It’s hard to describe federal telecom regulation as anything other than regulation by the extremes. We are now moving to the fourth administration that has essentially reversed the regulatory philosophy and policies of the previous administration.
It’s clear that the FCC and other parts of the federal telecom regulation agencies have fallen victim to regulatory capture. This is an economic principle that describes when regulatory agencies are dominated by the industries they are supposed to be regulating. Economic theory predicts that regulators caught by regulatory capture act in ways that protect incumbent providers instead of the public interest.
What I find odd about the back-and-forth reversal of policies is that it doesn’t seem to be benefiting the big ISPs. Let’s take a look back at the Tom Wheeler FCC that passed the first set of net neutrality rules. I recall at the time these rules were passed that the CEOs of every large ISP made public statements that the net neutrality rules weren’t going to have any real impact on their businesses.
And yet the big ISPs still went into overdrive and fought the FCC’s rulings in court. They were unsuccessful and the courts said that the FCC had the authority to regulate broadband, which clearly is a telecommunications service.
But then the Ajit Pai FCC came into power through a change of administration and instantly set to doing what the courts could not do, which was reverse net neutrality and all of the implications of regulating broadband. The courts also weighed in on this and said that Ajit Pai’s FCC has as much right to not regulate broadband as the previous FCC had to regulate it.
I’ve been watching this back and forth for more than a decade and I can’t see how this regulatory back-and-forth helps the big ISPs. I’ve come to the conclusion that the problem at the federal level is caused more by the lobbyists than by the Board rooms of the big ISPs. Regulation is at most a minor burr under the saddle of the big ISPs, and it’s hard to believe that folks in the Board rooms get too bent out of shape over most FCC actions – and yet the companies react publicly like the sky is falling.
We now have an entrenched lobbying industry that tackles issues on behalf of the big ISPs. I’ve thought for many years that some of the big trade associations drag ISPs into regulatory fights, not the other way around. It seems like overreaction to new regulation has become reflexive, which is in nobody’s best interest because it automatically makes the regulatory process adversarial.
I’ve been watching the regulatory process in a lot of states over the years – not just for telecom, but for power and other utilities. A few states are almost as dysfunctional in the regulatory area as the FCC, but many are not.
It’s worth stepping back and looking at the purpose of the regulatory process. Regulation is needed in industries where industry bad actions can harm the public. States have established a regulatory process that sits between industry and the public. In many States and in some industries, the process works like it’s supposed to. There is horse trading by regulators to give companies some of the things they want in trade for concessions that benefit the public. That’s how regulation is supposed to work. However, sane regulation is not possible when every ruling against industry is taken as a life-and-death affront.
I’m doubtful we’re ever going to see a return to sane telecom regulation. As dysfunction as regulation has been for a decade, we now have courts who also think they should be making regulatory decisions. This can only make things worse.
As I said in opening this blog, none of this back and forth benefits big ISPs. They spend far too much money and energy on lobbying. They antagonize and demonize regulators. And the public grows increasingly tired of bad corporate behavior and chooses smaller ISPs when they get the option. Who other than the lobbyists is winning this never-ending regulatory battle?
A thoughtful and wise post. Note that the lobbyists, unlike even divisions that generate most revenue, usually have direct access to the CEO
With Chevron removed, it seems that the courts will eventually be able to stop the pendulum… or am I not seeing this correctly?
It does seem that many recent decisions by the FCC seem to be in spite of larger ISPs. While some of the federal money went to the majors, a lot went to overbuilds in those territories. CenturyLink may be the biggest loser followed by AT&T.
The winner-take-all funding model that has been employed in broadband tech helps swing the pendulum further. The big losers that are still big companies will redouble their lobbying efforts and try to swing it back.
“Overbuilding” is another negative outcome of the crazy quilt, “broadband speed”-based telecom policy and related subsidy programs. A better approach to infrastructure subsidization is a rebuttable presumption that FTTP does not exist. Also, there is little economic incentive to bring a second fiber connection to a given premise. One is sufficient.
one isn’t sufficient, that’s a single vendor market and that’s ALWAYS bad for consumers. Always, every single time. And when you get stuck with a poor fiber provider you’re stuck for life.
Fiber does not guarantee good internet or good service.
It doesn’t make economic sense to run multiple utilities to a customer premise. That’s why we don’t see multiple electrical, water and natural gas lines.
“It doesn’t make economic sense to run multiple utilities to a customer premise. That’s why we don’t see multiple electrical, water and natural gas lines.”
No it’s not, that’s because the government picked a winner and made it law. This is bad for consumers, there is ZERO competition, ZERO innovation. It’s a perfect bad example.
“We now have an entrenched lobbying industry that tackles issues on behalf of the big ISPs. I’ve thought for many years that some of the big trade associations drag ISPs into regulatory fights, not the other way around. It seems like overreaction to new regulation has become reflexive, which is in nobody’s best interest because it automatically makes the regulatory process adversarial.
I’ve been watching the regulatory process in a lot of states over the years – not just for telecom, but for power and other utilities. A few states are almost as dysfunctional in the regulatory area as the FCC, but many are not.”
I agree the American way of public policymaking is overly adversarial, played like a four-year-long football game with two halves, (2-year legislative sessions). Legislative advocates are expected and well compensated to block and tackle, to get or prevent first downs and goals for their clients.
The problem football by nature is about one side winning. It’s not compatible with an intelligent, wise long term approach to public policymaking that balances private and public interests. That is the root cause of the dysfunction, the consequent frustration among the electorate and why candidates who tell voters the “swamp” is rigged against their interests get a lot of traction.
because it’s sure pure cronyism and those that aren’t getting favores fighting their way into the inner circle to get the favors so they can earn the right to outbid for the favors.
Legislative advocates are also expected by their clients to build relationships with public policymakers. Nothing wrong with that per se and nothing much gets done without good relationships.
But the policymakers don’t work for their clients; they work for the public interest. And as a wise former speaker of the California Assembly once said of special interest lobbies: “If you can’t drink their booze, take their money and then vote against them, you don’t belong in this business.”