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Will the FCC Lose the Future?

Do the actions of the FCC match the FCC's words of support for the President's commitment to the "least burdensome tools to achieve regulatory ends?"

 

  • Does the FCC truly agree with the President's State of the Union that: "We can't win the future with a government of the past?"

 

  • There is much troubling evidence that the FCC mindset is firmly wedded to the regulatory past and not committed to competitively "winning the future."

 

There are three disturbing trends at the FCC: preservationism, pessimism and silo-ism -- that all strongly indicate that the FCC's trajectory is more geared toward losing the future than winning the future.

I. FCC Preservationism (Shackling the future with the mindset, approaches and legacy networks/regulations of the past.)

Most of the last year the FCC has been obsessed with FCC historical preservation, i.e. strongly considering restoring the FCC to its past glory days with new Title II common carrier regulation of the Internet, but then settling on a 1934 era interpretation of the FCC's Title I authority at its most boundless.

 

  • Like a museum curator, the FCC General Counsel has been dusting off legal antiquities in the FCC basement to assemble a new historical exhibit of the FCC's aspirational statutory power for the Court of Appeals perusal -- all the while forgetting that those pre-Internet legal antiquities were in the basement gathering dust precisely because they were no longer relevant to today or the future.

The FCC's Open Internet Order was really about preserving the FCC's relevance in the Internet Age, given that the DC Court of Appeals greatly constrained the FCC's imagined Internet authority, and given that there was no real industry problem that needed an FCC Open Internet regulatory solution.

The FCC has been in preservationist mode since the Comcast decision indicated the FCC has a much smaller role in the Internet era than they hoped or imagined for themselves.

To preserve its relevance, and much of its budget authority and staffing in a budget-deficit focused environment, the FCC's self-preservation instincts have been in overdrive discrediting competition gains and successes, assuming market failure tacitly, and promoting the need for regulatory involvement most wherever possible.

This helps explain the hyper-regulatory trajectory of the FCC's supposed data modernization NPRM which the FCC billed would: "streamline and modernize the collection of data... while minimizing burdens on voice and broadband providers."

 

  • The FCC's NPRM delivers the opposite, in that it is proposing to collect vast amounts of new data by census block, which represents ~250 times more granular data than it has ever collected before, and it is collecting granular pricing data that really has only one useful purpose, enabling the FCC to micromanage and price regulate the competitive broadband industry.

 

 

II. FCC Pessimism (No communications can be safe or ok for consumers without FCC involvement.)

The FCC's newfound need for institutional self-preservationism, has required the FCC to adopt a new pessimism about the future of the Internet, competition, and innovation in order to create justification for a full budget and staffing complement at the FCC.

 

  • The big question the FCC dreads being by asked by House overseers is why the FCC needs lots more resources to oversee a de-regulated competitive marketplace than they needed when they price-regulated communications monopolies?
  • Only in Washington, can bureaucracies justify needing more resources to do less.

The big evidence of the FCC's new found pessimism is that to justify the reassertion of the FCC's relevance in the future in the Open Internet order, the FCC had to implicitly assert, with scant evidence or argument, that competition was no longer sufficient to protect consumers.

  • Only a deeply pessimistic outlook could enable the FCC to ignore the overwhelming evidence that competition was more than ever delivering benefits to consumers.
  • Only a deeply pessimistic FCC would construct a new effective de-competition policy in direct contravention of the law.
  • Only a deeply pessimistic FCC interested in preserving its historical central role in communications would encourage and entertain requests from Level 3 and Netflix to effectively transform the well-functioning unregulated Internet backbone peering market into a CLEC-pick-and-choose-like regulated market where the FCC must referee every imaginable dispute.

 

III. FCC Silo-ism (Convergence and cross-silo competition threatens the FCC's iron regulatory grip on individual technology/industry silos.)

The FCC has come to appreciate that convergence and competition reduce the need and relevance of pre-convergence regulation.

  • Its answer is to hedge its bets and continue regulating the silo irrespective of the competitive facts and to also try to regulate the new convergence competition as well.

The poster child for FCC silo-ism is the tortured logic the FCC went through to deny Qwest's voice forbearance petition by ignoring that 25% of consumers have cut the cord and are using wireless as their competitive substitute for voice.

 

  • Acknowledging the obvious competition from wireless would mean admitting that the FCC would have less to do, and less need for heavy regulation staffing.

 

There are glaring examples of FCC silo-ism in the cable market as well.

 

  • For the purposes of retransmission consent, to date the FCC continues to look at the world through 1992 lenses and has yet to acknowledge the existence of the 18 year old DBS industry that has won over 30m customers in the marketplace, or the existence of Fortune 100 MVPD competition from Verizon Fios and AT&T U-verse.
  • For the purposes of the FCC's All-Vid proceeding, the FCC is ignoring the facts of the marketplace that the Navigation Device provision of the 1996 Telecom Act has been overtaken by competitive and technological events, where set-top box providers are proliferating and the space is transforming from a hardware technology to a software technology, from a device to an operating system.

 

In sum, the FCC's actions, not its words, are signaling that the FCC is more interested in winning the past than the future.

 

  • The FCC would do well to listen to the President's admonition in his State of the Union that "our free enterprise system is what drives innovation."
  • If the FCC is serious about wanting to promote economic and job growth, investment and innovation, the answer is helping win the Nation's future through least burdensome regulation, not forcing competitors to drag into the future the petrified remains of the FCC's heavy regulatory past.

Simply, if the FCC remains more concerned about winning its own bureaucratic future than winning the nation's future, the FCC will lose the future.

     

       

       

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