Industry Voices—Lowenstein’s View: It’s time to revisit the 1996 Telecom Act

Mark Lowenstein Industry Voices

A gaggle of AGs and a near-quorum of the Senate are rallying to repeal the recent repeal of Network Neutrality. The FCC has been split on the issue, and industry is divided along predictable lines. The signals from the major actors in this game—the FCC, DOJ, FTC, the White House and Congress—are muddled. The years-old fight, likely to be dragged out for many months more now, tells me that our current regulatory structure, largely defined by the 1996 Telecom Act, has become outmoded. With so many changes in technology and industry structure, I believe it’s time for a broad strategic review. The hopeful result would be a new Act, passed by Congress and signed by the President, that will provide guidance for the next 20-30 years.

Let’s first review the major provisions of the 1996 Telecom Act (first reaction….Telecom? Really?):

  • Opened up the local telecom market to competition and allowed the then RBOCs to enter the long-distance market (under-30s: Huh?; over-40s: remember LATAs?)
  • Allowed telcos to enter cable and video services (hence U-Verse, Fios)
  • Loosened cross-industry ownership restrictions and relaxed media concentration limits (DOJ, are you hearing this?)
  • Required telcos to permit resale and provide equal access
  • Expanded the idea of Universal Service to potentially include more than POTS (when’s the last time you heard that one?) 
  • Provided for local number portability (Yippee!)
  • Paved the way for HDTV

The Telecom Act was also notable for what it didn’t do. It took major steps to open up the telecom market to competition but kept the lid on competition in broadband. Hence we had intense competition in the long-distance, local telecom (for a while and when it made sense) and cellular markets, but comparatively little competition in fixed broadband.

Well, just a wee bit has changed in the 22 years since President Clinton signed the Act, which was sort of a bipartisan affair, at least by today’s standards. Transformation in technology and industry not envisioned by the Act include the shift of nearly everything to IP, pervasive fixed broadband, the emergence of mobile broadband, smartphones, OTT for everything from voice to messaging to video, and the emergence and dominance by companies such as Google, Facebook, Apple, Amazon and Netflix.

The very idea that our current structure is governed by an Act led by the word Telecom is sort of hilarious in our IP/OTT/streaming video/software-is-eating-the-world world.

So what might the outline of a revised Act look like? These would be my priorities:

  • Job 1 is to strike the word Telecom and call it the 2020 Internet Act (internet being an umbrella term encompassing voice/data/video/information services).
  • Understand that fixed and mobile broadband, delivered via fiber or wirelessly for the last few hundred meters, are the foundational “services” of our age.
  • Take steps to make the fixed broadband market more competitive. This would require some measure of requiring the broadband providers to provide wholesale services. Perhaps this is where there might be some quid pro quo in terms of some of the Network Neutrality provisions.
  • Recognize that fast broadband to every home is an essential service, on the scale of electricity and water. Further revise Universal Service rules in support of that principle.
  • Think through some of the key issues in the Network Neutrality battle (access, prioritization, and so on) within the larger framework of the new Act.
  • Provide for the fact that Facebook, Google, Amazon and other potentially new, disruptive players are on the same stage as traditional telecom, cable and broadband players.
  • Assume that what we consider as “communications services” are all “data” and they’ll be as easily delivered OTT or via an app.
  • View wireless service through a somewhat modified prism, compared to fixed broadband, since wireless still relies on utilizing spectrum—a scarce and finite resource. 
  • Review the classification of services—Telecom/Cable/Information Services/Broadcast from the 1996 Act. It is likely no longer necessary to have these distinctions.
  • Anticipate an evolution from services based on hardware infrastructure and physical devices such as set-top boxes to services that will rely on more open, software-based cloud platforms.

There has been a growing call for Congress to get involved. Whether lawmakers have the stomach or wherewithal to take this on, in this time of intractability, is anyone’s guess. It could also be an issue that the Democrats bring to the forefront in their quest to take back Congress in 2018.

Mark Lowenstein, a leading industry analyst, consultant, and commentator, is Managing Director of Mobile Ecosystem. Click here to subscribe to his free Lens on Wireless monthly newsletter, or follow him on Twitter @marklowenstein