The Daily Caller

The Daily Caller
WASHINGTON, DC - DECEMBER 21: Federal Communications Commission Chairman Julius Genachowski (R) delviers remarks before the commission voted to adopted controversial Net neutrality rules December 21, 2010 in Washington, DC. The rules put into effect by the commission create two different classes of broadband internet service -- one for fixed networks and another for wireless networks -- due to their technological differences. (Photo by Chip Somodevilla/Getty Images)  WASHINGTON, DC - DECEMBER 21: Federal Communications Commission Chairman Julius Genachowski (R) delviers remarks before the commission voted to adopted controversial Net neutrality rules December 21, 2010 in Washington, DC. The rules put into effect by the commission create two different classes of broadband internet service -- one for fixed networks and another for wireless networks -- due to their technological differences. (Photo by Chip Somodevilla/Getty Images)   

FCC Showcases Its Growing Obsolescence

Photo of Scott Cleland
Scott Cleland
Chairman, NetCompetition

In three different major FCC decisions this week, all conveniently-timed for when the fewest overseers of any kind would be paying attention, the FCC showcased its anachronistic “regulation-first” instincts in its: 706 broadband report, special access regulation order, and regulatory conditioning of the Verizon-Cable spectrum sale.

As digital technology fuels increasing competition and rapidly remakes the communications landscape, these decisions showcase the FCC clinging to obsolete technology and competitive assumptions that competition doesn’t or can’t work in order to justify the FCC’s first instincts to regulate whatever comes before them.

The unmistakable common thread woven through these diverse decisions spanning broadband, copper-networks, and wireless — is de-competition policy — which is the supplanting of market-based competition policy with out-dated common carrier regulation policy.

FCC’s 706 Broadband Progress Report: In a 3-2 regulatory rationale that only a circus contortionist could admire, the FCC declared that broadband is not being deployed in a reasonable and timely manner, because 100% of Americans still don’t have access to broadband — only 96% do.

This regulatory rationale is contorted beyond reason in at least three ways. First, the FCC knows a 100% standard is patently unreasonable because many Americans choosing to live in remote areas do not necessarily want or need broadband access.

Second, the FCC purposely has constructed an unreachable standard so it can guarantee that it can exercise its imagined 706 regulatory authority as far as the eye can see.

Third, the FCC has contorted its 706 authority, which Congress very clearly created for de-regulatory purposes, to justify new net neutrality regulation of unregulated broadband information services. Expect the D.C. Court of Appeals to reject the FCC’s self-empowering and contorted legal logic in the upcoming Verizon vs. the FCC court case.

FCC Special Access Regulation Order: In another 3-2 decision exposing the FCC’s regulation-first instinct, the FCC put the proverbial cart before the horse in suspending longstanding regulatory rules, before collecting the data necessary to determine if the suspension of the rules actually is warranted. It is supremely ironic that a self-described “data-driven” FCC decision-making process would not use data to make this data-dependent decision to increase regulation of increasingly obsolete copper networks.

Moreover, it is Orwellian doublespeak for the FCC to represent its pro-regulation decision as an attempt to “modernize” special access rules, when the clear goal is to go back in time, and return the rules to a bygone analog copper network era, that encourages competitors to resell increasingly obsolete copper networks rather than investing in better fiber or wireless broadband technologies.

Does no one at the FCC see the irony and hypocrisy of the FCC issuing a 706 “advanced telecommunications capability” report designed to promote advanced technology, within days of issuing FCC special access regulations that would promote use of increasingly obsolete copper network technology?

FCC’s 5-0 Approval of Verizon-Cable Spectrum Sale: Yet another obvious example of the FCC’s regulation-first instinct, was how slow and interventionist the FCC’s review of the Verizon-Cable spectrum sale was despite the FCC’s longstanding Clinton Administration policyto facilitate both the transfer of spectrum usage rights for existing services to new, higher-valued uses and the availability of unused and underutilized spectrum to those who would use it for providing service.

While the FCC and DOJ approval of this spectrum sale is welcome, if the FCC only followed its existing pro-competition secondary markets policy, this spectrum sale should have been approved months ago without conditions.

This was a simple and obviously pro-competitive secondary market transaction of fallow spectrum property that unfortunately was hijacked by regulation-first forces in order to extract ad hoc, special interest regulation and market restrictions that could not have been achieved under normal due process.

The sad takeaway here is that the FCC apparently is unwilling to let market forces determine the highest economic use of spectrum, despite existing law and FCC policy that is supposed to facilitate a functional secondary market for wireless spectrum.

In sum, in cramming all of these legally-unsupported decisions into the August vacation period when the fewest possible FCC overseers would be paying attention, the FCC is obviously aware that its regulation-first decisions are unpopular and hard to justify.

The FCC’s mistake in bundling them together in a few days is that: it spotlights how out-of-step the FCC is with the realities of digital communications technology and competition; and it showcases the FCC’s growing institutional obsolescence.

Scott Cleland is Chairman of NetCompetition® a pro-competition e-forum supported by broadband interests and President of Precursor LLC, a research consultancy for Fortune 500 companies.