The Daily Caller

The Daily Caller
AT&T - T-Mobile merger  Photo: AP AT&T - T-Mobile merger Photo: AP  

A Welcome Catalyst for Modernizing Obsolete Communications Law & Regulation

Photo of Scott Cleland
Scott Cleland
Chairman, NetCompetition

AT&T’s announcement this week that it would invest $14b in further IP modernization of its wireless and wire line broadband networks — coincident with an AT&T petition for the FCC to open a new proceeding to transition from outdated legacy telephone platforms to modern Internet-based fiber and wireless platforms — is a very welcome catalyst for modernizing obsolete communications law and regulation.

This catalyst has several important implications and takeaways.

First, modern beats obsolete. While that’s obvious technologically, that apparently is not yet obvious to policymakers. That’s the point. While modern Internet technology platforms obviously beat obsolete platforms, much of American communications law and regulation is still predicated on obsolete 1881 copper twisted-pair technology, 1912 radio technology, 1887 railroad common carrier regulation, and 1934 analog monopoly telephone economics. No kidding. The law is more museum than current events.

From the beginning, U.S. communications law has been technology-specific or “silo-ed”, and ever since, each new technology law has been specifically silo-ed next to, or grafted onto others’ technology-specific law, with precious little thought or effort to clear away laws and regulations made obsolete by changes in technology and competition. The absurd result has been an increasingly dysfunctional foundational legal framework that still imagines that communications technologies are separate and not competitors, when Internet technology and convergence obviously enable cross-platform competition.

This catalyst will bring attention to the stubborn facts that U.S. communications law and regulation is absurdly out-of-date. U.S. telephone service, i.e. local and long distance, are not monopoly services; two-thirds of Americans no longer use the legacy telephone service because voice is an “app” and long distance is essentially a free integrated feature in the age of Vonage, Skype, iChat, Hangout, etc.

Second, U.S. facilities-based broadband competition continues to intensify. AT&T’s latest $14 billion investment in infrastructure comes on top of: Softbank’s recent $12b purchase of Sprint; T-Mobile’s recent ~$3b investment in MetroPCS; Verizon’s recent ~$4b investment in acquiring Cableco spectrum; and Cable’s ongoing billions of dollars of investment in DOCSIS 3.0 technology upgrades.

The U.S. communications marketplace is characterized by fierce competition for customers, not the market power of the past that is still assumed by the increasingly obsolete legacy communications acts of 1934, 1984, 1992, and 1996 and their follow-on regulations.

Third, wire line and wireless broadband are competitive substitutes. What the AT&T $14b investment reminds us of, is that in certain areas with less population density, challenging terrain, or lower demand, it makes more economic sense to deploy 4G LTE wireless technology there than the relatively much more expensive deployment of fiber either under-the-ground or on poles.

Consumers have led the way in showing that wire line and wireless are competitive substitutes. ~30% of consumers have dropped their land line voice service for cellular, and consumers routinely watch TV on their smart phones and tablets independent of a direct wire line connection.

Finally, the multi-ten-billion dollar investments in IP infrastructure upgrades by AT&T, Verizon and the Cable industry directly contradict the technology and economic imaginations of net neutrality activist Professor Susan Crawford that cable is somehow a “looming monopoly.” Anyone paying attention can’t miss the regular bombardment of advertisements for their business from multiple broadband providers. Monopolies don’t have to advertise.

In short, the U.S. broadband marketplace is vibrantly competitive and in no segment is there a monopoly. Legacy communications laws and regulations are stuck in the past. They imagine: 19th century technology and regulations; 1934 economics; 1940′s resource management approaches for spectrum; embarrassingly out-of-date monopoly assumptions from 1934 and 1992; and even obsolete 1996 competition policy.

Simply, obsolete communications laws and regulations are holding America back because they are an unnecessary drag on the commercialization of innovations for consumers. Legislators and regulators need to modernize communications law and regulation for the 21st Century soonest.

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. In the George H.W. Bush Administration, Cleland served as United States Deputy Coordinator for International Communications and Information Policy.