Obsolete communications law stifles innovation, hurts consumers

Scott Cleland Contributor
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Conventional wisdom supposes the Internet was essentially invented overnight, that cell phones burst onto the scene in the late 1980s and that new communications technologies are brought to the market at a breakneck pace. What no one tells you is that the original 1990s’ Internet technology had been around since 1969. Cell phones? That technology was invented in 1947, but wasn’t approved for consumer use until 1982. And computer modems were first invented in the 1950s, only to have obsolete laws hold up mass market consumer adoption until after 2000. Imagine how better our lives would be had consumers gained access to these phenomenal communication innovations before the government bottleneck got in the way!

Change is the only constant with technology, yet the foundation of communications law that governs one-sixth of the econom hasn’t changed in 80 years. While the 1996 Telecom Act wisely changed communication policy from monopoly regulation to competition, it merely amended part of the 1934 Communications Act, leaving much of the monopoly-assumed regulatory legal foundation intact and creating a profoundly contradictory statute overall. A law divided against itself cannot, and should not, stand.

The common impediment to the commercialization of these phenomenal communications innovations has been, and continues to be, the law’s antiquated assumptions of what communications technology can do, and the long-disproven policy notion that communications was a natural monopoly affording consumers no choices and requiring extensive regulation.

America’s communications law wrongly assumes consumers have no competitive communications choices when they now have many. Government-centric regulation is naturally hostile to private-sector innovation. And when confronted with innovation that enabled competition to the monopoly-assumed system – like wireless and computer communication – obsolete law effectively postponed user adoption for decades until a new regulatory cage could be devised to preemptively control these new communications technologies.

Most Federal wireless regulation rests on the 1912 Radio Act – a law that required all radio stations be licensed – and the 1927 Radio Act – a law that established the Federal Radio Commission and required radio stations to operate in accordance with the “public interest, convenience and necessity,” a premise borrowed from 1880s’ railroad monopoly regulation. This notion of analog-era public interest radio regulation is archaic at best when we live in a broadband world of digital cellular communications, software defined radio, and spectrum sharing, that offer solutions through technology, competition, auctions, and property rights; solutions our early 1900s government bottleneck laws could never fathom.

Examine history even further and you’ll find that a backroom deal in 1913 is what shaped current communications law by establishing a government-sanctioned national communications monopoly in return for a commitment to universal telephone service. That decision was then codified into the 1934 Communications Act, which created the Federal Communications Commission to regulate that government-established monopoly. Obviously, this century-old concept of a permanent communications monopoly is no longer relevant when cable, wireless, satellite, and various Internet competitive alternatives can provide voice service as well as the still monopoly-regulated telephone network can.

Innovations in technology have long outpaced the government’s ability to keep up. Yet, existing law still entrenches the government as the decider of what communications facility innovations are best for consumers, rather than enabling us to choose for ourselves in the marketplace. The perverse and counter-productive result is to slow private sector technology progress down to government speed.

By limiting benefits, savings and productivity, discouraging consumer adoption of new innovations, and devaluing communications infrastructure investment, our obsolete communications law strangles America’s innovation potential.

Imagine what other communications innovations obsolete law is keeping from us?

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.

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Scott Cleland