Why US communications law is obsolete

Scott Cleland | Chairman, NetCompetition

The problem is obsolete analog law obstructs our modern digital world.

Amazingly, America’s core communications law still rests upon the technological limitations and monopoly economic assumptions of early twentieth century analog telephones and one-way analog AM radio transmissions, as if the digital revolution of the computer, broadband, smart phones, WiFi and the Internet never happened. Only in Government, which habitually adds without subtracting, could such obsolete ideas, notions and assumptions obliviously blob along in near complete contradiction to the world around them.

The old adage is true here, that if you only have a hammer everything looks like a nail. Well if you have communications laws still predicated on 1880’s railroad regulation, 1927 radio capabilities and 1934 economics, everything looks like it needs centralized government control and regulation.

At core, America’s communications law wrongly assumes technologically and economically that Americans have, and should have, one common analog electronic form of communicating — a telephone, and one common analog electronic way of receiving information — AM radio broadcasts. The obsolete technological and economic assumptions of these early 1900s technologies are now completely divorced from the reality of America’s fiercely competitive digital communications marketplace. Nevertheless, they still legally rule the analog remnants of American communications and still jealously entangle and impede the progress of modern digital communications.

To understand the absurdity of our obsolete core communications law, imagine if our transportation law still permanently assumed that the capabilities and economics of a horse and buggy should be the baseline for regulation of all modern transportation technologies that follow.  Wisely Congress modernized transportation law in the 1970s and 1980s, and finally abolished the obsolete Interstate Commerce Commission in 1995.

Today digital communication does not limit consumers to an analog telephone call of yesteryear, but offers them a panoply of digital choices of a: voice call, text, email, chat, instant message, voicemail, video chat, video call, video conference, VoIP, Skype, BBM, AIM, iChat, FaceTime, Twitter, Facebook messaging, Hangout, etc. Nor are consumers limited to just AM radio of yesteryear, but enjoy a smorgasbord of choice of AM radio, FM radio, satellite radio, HD radio, TV broadcast, HDTV broadcast, cable, direct broadcast satellite, the Internet, DSL, cable modem, fiber-to-the-home, wireless broadband, WiFi, WiMax, LTE, video streaming, YouTube, Hulu, TiVo, etc. Today’s digital reality of expansive competitive choice mocks the archaic monopoly assumptions of our stubbornly obsolete communications law.

So why are analog electronic technological and economic assumptions obsolete, if we still use analog telephones and AM radios today?

First, analog telephone technology suffers from static “natural monopoly” economics, whereas digital communications technology enjoys natural competitive economics because the dynamic of digital technology continuously generates more capabilities and capacity at lower cost, which eliminates barriers to entry, fuels innovation, and encourages risk capital investment.

Analog telephone circuits allow only one conversation, while digital communications enable ever increasing multiples of conversations on the same facility or spectrum. Unlike the real physical limits of analog telephones and AM radios, digital communication technology has virtually limitless capabilities, and vastly better and constantly-improving economics because of Moore’s Law (the doubling of microchip performance every ~two years); Coopers Law (the doubling of radio spectrum utilization efficiency every ~30 months); and optimization algorithms (which continuously maximize transmission capacity, like Cable DOCSIS, wireless broadband LTE, and a wide variety of audio and video compression standards.)

Second, digital communications’ natural competitive economics fuel competition and opportunity, which in turn empowers the consumer to choose whatever communication method they want at any given time or circumstance to meet their varied purposes, needs, wants and means. This natural competitive dynamic makes obsolete the notion in our law that Government regulators must approve what technologies, products or services are allowed to be sold to the public at what price, terms or conditions.

In sum, obsolete law is a drag on progress, because it discourages innovation and investment by assuming regulation is necessary when it is not, which in turn causes unnecessary inefficiency, long-delays, dead-weight costs and artificial uncertainty. Consider: the cell phone was invented in 1947, but not approved for commercial use until 1982; Internet packet-switching technology was invented in 1969, but not commercialized until the early 1990s; and computer modems were invented in the 1950s but not commercialized for broadband until after 2000.

American communications policy obsolescence is an unnecessary drag on everything it touches. The solution is simple — modernize America’s obsolete communications law.

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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