Telecommunication’s Regulatory Cat and Mouse Game

My former colleague Jon Henke has reviewed “The People’s Network: The Political Economy of the Telephone in the Gilded Age” for Reason. I haven’t read the book, but his take has placed it on the top of the list. As anyone who has read about the history of telecommunication regulation, policy formation is and has been a cat-and-mouse game between regulators and the regulated. Jon explains:

The history of telecommunications is a long story of progressives and populists demanding “public interest” regulations that produce and protect monopolies, followed by progressive and populist demands for regulations to fix the problems that their earlier regulations created. At each step, activists were coached and coaxed by the political and business interests in question.

What can this history tell us? A lot, actually:

Progressives today are traveling the well-worn policy path of trying to fix old mistakes by making new ones. They demand competition while promoting municipal public utility broadband systems. “Open access creates competition,” they claim, never minding that the unbundling requirements that force providers to lease their systems to competitors only create “competition” by turning an existing provider into a de facto monopoly. The goals of the modern net neutrality movement—which in effect seeks to prevent Internet Service Providers from providing anything but lowest-common-denominator service—might as well adopt the same early slogan of monopoly-era AT&T: “One System, One Policy, Universal Service.”

The urge to make carriers a public utility or regulate them as such remains deeply embedded in telecommunications policy today. After all, if the telephone networks required the guiding hand of regulators, how could the Internet possibly work without regulations to mandate interconnection, to require settlement-free peering, to set prices, or to dictate which services providers are allowed to offer?

And yet the comparative regulatory anarchy of the Internet does work. We all enjoy a global network of independent systems that interconnect almost entirely through contractual agreements. And yet activists seem determined that, in order to prevent gatekeepers from “destroying the Internet,” the Federal Communications Commission must become the gatekeeper of the World Wide Web.

My post on the Satellite Television Extension and Localism Act (STELA) hits on a couple of these key issues for video law. Changing consumer preferences is ultimately undoing the myriad and complex rules put in place by the FCC under the guise of public interest. Like so many other areas of telecommunication law, the laws governing video must be updated to meet the 21st century marketplace.