Video and Wireless Drive Broadband Demand, Experts Agree

Communications law uses a silo approach: Telecom, data services, broadcasting, cable and mobile services, and other segments are defined under the 1996 Act as what May termed “techno-functional constructs.” Firms beneath the telecom rubric face rate regulation, nondiscriminatory obligations and contributions to the universal service fund. Data services aren’t shackled with any such requirements, May said. “The distinction between information services and telecom services is really quite metaphysical and has nothing to do at all really with how consumers in the marketplace would look at these services.”

The U.S. must shift to an approach based on competition, said May, whose group wants an unfair- competition standard built into a new era of telecom oversight. That standard would resemble the one governing the Federal Trade Commission. PFF also would drop technology-focused distinctions that cause countless problems in the converged digital age, May said. Under PFF’s regulatory proposal, the FCC could act on unfair practices itself or on complaints by others, May said. A situation would be evaluated in the context of its market, and a determination made on need for regulatory action only after thorough economic analysis -- a stark contrast to today’s system and its “broad and rather vague mandates,” May said.

A PFF project begun in 2004 concerns U.S. telecom law reform. The project’s 3 reports so far have made sweeping recommendations on regulatory frameworks, federal and state relations, universal service, and spectrum and institutional reform. A PFF report on spectrum reform due this month will propose a regime whereby telecom players own the spectrum they use, on the premise that “when you own it, you'll make the best use of it,” May said.

Sen. Ensign’s (R-Nev.) telecom bill is “forward looking,” May said, but he doesn’t agree with all its provisions. The House Commerce Committee’s discussion draft ties regulatory consequences to specific technologies, and defines broadband, Internet transmission services, broadband video and VoIP, he said. The high- tech market will render this techno-functional approach obsolete, he argued. Davidson lauded congressional efforts at telecom reform for “moving the debate forward” and generating “a lot of healthy discussion about where policy needs to be.”

Franchising reform is needed above all, because video is driving broadband and voice is now merely an IP application, said Davidson. Today’s regulatory regime assumes a voice market, not video, he said. Regulatory ambiguity has led Verizon and other firms to apply for franchises they think unnecessary, said Davidson. Firms “shouldn’t just go out and comply with regulation to get something done,” he said, since that’s a costly barrier to entry whose expense consumers bear.

Davidson’s preference is national franchising, via a single set of rules. Those regulations should be technology-neutral and shrink as new entrants emerge. Legacy rules also shouldn’t be imposed on new entrants just because it’s easy, Davidson said.

The wireless industry is pushing broadband to new heights, he said. All major carriers are upgrading and expanding their wireless networks and prices on many Wi-Fi services are falling. This has spurred huge capital spending and job creation, and industry has flourished under govt.’s light touch, he said. State rules remain problematic. “Well meaning attempts at regulating” boost costs for companies that customers eventually bear, Davidson said.