Rethinking communications regulation
- 20 August, 2014 00:34
No technology has had as great an impact on society over the last several decades as the Internet. It has changed how we get information and how we use it, how we behave as consumers and citizens, how we learn, and how we connect to and communicate with other people. The rise of the Internet has disrupted many sectors of the economy, a story that is still unfolding.
One of the most powerful effects of the Internet has been its role in precipitating the convergence of previously separate media: In recent years, online digital channels have become the dominant mode of distribution for music, video, photography, newspapers, magazines and books in place of physical media. The Internet has not only transformed many traditional industries, but has sparked the emergence of entirely new categories of content. Think, for example, about how Wikipedia, YouTube, Facebook, Instagram, and Twitter have created unprecedented opportunities for creating and sharing user-created content.
Convergence has also been a powerful force in reshaping telecommunications media. Today, barely one-quarter of U.S. households still have a traditional switched telephone line. Nearly 40% of households now have only a wireless phone, while one-third of households depend on Internet-based VoIP service. Telephones, which have historically been associated with a specific location, are now linked to individuals, with more than 300 million mobile phone subscriptions compared to 90 million landlines.
As Internet access speed has increased, more Americans are getting their television programming online: Netflix now has more than 48 million subscribers (38% of all Internet users), while Hulu has more than 5 million customers, and Amazon Prime Video more than 10 million. "Cord cutting" -- giving up cable TV in favor of getting TV programming online -- has been growing in popularity.
The persistence of silos
Even as the telecommunications landscape has changed enormously, the structure of communications regulation has remained largely intact. Over the past 80 years, there have been just two major pieces of federal legislation defining how communications are regulated in the U.S.: The Communications Act of 1934, which created the Federal Communications Commission (FCC) and established the basic goals for communications regulation, and the Telecommunications Act of 1996, which moved toward deregulation and encouraged greater competition.
But the basic framework of regulation, which treats each telecom sector as a separate silo with its own characteristics and its own legal requirements, has not changed since 1934: Traditionally, communications regulation has been divided into two broad categories: first, regulation of broadcast media (radio, TV, cable and satellites) that distribute professionally produced, advertising-supported programming to a mass audience; and regulation of telecommunications (wireline and mobile telephony) that provide two-way point-to-point communications. To this day, the FCC is structured into different bureaus that enforce different regulatory schemes for different media based on historical circumstances rather than present-day realities.
The last effort to update telecommunications regulation, the 1996 act, focused mainly on the market for local and long-distance telephone service and paid relatively little attention to the Internet. One of the most profound changes since then has been the rise of broadband service, which has accelerated the process of convergence. Two decades ago, virtually everyone accessed the Internet by slow dial-up modems that worked over standard telephone lines and that limited the range of content that could be easily accessed online. Today, nearly three-quarters of U.S. households have high-speed broadband service, and two-thirds of mobile phone users (which includes virtually all American adults) have smartphones capable of accessing the Internet over wireless broadband networks. Broadband provides a big pipe that treats all sorts of different media as just bits in a bitstream.
In light of these profound changes, the question is whether the traditional framework for communications regulation still makes sense. In late 2013, two members of Congress -- House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) and Communications and Technology Subcommittee Chairman Greg Walden (R-Ore.) -- announced their intention "to examine our nation's communications laws and update them for the Internet era," a process that they acknowledged would take several years. As a first step, they issued a series of white papers that identify some of the issues they plan to address and raise questions pertaining to such things as spectrum policy and the appropriate role(s) for the FCC. In response to these papers, hundreds of comments have been submitted by think tanks, academics, industry representatives and public interest groups to express their views on changes to the Communications Act. While these submissions differ on specific points, they reflect a clear consensus that there is a need to update the law in order to maintain a competitive and innovative communications sector. (The white papers and public responses to them can be found at http://energycommerce.house.gov/CommActUpdate (http://energycommerce.house.gov/CommActUpdate).)
Creating a new framework
What might a new framework for regulating communications look like? A year before the current congressional initiative was launched, a group of legal experts, communications scholars, current and former regulators, and business leaders convened at the Aspen Institute to consider the challenge of "rethinking communications regulation." The participants shared a belief that the current approach to regulation is outmoded, and they attempted to identify the contours of a new, more appropriate framework. The group considered how communications regulation might be conceived today if it were possible to ignore 80 years of history and start with a blank sheet of paper. In particular, they grappled with the problem of devising a schema that would be flexible enough to keep pace with the changes in technology.
To start the process, the group explored three very different starting points for developing a new approach to regulation:
User perspective. Although just about everyone makes use of the Internet and media, users can be defined as members of a series of overlapping groups, each with its distinctive set of needs and interests. For example, user groups include residential customers, businesses and organizations, people with disabilities, minorities, children and the elderly, healthcare and education providers (and users), and government. Once these groups have been identified, one can ask, "What do users want?" and consider how government policy could best help them to achieve their goals.
Ecosystem perspective. A second approach begins by defining the participants that make up the broader Internet ecosystem -- public-sector actors (government on the federal, state and local levels, plus nonprofits), network infrastructure providers (telcos and cable companies), content and service providers (e.g., Google, Facebook, Netflix), hardware and software providers (Intel, Apple, Cisco, Microsoft), as well as end users and multi-stakeholder groups, including the Internet governance organizations (ICANN, IETF, W3C). These actors all interact in a "tussle space" in which everyone seeks their own goals and strives to maximize their benefits -- which may be personal, financial or social. The goal of policymakers should be to facilitate or constrain those interactions to produce "the best outcomes" for the widest group of participants.
Application and service perspective. Perhaps the most pragmatic approach is to start by identifying the most critical communications issues likely to confront policymakers in the foreseeable future. These are all related to the emergence of a broadband-enabled Internet as the dominant platform that can perform the functions of virtually all existing media. Among the specific challenges involved with developing a new framework for Internet governance in the digital age are the shift of telephony from analog to digital ("IP transition"); devising procedures for more rapid, more effective allocation of spectrum; a redefinition of universal service in a digital world; and establishing appropriate mechanism(s) to promote competition. Rather than seeking to design a grand overarching regulatory structure, this approach would focus on devising solutions to each of these individual challenges.
The participants agreed that communications regulation needs to be "unshackled" from the current framework organized around separate industry and media silos. Some suggested that a regulatory agency like the FCC is no longer relevant in a digital world and that the Federal Trade Commission (FTC) or an agency like it was better suited to protect consumers and promote competition. Yet others called for the creation of an entirely new agency with greater technical capabilities and a simpler, less segmented regulatory mandate. And given the relentless pace with which Internet technologies and competition are changing, a "light touch" approach to regulation was seen as preferable to any attempt to construct ex ante a new, prescriptive regulatory scheme.
In light of the current political realities in Washington, passing major new legislation will not happen quickly. But, at the least, the process of rethinking communications regulation over the next several years can provide a useful opportunity to explore where technology has taken us and to consider new, more effective approaches to regulation.
Even as the Congress begins its consideration, the technology of the broadband Internet will continue to evolve. Its performance will continue to improve and access to it will become ever more pervasive. New applications will emerge.
Over the next several months, I will be exploring some dimensions of these new emerging technological capabilities, including "connected learning" that is transforming education; the growth of supercomputing capabilities to address everyday problems; the impact of augmented reality; the rise of smart cities, the emergence of a collaborative economy; the implications of increasing "emotional bandwidth"; and the blurring of the line between online and offline experiences. By looking forward and anticipating where the broadband Internet is going, we will better understand why developing a regulatory framework relevant for the 21st century is so critical to our digital future.
Richard Adler is a distinguished fellow at the Institute for the Future in Palo Alto, Calif. He has written widely about the future of broadband and its impact on fields such as education, healthcare, government and commerce.
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