Everyone spends a lot of time and ink criticizing all that Washington policymakers get wrong, including many of us who work here in Washington. Yet lawmakers often get things right, too, demonstrating a humility for which they are rarely credited. One of the best modern examples of this may be the 1996 Telecom Act.
In 1996, wireless technology and the Internet were beginning to make their mark. Congress, realizing that America stood on the cusp of unparalleled advances, flipped the ordinary presumption of government regulation.
Rather than assuming that regulation is permanent and unavoidable, Section 10 of the Telecommunications Act of 1996 provides that once the FCC determines that a particular FCC regulation is no longer necessary to promote competition or to protect consumers, then the FCC should forbear from enforcing it. To make things even easier — and to reinforce Congress’ determination that the FCC should not be enforcing outmoded rules — if the FCC fails to act on a petition to forbear from enforcing such an anachronistic regulation within 15 months, the petition is “deemed granted.”
Consistent with this, the U.S. Telecom Association, or USTA, recently filed a petition requesting forbearance from a limited number of regulations in the 1996 Act’s scheme to promote competition to the Regional Bell Operating Companies. USTA’s bottom line? The regulations in question are no longer necessary, precisely because the act worked in promoting competition. In 2000, America had approximately 186 million residential telephone lines controlled by Incumbent telephone compmanies, or ILECs; now, that number has fallen to 35 million.
In fact, by the end of 2018, only 11 percent of U.S. households will have ILEC landline voice service — down from 93 percent in 2003 and 46 percent in 2010. “Cord cutting” is very real, particularly for younger generations — 60 percent of American households will be wireless-only by the end of this year. And for those households that continue to use landline telephone service, many have chosen competitors to their traditional phone company.
That’s the power of technology to change markets — wireless replacing wires, data replacing voice. It’s also the power of competition, precisely what Congress promoted in 1996, to move markets. A similar shift has happened in the market for business data services. Over the last decade, competitive providers have deployed fiber, offering much faster broadband access to businesses and other large consumers of data services.
Competitive alternatives had become available in 99 percent of the census tracts in which there was demand as of five years ago, and most buildings were within a few hundred feet, at most, of competitive fiber, if they were not already being served. Again, the same pattern of technology and competitive shifts have transformed the market to something completely unrecognizable from that of 1996.
Congress saw technological change coming, even if the precise nature of the technology was not known. That’s why the concepts of regulatory flexibility and regulatory forbearance were put front and center in the statute.
The stated purpose of the USTA petition is “to accelerate investment in broadband and next-generation networks.” In other words, money spent on maintaining old, copper-based networks or on regulatory compliance for the nearly extinct “long-distance service option” (remember that?) is money that would be better spent laying more competitive fiber, deploying 5G wireless technology, or other services that consumers and businesses actually want and need.
Another area where USTA is asking for forbearance pertains to complicated and duplicative rules on utility poles and rights-of-way. As the petition notes, “The continued presence of overlapping requirements drains valuable compliance time and resources” from the legacy Bell phone companies.
The 1996 Act’s aim was to end the ILEC monopolies’ control of markets, promote competition, and point the way to the broadband future. It succeeded in these aims beyond the wildest dreams of its drafters. Competition thrives.
And as a further proof of the virtues of forbearance, as USTA notes, to their knowledge, “No party has filed a single complaint with the Commission suggesting that these efforts to modernize the regulatory framework have led to any consumer or marketplace harm.” Score one for Washington’s policymakers.
Bruce P. Mehlman served as assistant secretary for Technology Policy in the President George W. Bush administration and presently co-chairs the Internet Innovation Alliance.
