More Thoughts on Telecom Reform

David Weinberger and David Isenberg kindly emailed me to talk about my concerns about the letter to the FCC at their The Paradox of the Best Network site. David I. gently pointed out that they had indeed highlighted continuity of service as a special concern for any transition away from traditional circuit-switched telephone technologies. David W. voiced the hope that universal service (that is, rural and inner-city service to people who can't pay the fully distributed costs or the competitive equilibrium prices of their service) would be plausible with new technologies at least as effectively as with the current network. Both re-emphasized the point that they believe that incumbent networks are failing irretrievably, so that the proper question to ask is not whether we should get rid of the old network technologies and business models, but how we can least painfully deal with the obsolescence of those technologies, the failure of those business models, and the imminent insolvency of the companies that have employed them.

It will take more than the FCC to change the legal rules of the telecom market. A vast body of legislation and regulation depends upon and assumes the existence of the architecture of the traditional telephone system. For example, the IXC/ILEC-BOC/CLEC/wireless/cable industry structure plays a substantial role in the way the Telecommunications Act of 1996 is put together. That Act was designed to encourage competition, but it was designed to do so within the architecture of the existing wireline system. The FCC has to work within the structure set by the Telecommunications Act and other telecom-related legislation. Every state also regulates the carriers with its jurisdiction, so there are state legislative and regulatory questions to be resolved as well. The drafting of the 1996 Act was a vast process in which the RBOCs/ILECs, would-be CLECs, IXCs, wireless and cable operators, state regulators, and the FCC all went to Congress and tried to strike compromises. (Since then, of course, ILECs have been rather unsatisfied with some of the ways the FCC has administered the Act -- see, for example, the network element lease rate case, Verizon Communications v. FCC, 535 U.S. ____ (2002), and we also haven't been successful in broadly creating economically sustainable wireline CLECs with good service.) So my first thought is that this is not merely a FCC matter. It's also a legislative matter, and Congress is probably going to have to be involved at some point. It may involve itself regardless of whether anyone wants it to do so, but it's more likely that the industry and public will have to drag Congress back into telecom policy discussions.

My former regulated industries professor made another point from the legal perspective that I want to emphasize: Right now, we (academic and practicing lawyers, others in government or public policy who genuinely desire more optimal telecommunications systems, and to a certain extent the FCC) need to be educated about the 'hardcore questions of technological feasibility' of new network ideas, especially technologies designed to enable widespread packet-switched voice communication. I would like to add that we will also need hardcore discussions of economic sustainability of businesses based around new technologies. By "educated" I do not mean "lobbied." We need serious technological and economic analysis. This is partly because we want policymakers to make the best, most informed decisions possible. It's also because most of us in the legal field are intensely critical thinkers and really want to get this as right as we can. We're just better at law than at technology. Another important reason to accumulate hard evidence of technological and economic feasibility, though, is that at some point the FCC will have to make enforceable decisions about these matters. If those decisions are to hold up in court, they will have to be based on 'substantial evidence,' and its rulings will have to address and respond to the objections of those who oppose the proposed rule. It will also need to be acting within authority derived from the telecommuniations laws and not contrary to any of the laws on the books. If those laws must be changed, only Congress can change them.

My hunch, based on what little I know about regulation, is that a revolution away from traditional circuit-switched telephony is probably not imminent in the next few years. The mechanisms of regulatory and broader legal change do not usually move that quickly, and they will probably buy time -- with lots of dollars in regulatory or bankruptcy wealth-shifting if that's what it takes. But if big change is going to happen, we should start getting as many smart and involved minds in on it as we can. Technology developers alone can't solve all these problems. The amount of social policy, existing legal 'infrastructure,' and, frankly, money that is involved demands the involvement of legal specialists* and economists. We really need to do all we can to get this right.

The question I want to ask now is, where does the research and communication among technology specialists, policy and law specialists, and economists need to go from today? I'll keep thinking about that question, and maybe write more here on that later. I also want to hear your thoughts. I deeply appreciate comments by email (tph at tph-lex dot com) or here on the weblog. Please indicate in email if you do not wish to be quoted publicly.

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References: Telecommunications Act of 1996, Feb. 8, 1996, P.L. 104-104, codified throughout Title 47, U.S. Code, available at http://thomas.loc.gov/cgi-bin/bdquery/z?d104:SN00652:|TOM:/bss/d104query.html
Title 47 of the U.S. Code is available at http://www4.law.cornell.edu/uscode/47/
Verizon Communications v. FCC, 535 U.S. ____ (2002), available
at the U.S. Supreme Court (PDF) or Cornell Law Information Institute (HTML).
And, of course, the FCC.

* I've been avoiding using the word "lawyers" because a lot of people in
legal academia no longer practice law.