At Free State Foundation's Winter Conference, FSF President Randolph May stated that it was his experience that agencies tend to err on the side of regulating. The Federal Communications Commission's history with Section 10 forbearance seems to fit the mold. How else to describe the FCC's hesitation to use Sec. 10's deregulatory mechanism that Congress provided it in the 1996 Telecommunications Act? The FCC has declined to use its regulatory forbearance powers on a sua sponte basis that the '96 Act almost certainly countenances. And the FCC has hardly been prompt in deciding on forbearance petitions filed by telecommunications providers, instead waiting until its statutory shot clock period and time extension runs the full fifteen months before making its decision.
Just this week the FCC granted itself a ninety-day extension for its consideration of Qwest's petition that the FCC forbear from continuing to impose certain regulations in the Phoenix Metropolitan Statistical Area (MSA). This is keeping with the Commission's regrettable pattern of granting itself extensions in similar forbearance proceedings. (This is something I wrote about in greater detail last year in my FSF Perspectives piece "Delaying Deregulation: Forbearance at the FCC"). Hopefully the Commission won't be furthering that pattern by holding off on a decision until just before the final buzzer.
One can reasonably question why it would take the Commission over a year's time to make its decision. This may be a particularly apt question with respect to the Phoenix MSA since the FCC had previously considered the state of telecommunications service in that same area as part of the Qwest 4 forbearance proceeding. (The FCC previously denied the Qwest 4 forbearance petition, but more on that denial in a minute.)
Perhaps the Commission is seeking extra time to make its decision on Qwest's Phoenix MSA forbearance petition in conjunction with a prospective remand order on the Verizon 6 MSA and Qwest 4 MSA petitions. This week's extension order does note that the Verizon 6 and Qwest 4 remands are "relevant" to the Qwest's Phoenix MSA petition since they involved the same unbundling regulations.
Last fall, the U.S. Court of Appeals for the District of Columbia took the Commission to task for acting contrary to its own precedents in denying forbearance relief to Verizon. As FSF President May wrote in his FSF Perspectives piece "Assessing the FCC's Competition-Assessing Competence," although “in a couple of forbearance cases, the FCC has acknowledged that potential competition should be considered in assessing whether continued regulation was necessary," when considering Verizon's forbearance petition, the FCC "focused single-mindedly on present market share, ignoring the fact that potential entrants constrain whatever market power the existing providers may possess." The D.C. Circuit remanded to the FCC, instructing the commission to provide consider potential market competition or to give a reasoned explanation for its departure from its precedent. Just days later and on the exact same grounds the Court remanded the FCC's order rejecting the Qwest 4 forbearance petition. (In October, 2009, FSF submitted comments to the FCC on the Verizon 6 / Qwest 4 remand.)
As I related in a prior blog post, one of the unhappy consequences of litigating FCC orders rejecting forbearance petitions is that even court rulings favoring forbearance petitioners have resulted in victory without any immediate enforcement remedy. Instead, forbearance petitioners are kept waiting well after the expiration of the shot clock for the FCC to reformulate and issue orders on remand.
Hopefully the FCC will use its extra time as an opportunity to get things right on all accounts—Phoenix MSA, Qwest 4 and Verizon 6—by carefully considering both actual and potential marketplace competition. Regardless of the Commission's specific ruling on any of those petitions, the most important thing will be for the Commission to return to its precedents that take both actual and potential marketplace competition seriously. Let's hope the Commission won't be erring on the side of regulation by attempting to rationalize a departure from those precedents by mistakenly treating modern communications markets as static rather than dynamic.