Wednesday, July 21, 2010

The “FCC Act” – A Welcome Addition


Senator Jim DeMint, joined by cosponsors Senators Ensign, Thune, Hatch, Cornyn, Coburn, and Sessions, has introduced the “Freedom for Consumer Choice Act” (or aptly acronym-ed “FCC Act”). Like Senator DeMint’s proposed Digital Act Communications Act of 2005, this bill is a welcome addition to the current discussions concerning the need to update the Communications Act. Senator DeMint’s 2005 DACA bill was based, in large part, on work performed by a diverse group of prominent law and economics scholars on a Digital Age Communications Act project which I had the privilege of leading at the time. So it won’t surprise you that I remain partial to the market-oriented principles embodied in the “FCC Act”.

Without elaborating too much here, the FCC Act has obvious virtues. Foremost, it would require the FCC, before taking regulatory action, to focus, much more than it regularly does now, on whether communications providers possess market power that actually harms consumers. The agency’s regulatory actions would be guided by “jurisprudential principles grounded in market-oriented competition analysis” such as that commonly employed by the FTC or DOJ in enforcing the antitrust laws.

And another principal virtue of the FCC Act is that it would circumscribe the FCC’s rulemaking authority. Rulemaking would be tied tightly to showings, supported by convincing evidence, that a market failure has occurred which harms consumers.

In my view, given the development of competition in almost all communications markets, and the profound changes in the marketplace that the digital revolution already has wrought, the FCC Act points in the right direction for the overhaul the Communications Act desperately needs. Senator DeMint, and his cosponsors, deserve credit for offering a forward-looking approach.

Having said that, it may be that such a bold departure from the existing regime won’t win widespread approval in the near-term. If so, and if it is necessary for Congress to act to prevent the FCC from adopting harmful net neutrality regulations, there are narrower, market-oriented approaches that perhaps could be adopted more readily. These more targeted approaches could give the FCC authority to regulate broadband Internet providers based on showings of the exercise of significant market power coupled with proven consumer harm. I have suggested legislative language embodying one such approach here.

A final word on the legislative activity. On the day after the Comcast decision, I filed comments at the FCC outlining a suggested legislative approach for moving forward in light of the D.C. Circuit’s decision casting doubt on the FCC’s authority to impose net neutrality mandates on broadband ISPs. I urged the Commission to “immediately suspend its efforts to adopt net neutrality regulations and, instead, begin preparations to work with Congress to develop appropriate amendments to the Communications Act.”

Unfortunately Chairman Genachowski hasn’t suspended his efforts to adopt a new regulatory regime for Internet providers. But, to his credit, Genachowski, under the leadership of his able chief of staff, Edward Lazarus, has been facilitating discussions by some of the leading interested parties, including AT&T, Verizon, NCTA, Google, the Open Internet Coalition, and others, to determine whether common ground can be reached on a legislative approach. I see nothing wrong with Chairman Genachowski’s efforts in this regard. Indeed, I think it is right that he should focus the agency’s attention on facilitating a legislative solution.

On this score, it has been disturbing to witness the vitriol with which Genachowski has been attacked by Free Press, Public Knowledge, and the Media Access Project and others for facilitating discussions that possibly might lead to a satisfactory legislative solution. It is somewhat incongruous, and wrong, for the entities to be attacking Genachowski so vehemently for conducting so-called “secret” negotiations when, at the same time, Free Press, Public Knowledge, and the Media Access Project are all members of the Open Internet Coalition which has been participating actively in the discussions. And, of course, Google, the staunch pro-net neutrality advocate, is participating in the discussions.

It makes you wonder whether Free Press and its allies really will not be satisfied with anything short of a full government takeover of the Internet, perhaps placed under the control of the Post Office, or a revived Interstate Commerce Commission, which regulated the railroads until they were deregulated thirty years ago. 

Actually, rather than entertaining that scary thought, I would rather give a shout-out to Senator DeMint’s “FCC Act.” It is a welcome addition to the legislative debate. If nothing else, it is a model pointing the way towards a market-oriented communications policy framework fit for the dynamism of the digital age revolution.

Come to think of it, I am still partial to “Digital Age Communications Act” for the bill’s title.