Monday, February 14, 2011

FCC's Elimination of CEI and ONA Rules Long Overdue

At its February 8th public meeting, the FCC issued a proposed rulemaking to remove sorely outdated and unnecessary reporting requirements that apply to Bell Operating Companies. Eliminating old, costly, and unnecessary regulations is always a good idea. So this is a welcome proposal by the FCC. But at the same time, it raises a serious question: What took the Commission so long?

Both the comparably efficient interconnection (CEI) rules and the open network architecture (ONA) rules were adopted as part of the FCC's Computer III proceedings, beginning back in 1986. CEI and ONA rules were offered as non-structural regulatory alternatives to the structural separationist regulatory apparatus provided under Computer II. I'll leave the history and details of the Computer Inquiry proceedings and the CEI/ONA regime to prior accounts such as the FCC's Wireline Broadband NPRM (2002) or to FSF Board of Academic Advisor Member and Professor Gerald Brock's book Telecommunication Policy for the Information Age. But two points about CEI and ONA are in order.

First, these Computer III reporting requirements are anachronistic rules based on assumptions that have been rendered obsolete by the development of broadband Internet services, wireless, and other technological developments in the advanced communications marketplace. As the FCC put it in its Wireline Broadband NPRM, CEI and ONA requirements were based on the "implicit, if not explicit, assumption that the incumbent LEC wireline platform would remain the only network platform available to enhanced service providers."

Second, the CEI and ONA reporting requirements are onerous, costly, and unnecessary. ONA requirements, for instance, include annual reports, semi-annual reports, quarterly nondiscrimination reports, and company officer-signed annual affidavits of compliance with those reports. Those reports must include detailed descriptions of various ONA services, federal and state tariffs, and projected deployment schedules for ONA services.

In complying with these ONA reporting requirements, Bell Operating Companies have spent years assembling boxcar loads of files and documents for routine delivery to the FCC. But it's doubtful that during the years of ONA reporting that many or any of these file-filled boxes were ever relied upon or even read. As the Commission pointed out in its recent proposal to eliminate CEA and ONA rules: "[T]he Commission does not rely on any of these submissions in the course of its decision making."

Moreover, the FCC's proposal for eliminating CEI and ONA reporting requirements states that "[n]o commenter or reply commenter in this docket argues for the retention of any of the BOC-specific CEI and ONA reporting requirements." Similarly, "no commenter voiced any opposition to their elimination or advocated in support of their continue application" in response to comments made in the Commission's 2006 and 2008 Biennial Review proceedings.

So what prompted the FCC to hang on to CEI and ONA reporting requirements that appear never to have offered any benefit and were based on market assumptions long since overtaken by market developments? The agency shouldn't have had to wait until the President's recent pledge to reduce or eliminate unnecessary and outdated regulation. Clearing out antiquated rules should be part of the modus operandi for all regulatory agencies and a constant goal rather than a counterintuitive task that requires an extraordinary public relations push.

Unfortunately, the Commission's prolonged retention of CEI and ONA reporting rules coincides with the FCC's foot-dragging over the past few years in granting petitions for forbearance relief from other Computer Inquiry III rules. The fact that the FCC is only now acting to eliminate CEI and ONA reporting requirements also points to the agency's institutional inclination to regulate today's market players under yesteryear's regulatory assumptions.