Regardless of the outcome of tomorrow's presidential and congressional elections, there is a widespread consensus that, given the marketplace realities spurred by the digital revolution, our nation's communications laws and policies are in need of serious reform. With respect to the matter of communications policy reform, the question is not so much if, but when.
So, I am particularly pleased to announce the publication by Carolina Academic Press of the Free State Foundation's latest book, Communications Law and Policy in the Digital Age: The Next Five Years. (Ordering information is below!)
With the growing consensus for meaningful communications reform, the book's release is especially timely. While the book contains much in the way of describing the current state of affairs, certainly a necessary predicate to understanding why law and policy should be changed, its primary focus is forward-looking. In other words, the emphasis is on how communications policy should be changed in the next five years, and beyond.
I hope you will get the book and read it from cover to cover. As a bit of an enticement, here is a brief preview of the book's chapters. You'll note that they are authored by some of the nation's leading experts on communications law and policy.
In the Introduction, I set the stage by explaining why the marketplace and technological changes that have occurred since the last major revision of the Communications Act in 1996 have rendered existing law and policy woefully outdated, if not obsolete. In the more than fifteen years since passage of the Telecommunications Act of 1996, which was grafted onto the original Communications Act of 1934, we have witnessed a switch from analog to digital services and equipment, from narrowband to broadband network facilities, and, most importantly, from a mostly monopolistic to a generally competitive marketplace environment. These are fundamental changes that call for a very different communications law than the present one.
In my view, the new communications law should get rid of the current "stovepipe" regime in which regulatory activity is tied to different service classifications grounded in now outmoded techno-functional constructs, as well as the ubiquitous public interest standard that grants the agency wide-ranging discretion as it goes about regulating. The replacement regime should have at its core a competition-based, consumer welfare standard grounded in antitrust-like jurisprudential principles.
Representative Marsha Blackburn's contribution, Why We Need a Free Market Approach for the Communications and High-Tech Sectors, explains "why we must apply some conservative, deregulatory principles to the communications, information services, and high-tech market sectors." These principles, on which Rep. Blackburn elaborates, are: (1) the government's default position must be "do no harm"; (2) government needs to respect private markets; and (3) regulations need to be streamlined to better reflect the competitive and dynamic characteristics that define communications and technology markets.
In a chapter entitled Placing Communications Law and Policy Under a Constitution of Liberty, FSF Research Fellow Seth Cooper and I take Friedrich Hayek's path-breaking work, The Constitution of Liberty, and distill from it a set of basic principles that, in our view, are relevant to establishing consumer welfare-enhancing policies in today’s competitive, technologically dynamic communications marketplace. Applying these Hayekian principles to contemporary communications law and policy, we set forth a communications reform agenda for the coming years – an agenda that promotes free markets and the rule of law by respecting contracts and private property, maintaining the primacy of markets for determining prices and the quantities of goods produced, encouraging freedom to innovate free from unnecessary regulatory restrictions, and constraining otherwise unbridled administrative discretion.
Next is Christopher Yoo's chapter entitled Internet Policy Going Forward: Does One Size Still Fit All? At the outset Professor Yoo makes clear he is going to challenge the premise, which in significant part undergirds the FCC's Open Internet Order, that "the Internet's past success stemmed from the fact that there has always been a single Internet that was open to everyone." Not so, explains Professor Yoo, calling upon his acknowledged combination of technical, economic, and regulatory expertise. He suggests the various trade-offs that should be considered, say in loss of innovation and higher costs borne by users, if the Open Internet Order's "single Internet" claim is enforced rigidly by policymakers.
James Speta's essay, Reconciling Breadth and Depth in Digital Age Communications Policy, is a natural follow-on to Professor Yoo's piece. Professor Speta cogently explains why marketplace shifts attributable to new services and technologies coming to market point to the need for an entirely new Communications Act. As he puts it, the existing law "barely acknowledges the Internet and provides very little direction on the regulation of mobile services – the two areas in which communications services are moving most importantly." Professor Speta recommends that Congress adopt a new Digital Age Communications Act (DACA) along the lines of a model statute that he and I, along with many others, helped draft back in 2005.
In his chapter, Restoring a Minimal Regulatory Environment for a Healthy Wireless Future, Seth Cooper focuses on the FCC's regulation of mobile services, and especially the agency's more recent actions adopting a more activist regulatory posture relying on its public interest authority. Mr. Cooper's chapter contains an up-to-date detailed description of the wireless broadband marketplace that demonstrates its competitiveness and dynamism. He explains how recent FCC actions have eroded the minimal regulatory environment that existed before the Commission recently began adopting a more interventionist posture. Finally, he explains what the FCC needs to do by way of getting back on the right regulatory track.
Next, in Proposed FCC Incentive Auctions: The Importance of Re-Optimizing Spectrum Use, Michelle Connolly focuses on the upcoming incentive auctions to allow up to 120 MHz of high-quality spectrum currently used by television broadcasters to be reallocated to a more economically beneficial use. As Professor Connolly states, "[i]n light of the economic and social benefits that accrue from broadband availability and adoption, the public policy goal is to free up additional spectrum that could be used to provide mobile broadband services." Employing her expertise as an economist, along with the first-hand experience gained from serving two stints as the FCC's Chief Economist, Professor Connolly sets forth the theory of spectrum incentive auctions. And, perhaps more importantly, she explains how, in practice, incentive auctions should be designed to ensure their success in repurposing the maximum amount of spectrum reclaimed from broadcasters, while protecting taxpayers' interest as well.
In his chapter, Reforming the Universal Service Fund for the Digital Age, Daniel Lyons acknowledges that in November 2011, the FCC took meaningful steps to begin reforming the USF regime, including reorienting the fund's focus from ordinary telephone service to broadband access. But he proposes a much bolder reform program than the FCC's more modest reforms. Professor Lyons would target the distribution of subsidies to low-income persons so the program's cornerstone would "be a voucher program similar to a telecommunications version of the food stamp program, or a phone-provided broadband phone card." And he would jettison the current contribution methodology under which the USF subsidies are now funded by a surcharge (17% at the time the book went to press) assessed on all interstate calls. In its place, Professor Lyons suggests the "simplest and most elegant solution to the contribution problem is simply to fund universal service through a line of the federal budget like most other entitlement programs."
Ellen Goodman's thoughtful chapter, Public Media Policy Reform and Digital Age Realities, explains why the same market failure rationale that supported the public broadcasting system created in the 1960s no longer fits comfortably in today's digital world and why the country needs a redesigned public media regime that pursues innovation. Professor Goodman would retain the decentralized structure of the legacy public broadcasting system but build in more flexibility so that public media support can take into account, and be responsive to, changing digital marketplace realities. In the end, she concludes, "it seems inconceivable that ambitious telecommunications policy reform should ignore the carbuncle of the Public Broadcasting Act in its sweep through the calcified remnants of 20th century regulation."
The book's final chapter is Bruce Owen's Communications Policy Reform, Interest Groups, and Legislative Capture. In considerable detail, and based on long observation of communications policy sausage-making, Professor Owen bluntly explains how interest group politics, coupled with the FCC's subservient relationship to its congressional overseers, subverts reform efforts. Despite his portrayal of the difficulties of achieving reform in the face of the political economy realities, Professor Owen does not foreclose the possibility of success. He acknowledges that "it may be that the disconnect between the existing communications policies and the current marketplace realities will become so great, coupled with imperatives driven by the need for U.S. companies to compete in the global economy, that conditions will become ripe for implementation of meaningful reform." Indeed, in the end, Professor Owen concludes, even a bit optimistically, that, with "continuing education" as a spur, the "good news" is that the anti-reform policy bias cannot continue indefinitely in an economy that faces global competition, "and therefore it will not."
To play upon Professor Owen's words, the good news is that there is truly a lot of "continuing education" jam-packed into the Free State Foundation's newest book. I am confident that when our nation's communications laws and policies are comprehensively reformed – as they ultimately must be – many of the free market and rule of law ideas presented in Communications Law and Policy in the Digital Age: The Next Five Years will be at the core of the reform.
Getting from here to there – from policies still grounded in an analog-era mindset to free market and rule of law-oriented policies reflecting the competitive realties of the digital age – will not be easy or accomplished without a struggle. But I am sure that Communications Law and Policy in the Digital Age: The Next Five Years will advance the cause of sound communications policy.