The FCC Takes A Positive Deregulatory Step

Late last night, the FCC largely granted AT&T's request that the agency forbear from continuing to apply decades-old cost assignment rules that no longer serve and useful regulatory purpose. As I explained in this space yesterday in "Midnight Madness," the rules "were put in place when AT&T was the dominant carrier in a monopolistic environment." In that era, rates for various AT&T services were based on cost assignments, admittedly necessarily arbitrary, to various serivces. As I said yesterday, "this is no longer true in an era when rates are capped by both the FCC and the states."

It seemed to me this was an important test of the FCC willingness to recognize that outdated and costly rules which no longer serve a useful purpose in today's competitive environment should be eliminated. And, as I explained in two earlier pieces, "Bearing in Mind Forbearance's Purpose" and "Bearing in Mind Forbearance's Purpose-Part II," it was an important test of the Commission's willingness to use the forbearance authority contained in the Telecom Act of 1996 to accomplish such deregulatory purposes. It is very rare for Congress to include such forbearance authority in a regulatory statute. Recognizing the dynamic and fast-changing nature of technology and the communications marketplace, Congress included forbearance authority in the '96 Act for a good reason.

AT&T's petition asking the FCC to stop applying costly rules that no longer made any sense presented a paradigmatic case for the exercise of forbearance. There will surely be criticism from those who refuse to recognize the dramatic changes that have occurred in the marketplace, and who oppose any efforts to change the FCC's rules to recognize the new competitive realities. But FCC Chairman Kevin Martin, and Commissioners Deborah Tate and Robert McDowell deserve much credit for exercsing leadership and taking a worthwhile deregulatory step.