You are here

Asymmetric Absurdity in Communications Law & Regulation

You can’t make this stuff up.

Asymmetric Realities: The five most valuable companies – Apple $802b, Alphabet-Google $688b, Microsoft $585b, Facebook $500b, and Amazon $475b – are together worth an unprecedented $3 trillion and widely-appreciated to be dominant in the communications-driven businesses of smartphones, search advertising, subscription business productivity software, social advertising, and ecommerce platform services respectively.

In Washington’s theater of the absurd, these well-known, winner-take-all platforms, are playing the role of victims of potential harms, that supposedly can’t afford to shoulder the potential risks for the potential net neutrality problems that they allege are potentially serious, when they produce $131b annually in free cash flow and have $357b in cash (mostly overseas).

The richest and most powerful among us are collectively urging the FCC to specially protect their businesses by continuing to maximally regulate their communications counterparts with the “strongest possible” utility regulation in the FCC’s 2015 Open Internet Order, that conveniently advantages the most dominant edge platforms most with a de facto permanent price of zero for their outsized usage of America’s downstream Internet infrastructure.

That’s winner-take-all thinking.

Asymmetric Competition: The FCC’s September wireless competition report to Congress found effective competition, because America leads the world with four national mobile wireless network providers that also resell their network capacities, and because wireless access, availability, usage, and speeds have all increased steadily, while prices have decreased substantially.

When the FCC soon completes its annual video market competition report the evidence will be clear that America’s video market also is vibrantly competitive with vastly more video distribution and content options and choices than anywhere in the world.

Absurdly, the FCC currently maximally regulates competitive communications companies as if they are monopoly telephone utilities when they obviously are not.

That also absurdly means that the tech platforms that many see as real “utilities” given their exceptional dominance – Google, Facebook, Amazon, Microsoft, and Apple – are effectively immunized from any FCC regulation, ironically under section 230 of the Title II Common Carrier part of the Communications Act.

Asymmetric neutrality expectations: In this Washington theatre of the absurd, competitive companies with no significant track record of engaging in anti-competitive traffic discrimination, and which have publicly committed to: net neutrality principles; be transparent; and not anti-competitively block or throttle traffic -- are expected to maximally regulated, when the dominant intermedia platforms are not, despite having discrimination-driven business models, notoriously non-transparent algorithms and network practices, and minimal competitive accountability to be neutral.

Asymmetric Regulation: This one-page chart shows the absurdity of how companies serving the same consumers with similar services face starkly asymmetric regulation.

Asymmetric Regulatory Classification: The origin of this asymmetry was technological in the 1960s when monopoly regulated telephony threatened to stifle nascent unregulated computing services. From the 1960s through the 1980’s, the FCC through a series of “Computer Inquiries” ensured that telecommunications remained regulated to enable computer data services to flourish.

The 1984 break-up of AT&T, the 1994 privatization of the Internet backbone, the passage of the 1996 Telecom Act, and the FCC’s 1998 classification of broadband as an information service all largely completed the convergence of communications and computing.

However, the 2015 FCC Open Internet Order was so radical and destructive because it reversed a consistent fifty-year government policy trajectory to facilitate the convergence of communications and computing, by effectively ruling one-way convergence.

Communications companies could not innovate and converge into the unregulated information technology space without maximal regulation, but information technology companies could innovate, converge, and poach regulated communications revenues without the same regulation.

Not only is the 2015 FCC’s one-way vision of convergence wrong on the law, precedent, facts and trajectory, its asymmetric regulation is profoundly unfair and destructive, because it encourages regulatory arbitrage and winner-take-all outcomes over market competition and a fair playing field.

Conclusion:

Congress must recognize communications and information technologies and companies converged long ago. The law and regulation must converge too -- soonest.

In 2017, the government notion of asymmetric regulation of telephony vs. data and telecommunications services vs. information services, has become an increasingly obsolete notion because information technology companies can do most anything a communications company can, and currently are.

Obsolete asymmetric telephone or data communications law and regulation, needs to modernize to adapt to the fully-converged symmetric consumer reality in the marketplace.

Current asymmetric regulation ill-serves everyone but the online platforms who depend on regulatory arbitrage and government favor to dominate their markets and users.

Congress should modernize communications law to be symmetrical with one law, one set of rules, and one enforcement regime that’s consumer-centric, technology-neutral, and covers every entity involved in communications, privacy and cybersecurity in the same way.

Same consumers. Same rules.

***

Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, an internetization consultancy for Fortune 500 companies, some of which are Google competitors, and Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests. He is also author of “Search & Destroy: Why You Can’t Trust Google Inc.” Cleland has testified before both the Senate and House antitrust subcommittees on Google.

Q&A One Pager Debunking Net Neutrality Myths