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Deregulation

FCC Needs to Update Sect. 652 to Conform with Market Reality & Congress' Intent

An easy way for the FCC to show respect for the President's Executive Order to eliminate "outmoded" and "excessively burdensome" regulations would be to grant the NCTA's petition for a declaratory ruling, that Section 652 of the 1996 Telecom Act, (intended to encourage incumbent local telcos and cable companies to compete in telephony and video) was not meant to prohibit pro-competitive mergers between cable companies and new entrant CLECs that didn't exist in 1996 and thus have no market power.

The FCC Sect. 652 status quo is counterproductive in perversely thwarting a central competition policy goal of the 1996 Telecom Act: i.e. promotion of cable-telco competition.

  • By creating unnecessary regulatory uncertainty around actual and potential cable-CLEC mergers, at both the FCC and with local franchising authorities, the FCC effectively has created a regulatory barrier to more cable-telco competition.
  • We cannot "win the future" with a broadband Internet "excessively burdened" with anachronistic analog anchors like the FCC's current interpretation of Sect. 652.

 

Specifically, the NCTA's petition exposes a dysfunctional local franchising authority review process that has no standards or time limits, which makes the overall regulatory review process for cable-CLEC mergers uncertain, arbitrary, and "excessively burdensome."

FCC's Net Neutrality Rationale Crumbling in US & EU -- Dead Regs Walking?

The fundamental rationale undergirding the FCC's net neutrality regulations in the December Open Internet Order appears to be crumbling before our eyes in both the U.S. and the EU -- enough so to raise the question -- could they be "dead regs walking?"

In the U.S., a new White House Executive Order calls on independent agencies like the FCC to revisit "regulations already on the books to reduce outdated, unjustified regulations that stifle job creation and make our economy less competitive."


Why an Exception for the FCC's "Unjustified" and "Pointless Red Tape?"

In a Washington Post op-ed entitled "A smarter approach to cutting red tape," Cass Sunstein, the White House's Regulatory czar, laid out a laudatory plan for Federal executive agencies "to eliminate burdensome requirements that hinder economic growth and job creation," with a big loophole problem -- the plan does not apply to "independent" agencies like the FCC and its burdensome net neutrality regulations in the Open Internet order.

It makes no sense that the FCC's net neutrality regulations, the veritable poster child of "unjustified burdens and pointless red tape," have escaped:

 

  • The fact that the President directed: "all executive agencies to cut costs, to promote predictability, to streamline paperwork requirements, to choose the least burdensome approach, to listen to those affected by the rules and, through our 'regulatory look-back' process, to eliminate rules that just don't make sense."
    • There was no net neutrality problem to fix before the FCC order, and there is still no net neutrality problem the FCC needs to address now.
    • So the FCC's Open Internet order is the worst of all worlds -- it is basically all cost and no benefit.

 

More problematic is that independent agencies, like the FCC, supposedly are "creatures of Congress," but this FCC ignored a majority of Congress last year that asked the FCC to defer to Congress on net neutrality.

A Critical FCC Reform Needed To Keep the FCC Current

One of the simplest and most important FCC reforms Congress could make would be to modernize and streamline the FCC competition report process to stay current with the Internet competition era.

 

  • Simply, Congress should eliminate and consolidate all legacy analog technology-specific "silo" competition reports (e.g. reports on wireless, video, or satellite competition, etc., including the 706 report) and replace them with one periodic Internet Competition Report that is forward-looking, flexible and dynamic so that the FCC and Congress can adapt and keep pace with the ever-evolving Internet competitive landscape.
    • Since the sector is competitively converging, the FCC's competition reporting process logically needs to converge as well.
    • This common sense best practice of replacing and consolidating outdated and redundant reporting efforts would not only save money in tight fiscal times, but also result in a more accurately informed FCC and Congress.
    • The FCC cannot stay current or help "win the future" by relying on fossilized competition reporting processes based on outdated technology and competitive assumptions.

 

Problems with FCC Silo Competition Reports

Denying Competitive Substitution is Weakest Link of FCC's De-Competition Policy

In order to justify broadband price regulation in the Open Internet and Data Roaming orders, the FCC and FreePress must continue to undermine Congress' competition policy by denying the increasingly obvious and incontrovertible facts that users competitively substitute broadband services between various broadband technologies like copper networks/DSL, cable modems, fiber, WiFi/WiMax, wireless broadband, and satellite.

 

FCC's In Search of Relevance in 706 Report

The FCC's latest arbitrary and capricious torturing of the facts, law, and common sense, in its most recent 706 report, makes it obvious that the FCC is "in search of relevance" and highly insecure about its authority and role in the broadband competition era.

 

  • Apparently, the FCC now sees competition-driven consumer benefits as a threat to the FCC's relevance, role and authority.
    • If the bipartisan policy/law of promoting competition succeeds, then the FCC by definition has less and less to do.
  • It is becoming increasingly apparent that many at the FCC don't want competition policy to succeed, because they vainly believe that the FCC can, and should, mandate social outcomes "better" than market forces and consumer choice can produce via competition.

Thus the pro-regulation forces at the FCC are increasingly and proactively seeking to discredit competition policy wherever possible by ignoring and torturing any facts, evidence, logic and common sense that do not forward their government-centric-view that "expert" FCC regulators invariably know best.

    Consider the common thread between:

    Will the FCC Lose the Future?

    Do the actions of the FCC match the FCC's words of support for the President's commitment to the "least burdensome tools to achieve regulatory ends?"

     

    • Does the FCC truly agree with the President's State of the Union that: "We can't win the future with a government of the past?"

     

    • There is much troubling evidence that the FCC mindset is firmly wedded to the regulatory past and not committed to competitively "winning the future."

     

    There are three disturbing trends at the FCC: preservationism, pessimism and silo-ism -- that all strongly indicate that the FCC's trajectory is more geared toward losing the future than winning the future.

    I. FCC Preservationism (Shackling the future with the mindset, approaches and legacy networks/regulations of the past.)

    Most of the last year the FCC has been obsessed with FCC historical preservation, i.e. strongly considering restoring the FCC to its past glory days with new Title II common carrier regulation of the Internet, but then settling on a 1934 era interpretation of the FCC's Title I authority at its most boundless.

     

    Level 3 & Net Neutrality -- Ignorance Unleashed!

    FreePress' latest unfounded accusations that the Level-3 peering dispute with Comcast is somehow a net neutrality violation exposes how embarrassingly ignorant the extreme left is about how the current Internet came to be and actually works.

    Net neutrality funder Soros says; traditional free market theory flawed -- how wrong he is...

    The USA Today's business section cover story is on George Soros, who is notable here as probably the second biggest funder of net neutrality/information commons causes after Google.

    The appropriately skeptical article, by David Lynch, has a second page-headline that sums up George Soros' government-first, economic point-of-view: "Traditional free market theory flawed."

    George Soros is really the poster child for net-neutrality-ish thinking, which is that the few, the truly wise, like Mr. Soros, know what is truly best for everyone else -- and that the whole free market concept of accumulating all the actions of all market actors through supply and demand to determine prices or market equilibrium -- is all wrong and a waste of time -- according to Mr. Soros.

    • Why include all this riff-raff -- like consumers and businesses -- be free to make constant decisions and adjustments, when the brilliant elite thinkers like Mr. Soros can cut through all the free-market mumbo jumbo and simply tell people what the right economic answers should be to any economic question?  

    Just like the Google/Soros astroturf net neutrality army who think they can rename an issue and demagogue it into the mainstream popularity, Mr. Soros now has his very own theory of economics, which he calls "reflexivity" (think knee-jerk-ivity), that Mr. Soros proposes replace current free-market theory and thinking.

    Takeaways from Senate net neutrality hearing; & proposed FCC framework on network management

    The big surprise of the hearing was that Chairman Martin was a last minute witness. The Committee created a new first panel for just Chairman Martin, which ended up consuming about 60% of the allotted time for the whole hearing, and which was also the prime time when most of the Senators and press were in attendance. This surprise testimony practically relegated the other panel, which was expected to be the main event, to more of sideshow status.

    Overall, this hearing was slightly more balanced than its House counterparts. Chairman Innouye continued his very measured and balanced approach, in that he said things that each side wanted to hear.

    • Given that the Senate Commerce Committee is historically quite bipartisan, and that this committee remains split largely down the middle, I doubt if we will see much real movement on Dorgan-Snowe's net neutrality bill this session.
    • If Chairman Inouye actually thought net neutrality legislation should make progress, he wouldn't have waited fifteen months since the introduction of the Dorgan-Snowe bill to hold the first hearing on it.
    • It appears the real purpose of this hearing was basically to let off steam and throw the net neutrality activists a bone. 

    The real import of the hearing was two-fold: 

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    Q&A One Pager Debunking Net Neutrality Myths