NetCompetition submitted this proposed communications competition framework in response to House Energy and Commerce Committee Chairman Fred Upton’s and Subcommittee Chairman Greg Walden’s call for input on defining competition and competition principles for a potential Communications Act Update next Congress.
Modernizing the Communications Act – Modern is Consumer-Driven Competition
Obsolete presumption of telephone and cable monopolies: The core policy problem with monopoly-premised communications law is that it is hostile to the reality of a vibrantly competitive communications marketplace.
- The 1934 Communications Act incorrectly presumes telecommunications is a monopoly. Since 1996, long distance has evaporated from a court-ordered artificial industry to essentially a free feature. The legacy telephone monopoly PSTN has become so obsolete and competitively irrelevant that the FCC has committed in the IP transition to shut down the legacy telephone PSTN in the next few years.
- The 1992 Cable Act incorrectly presumes cable is a monopoly. Since 1992, almost half of American households have switched to a cable competitor’s video subscription service (via satellite, fiber or DSL), and non-facilities based Netflix has become America’s leading video subscription service provider.
Transitional legislation unable to complete the full transition to a competitive marketplace: The core policy problem with the 1996 Telecommunications Act -- that changed American communications policy from monopoly to competition -- is that it was transitional. It never prepared for the full deregulation warranted by the end of telephone or cable monopolies and the advent of dynamic facilities/platform-based, Internet ecosystem competition.
- A legacy transitional mindset in a fully competitive communications marketplace causes inherent regulatory conflicts of interest where regulators have self-preservation incentives to subjectively never acknowledge competitive reality and to forever move the goal-posts of what is considered “competitive” in order to retain their transitional regulatory powers.
- A transitional mindset also tends to interpret a regulator’s role to “promote competition” as effectively re-distributing market share or assets from companies that have more to companies that have less, via regulatory mandates or forced subsidies, rather than standing down to allow market forces to deliver the consumer benefits of differentiated market choices, prices, innovation and investment.
- A modern competition mindset requires dynamic congressional oversight meaning periodic statutory reauthorization of the Communications Act every five years to ensure the law keeps pace with the rapid change in the communications marketplace.
Define “competition” as inherently:
- Comprising commercial rivals, not government ones;
- Predicated on consumers deciding market winners and losers, not regulators;
- Ruled by market economics of risk and reward, not politics or lobbying for special treatment;
- Involving voluntary commercial activity not forced by government; and
- Offering a level-playing-field that is technologically and competitively neutral.
Define “unfair competition” to include a governmental entity (municipality, state or Federal entity) offering a publicly rivalrous offering to a commercial communications entity over which it has any governmental power.
By Scott Cleland, Chairman of NetCompetition, a pro-competition e-forum supported by broadband companies www.NetCompetition.org
