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Washington Lags Consumers in Embracing Digital Age | Commentary

As they have throughout history, Americans are embracing technological change as a way to improve their quality of life. Just as the steam engine, electric light bulb and the automobile drove earlier revolutions, Internet-based communication is expanding our horizons and opening boundless opportunities. But Internet innovation could move even faster if Washington policymakers could manage to keep pace with the average American.

A new study by veteran telecom guru Dr. Anna-Maria Kovacs makes clear that 21st-century innovation is weighted down with antiquated 20th-century regulations. Across the country, Americans connect via text, Twitter, Skype and email, but Washington’s rules assume that telephone service is still king and that consumers have little choice.

The old phone system rules still see the world in silos — phone companies deliver voice service and are heavily regulated, cable companies offer TV and are unregulated, and wireless companies sell unreliable voice service that regulators discount as a competitor to wired phone service.

With the help of innovation, however, in 21st-century America, the old distinctions have been obliterated. Phone and cable companies compete head-to-head in the offering of voice, video and Internet access. There are now more wireless devices in the country than people. Thanks to one law (the Telecommunications Act of 1996), there is now a diverse communications market in which consumers choose the specific Internet, voice, digital information services and technologies they want from a wide range of providers.

“The most effective competition,” Kovacs writes, “is between different technology platforms that bring different characteristics and economics to bear.”

But those old silo-centric rules skew competition and misdirect investment. Some broadband providers — the former local phone companies such as AT&T and Verizon — are compelled by regulation to maintain the old phone network on par with the new. That means billions of dollars that should be invested in Internet-based innovation are directed, by Federal Communications Commission rules, into an antiquated phone network that more than two-thirds of Americans have stopped using and thousands more leave behind every day.

It’s as if towns still require a hitching post in front of every store, force the bus company to maintain streetcar tracks, or insist on backup electric fans in every air-conditioned office.

By contrast, cable TV companies, wireless operators, satellite providers and new broadband entrants such as Google are free to invest in modern facilities as they see fit in order to give consumers the services they want without any obligation to keep up older networks.

The disconnect between antiquated phone rules and the reality that Americans experience daily in the marketplace results in distorted competition, stifled innovation, limited choice and increased costs for consumers. America owes consumers an updated set of rules that fits today’s reality — not deregulation, but smarter regulation that protects consumers, ensures public safety and also allows every communications provider to put its dollars into bigger and better networks.

Arguing for liberating investment dollars from antiquated technology, Kovacs observes: “Consumers will be best protected if all resources are devoted to the networks that they have chosen to use rather than being wasted on the networks most have abandoned, and that the rest are likely to abandon within a few years.”

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