It’s Time to Update Telecom Laws

Posted June 1, 2005 at 1:07pm

As chairman of the House Energy and Commerce subcommittee on telecommunications and the Internet, I believe that now is the time for Congress to come together to update our obsolete telecommunications laws.

Why now? Because the telecom marketplace has evolved dramatically since the Telecommunications Act of 1996 became law. To put the need for updating the law into perspective, the 1996 act hardly even mentioned the word “Internet.” We need laws that will keep pace with the ever-evolving tech sector. New technologies like phone calls over the Internet were barely in the conception stages a few years ago,

let alone in 1996.

As the 1996 act was debated in Congress, the telecommunications marketplace was virtually dominated by the Bell companies (and other incumbents) that provided local voice services over traditional, circuit-switched copper networks and several carriers who provided the long distance service. Consequently, much of the debate focused on injecting competition into the “plain old telephone service” in both the local and long distance markets as we knew them then.

The regulations implementing the 1996 act relied on the government to manage this competition, and — no surprise — when the government anointed itself the chief regulator in lieu of market forces, investment in the telecommunications sector initially rose, but then sharply dropped. To make matters worse, the wrong-headed regulatory decisions resulted in numerous legal challenges, causing the Federal Communications Commission to rewrite many regulations to comply with the various, successive court remands. Consequently, there has been a dark cloud of regulatory uncertainty hanging over the tech sector, further depressing investment in the industry.

Despite these hindrances, tremendous advances in technology have emerged since 1996. For instance, instead of “plain old telephone service,” many Americans rely on other means to communicate — using cell phones, e-mail and other personal wireless devices with service offered from a wide array of providers. Now, consumers also have the option to utilize services enabled by Voice over Internet Protocol, delivered by the phone company, cable company or some type of a VoIP-only provider (like Vonage or Skype). Broadband over Power Line, delivering high-speed Internet via the electricity infrastructure, is another emerging technology, which many Americans may find attractive.

In addition, we are starting to witness the advent of IP-video services offered by telephone companies that will bring to the consumer exciting, new video services with IP-enabled voice and/or data functionality built into them, adding another type of video offering to compete with cable and satellite for the hearts and minds of the American consumer. Without a doubt, inter-modal, facilities-based competition has taken root as voice, video and data are being delivered into homes and businesses over multiple technological platforms.

All of this robust competition is a by-product of free-market forces that have been allowed to take root where government, by and large, has kept its hands off. The wireless industry is the “poster child” of how facilities-based competition can take root in the absence of excessive government regulation. Our experience with implementation of the 1996 act should teach us to not repeat the mistakes of the past. I suspect we knew no better then; but we know better now. Our experience with the 1996 act should have taught us is that investment and innovation goes into the less regulated space.

As we speak, there are multiple government proceedings at both the federal and state level concerning the proper regulatory treatment under the 1996 act of broadband, VoIP and other advanced, IP-enable services. Hanging in the balance is whether these services will be managed by the government or allowed to flourish in open markets, where they have already begun to show great promise. My fear is that if the government chooses a path of regulation, then we will see these emerging technologies smothered by red tape.

But it’s not enough just to rely on regulatory proceedings to ensure that these new technologies are not choked-off by regulation. Congressional action is essential.

Congress must retool the 1996 act — to bring it up to speed to today’s — and tomorrow’s — marketplace and technology — so that the specter of the government trying to manage this competition is foreclosed once and for all.

Over the last several months, we have held numerous hearings examining the growing facets of the IP marketplace. We have been laying the groundwork for legislation which I hope will be considered by the full House by the August recess.

We need to create new rules for this new technology. Rules free from government management so that we can provide the proper environment for capital markets to release investment in the advancement of new technologies. This would have a tremendous warming effect on the still too chilly technology economy, stimulating investment and jobs. As goes the tech sector, so goes the economy. Above all, this would bring the consumer new services by which they can communicate, shop, educate, entertain and otherwise improve their lives. Our daily lives have been transformed over recent years. Who knows what the future holds? As such, new rules would produce a win-win-win for America. And consumers will be better for it.

It’s well past time that our telecom laws catch up to the burgeoning tech sector.

Rep. Fred Upton (R-Mich.) is chairman of the House Energy and Commerce subcommittee on telecommunications and the Internet.