Two weeks ago, the Phoenix Center held its Second Annual Rooftop Policy Roundtable where we focused our attention on the complex issue of the IP Transition. We really appreciated everybody coming out to the event, particularly given the Washington DC heat and humidity (not to mention the thunderstorm). After giving myself some time to think about the excellent conversations we had, I thought I would use this blog to highlight what I believe to be the major takeaways from the event.
First, it became immediately apparent (at least to me) that the IP Transition is not a discrete issue; instead, the IP Transition concerns the whole regulatory ecosystem surrounding the communications industry. Indeed, the Roundtable made clear to me that if we are to develop a cohesive regulatory paradigm for an IP-based world, then we must also include in the conversation such complex and diverse issues such as interconnection, copper retirement, universal service, intercarrier compensation, carrier of last resort obligations, etc. Simply stated, the IP Transition is not going to be a quick and easy process for us to work through, but it’s an important one and we shouldn’t be afraid to take it on.
Second, market forces are pressuring the industry to undergo a radical transformation and, with such transformation, we are going to need to re-negotiate the “social contract” that has governed telecommunications for the last one hundred years—i.e. a copper loop to every home (regardless of location) at just and reasonable rates. With the rise of inter-modal competition, we are no longer in a monopoly world where in exchange for serving 100% of the service territory, the local telephone company has 100% of the customers bearing 100% of the costs of the network. Today, consumers have choices (cable, wireless, over-the-top, etc.), so most landline firms now serve less that a fifty percent (and often times less than that) of their network’s footprint and, as such, their ability to fulfill a social contract made under monopoly conditions becomes increasingly impossible to satisfy. As the recent effort to restore service in Fire Island bears out, we need to ask and answer this difficult question: what do we as a society believe is an acceptable level of baseline telecommunications service for all Americans? And, what do we as a society believe is an acceptable burden on consumers faced with a changing baseline?
Third, as I highlighted in a blog last year, while the removal of unnecessary regulation should certainly be a primary focus of the FCC’s policy inquiry into the IP Transition, we should also be focusing on the issue of regulatory symmetry. That is, does it make sense to maintain asymmetric regulation for one select segment of the industry (the ILECs) under current market conditions? As we begin the complex conversation about developing a regulatory paradigm to facilitate the IP Transition, common sense would dictate that under today’s market conditions that perhaps a good place to begin is to remove antiquated regulatory asymmetries so that everybody—ILEC, CLEC, Cable, Wireless, etc.—starts off on the same policy footing.
Fourth, given the magnitude of the required changes, I believe incoming FCC Chairman Tom Wheeler will need to exercise both extreme creativity and political will to move the IP Transition forward. Sadly, history makes me a pessimist.
For example, the Commission to date has steadfastly refused to use its forbearance authority under Section 10 to remove significant chunks of regulatory underbrush so we can focus on the more difficult issues at hand. (Yes, I realize the FCC has made great hay over some of its recent grants of forbearance, but removing outdated reporting requirements that generate information no one at the agency tracks or values is not meaningful deregulation.) More importantly, using a antitrust-type “market power” analysis in its Phoenix Forbearance Order, the agency has effectively rendered Section 10 moot. If we want to move the process forward constructively, then the Commission needs to get back to basics and determine the costs versus benefits of continued (or new) regulation.
In the same vein, the Commission has been reluctant to jump into wire center trials with both feet in order to see what works and what doesn’t under a variety of situations. Instead of holding comprehensive wire center trials in various geographic locations, the Commission is instead opting to hold a series of trials with each trial focusing on a discrete issue (e.g., VoIP interconnection, Next Generation 911, wireless versus wireline substitution). While I suppose a half a loaf is better than nothing, if the Commission really wants an accurate picture of what works and what doesn’t, then comprehensive wire center trials should not be feared; they should be welcomed and encouraged.
Finally, I am firmly convinced that if you want to have a meaningful conversation about important policy topics, then here is no better forum than sitting around with smart people over drinks and cigars in a collegial environment to hash things out. That’s how we at the Phoenix Center often come up with our research agenda, and we are glad we could share the experience with so many of our friends in the tech and telecommunications community at our Rooftop Policy Roundtable.