Telecom Act Rewrite — I've Always Depended on the Kindness of Monopolies

I’ve just read through the “Broadband Investment and Consumer Choice Act” (72-page pdf available here) introduced by Senator Ensign (R-NV) (and co-sponsored by Senator McCain, to my intense disappointment). In the name of deployment of broadband, consumer choice, free markets, yaddah yaddah yaddah, the bill strips the states and local governments of any consumer protection function and frees your local monopoly providers to serve you! Oh, and without the danger that your local government might decide to supply a pesky competitor. After all, we wouldn’t want you, the local citizen, to decide to foolishly waste your own tax dollars! We, the federal government, know best! Ain’t federalism grand? Except, of course, when it isn’t . . .

Knowing that the average reader here does not share my lawyerly obsession with legal definitions and so forth, I will do my best to boil this down to effects and skip over the specifics except where I absolutely must.

What the act generally does is strip the states and local governments of any regulatory power over telecom and cable providers. Local franchising authorities just vanish. State commissions become enforcement arms of the FCC. The FCC, however, is likewise limited to a few very limited regulatory functions.

The theory apparently is that if we remove all pesky regulations, and have only one place to go for regulation and enforcement of any video, cable or broadband service in the entire country, we will get stellar deployment and competition and a bright new universe of cheap affordable video services, voice services, and broadband internet services.

I can’t help but point out that we did something like this in 1984. To get cable going, Congress just about completely deregulated it and preempted the states and the local government from imposing significant regulation. We did indeed get deployment of systems, but at the cost of lousy quality of service, monopoly prices, and cable control of video content. It got so bad that Congress reregulated cable in 1992, over a presidential veto no less. But most of the damage was done and we have the cable monopoly system we know and love today (more on that in a future post).

In fairness, the Act is not entirely devoid of pro-competitive provisions. The FCC will still regulate to do the following:

1) Network providers can’t keep subscribers from using competing voice over IP services;

2) Network providers can’t keep subscribers from reaching any lawful content or using any lawful application (sometimes called “network neutrality”). But there is an exception. A provider can put any limitation in its terms of service. So if your provider reserves the right in its terms of service to mess with your content without alerting you, too bad. Of course, you can always negotiate for a diferent service contract. . . .

3) Network providers have to let you attach any device you want to the network. So you can buy your own fax machine or use Tivo rather than cable’s equivalent service, rather than going back to the days when you could only rent equipment from Ma Bell or Cousin Cable (The “Cartephone” principle).

4) Cable networks can’t lock up programming in exclusive contracts to keep rivals from offering competing video services (“program access” and closes the “terrestrial loophole”). So Comcast would have to let Verizon and others have access to its Philadelphia and New England Sports Network programming. This also applies to video on demand services.

5) Keeps basic “lifeline” service available.

On the downside, the Act:

1) Eliminates any state or local control of quality of service or prices. (While cable prices were deregulated in 1996, some states still have telephone rate controls and local governments still set cable quality of service standards).

2) Eliminates any build out requirements or “anti-redlining” provisions. (Most local franchises require cable companies to build out to the entire franchise area, to ensure that “less profitable customers” to use the industry euphamism for minorities and poor people generally, get service on the same terms as “profitable customers.”

3) Eliminates any private right of action against video or telephone providers. Your only recourse is the FCC complaint process, handled by the vestigial state or local authority.

4) Limits FCC authority to regulate anything but 911 and very limited quality of service provisions.

5) Eliminates any requirement for phone companies or cable companies to resell capacity to third parties — “bye bye ISPs!” Of course, telephone companies are still free to voluntarily allow DSL resale by thrid parties, under terms that the phone companies will set.

6) Eliminates need to open up to competing long distance providers. (Be interesting to see what happens to pre-paid long distance cards and other resellers.)

7) Any interconnection between networks (e.g., my independent facilities based wireless ISP and some internet subscriber on another network) is now effectively deregulated and subject only to private negotiation. There is a general interconnection requirement, but parties are to negotiate their own terms, subject to a complaint process at the FCC. State or local authority preempted, as is any private right of action.

8) Removes any limits on how big cable networks can get, and eliminates the ability of independent video programmers to buy their way on to cable systems (“leased access”).

And, my personal favorite:

9) PREEMPT LOCAL GOVERNMENTS FROM BUILDING COMPETING NETWORKS. The Act basically adopts the “Pennsylvania Plan.” If a local or state government wants to build a network, it must issue a request for proposal (RFP) to see if any private company wants to build the network instead. Only if no private provider offers to build a “comparable” network can the state or local government build and operate the network. Any system in existence at the time of the act is grandfathered, but only if it does not expand its network or type of service offered. If you are on the wrong side of the street when the statute passes, too bad for you.

I find this last (Section 15 of the Act) particularly outrageous in light of the fact that more than ten states have explicitly considered and rejected proposals and limitations like this. Most recently, when the citizens of Lafayette had a referendum to decide whether to build a public network despite the availability of both Bell South and Cox, 62% of the voters approved building a public network.

So, if local citizens want to spend their local tax dollars on these projects (whether wisely or foolishly) and the state legislatures, after hearing from the voters, decide not to limit these community internet projects, why is Congress getting invovled?

According to the bill, we need to protect the private monopoly providers from “undue government competition” (that’s the name of Section 15(a), “Protection Against Undue Government Competition With the Private Sector”).

I, dumbass Democrat that I am, did not realize that private companies needed protection from competition. I also had the foolish idea that the “federalism” that Republicans like Ensign go on and on about meant letting local people decide how to run their state and local governments.

Apparently, I was confused. “Federalism” only applies to gun control and other laws we don’t like. But laws passed at the prompting of industry lobbyists are a whole ‘nother kettle of fish. After all, if Congress didn’t preempt the states, industry lobbysists would have to fight all over again at the local level. That can get damn expensive. Happily, Mr. Ensign will gaurantee his buddies one one stop shopping, for your protection and their convenience.

Anyway, I can hardly wait for the brave new world of broadband competition his deregulatory approach will produce, as soon as all of my monopoly providers of video, voice and data networks are free from nasty regulations that constrain their monopoly power. And I’m glad he is taking away the ability of my local government to protect me if it turns out this perfect world has few rough spots. Mr. Ensign knows best, after all!

My friends, in a week or two your Senators and Representatives will be back home in their districts. They expect to talk to you about Supreme Court nominations and other important stuff. But, while you’re at it, tell them you think the “Broadband Investment and Consumer Choice Act” introduced by Mr. Ensign stinks. Tell them you like having some state and local protection so that people close to you and accountable to you can act when the FCC is just too far away and doesn’t give a rats patootie about your local situation. Tell them you like the fact that cable and telephone companies must build out to poor and minority neighborhoods and rural areas, that would otherwise get passed over as “not profitable enough.”

And most of all,

Stay tuned . . . .