FCC has its failings, but who else could police the Internet?

The Federal Communications Commission is coming under fire this month as the
House Commerce Subcommittee on Telecommunications and Trade opens hearings on whether the
commission is due for a major overhaul.

Does the aging agency still merit a position of power in the new, convergent
telecommunications world? Congress wants to know how well FCC is handling the fallout from
this explosive trend.

When Congress passed the Telecommunications Act of 1996, it was counting on FCC to
deregulate and spur competition in local cable and telephone markets, and to help the new
Internet economy grow. Three years later, however, there is almost no local phone
competition. Cable television rates are climbing, and Internet commerce is evolving just
fine on its own.

When FCC has stepped in, it has raised eyebrows. For instance, early this year it
declared that dial-up Internet access should be considered a long-distance call, even to a
local number. Users vociferously disagreed.

The commission still has defenders. Though some argue that FCC has no authority and no
mandate to regulate the Internet, others feel FCC should be commended for keeping its
hands off. And FCC chairman William Kennard has said he doesn’t want to be in the
Internet regulation business.

But FCC does continue to regulate key industries that could grow if strategically
deregulated. The commission’s bureaus deal with radio, television, satellites and a
slew of other communications industries. Each industry has its own set of rules for doing
business, and convergence means conflict.

Cable, telephone, satellite and wireless companies all want to sell the same thing:
high-speed Internet access. But they have different ways of competing, servicing and

With no clear map of who is allowed to do what in which business area, progress has
stalled. What FCC needs is a master plan to answer the looming questions and spur

Geographic distance, once the prime variable in the price of a phone call, now means
practically nothing. Digital information is the same stuff, be it audio, video, text or
any other type. Regulating by type becomes nearly impossible.

The playing field must be leveled. FCC hopes to convince Congress that it is up to the
job, so it must change its own view of separate, vertical communications industries. The
Telecommunications Act of 1996 may not even be the right blueprint because it anticipates
a line between information service providers and communications systems.

FCC wields the most power over Internet evolution. If Congress decides to strip away
some of FCC’s powers, who will keep an eye on the frontier of Internet services?

“In a dynamic and robust marketplace,” Kennard said at a recent Consumer
Federation of America conference, “FCC is the only agency out there that understands
the telecom industry and has the expertise to make sure consumers are protected from
unscrupulous companies that would rather cheat than compete.”

FCC is far from perfect, but it knows more than anyone else about such matters.
Congress would be wrong to break up or disempower the commission. But it should dig in to
make FCC do better and act faster.

In his initial meeting with the House last month, Kennard told Congress what it wants
to hear: “We expect in five years there can be fully competitive domestic
communications markets with minimal or no regulation, including total deregulation of all
rate regulation in competitive telephone services.”

But five years may be far too long.

Let’s hope we do not see anything similar to the IRS’ embarrassment last
year, when a parade of taxpayers told Congress horror stories about their treatment.

The hearings conceivably could produce enormous shifts such as no more rates and no
regulation of data type or carrier type. If that happens, government offices will benefit
from broadband access to converged communications at prices as low as a simple telephone

For details on what FCC has done about the 1996 telecom act, visit www.fcc.gov/telecom.html.  Reports of
efforts to boost bandwidth nationally appear at www.fcc.gov/bandwidth/.

House testimony for FCC reauthorization is posted at com-notes.house.gov/cchear/hearings106.nsf/ttcpmain.

Shawn P. McCarthy designs search and navigation products for a Web search engine
provider. E-mail him at smccarthy@lycos.com.

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