June 20, 2014

Letter to House Committee on Energy and Commerce Concerning Communications Law Reform

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June 13, 2014

Chairman Fred Upton
Energy & Commerce Committee
United States House of Representatives

Dear Chairman Upton,

Thank you for the opportunity once again to comment on communications law reform. In this third white paper, you solicited comment on competition policy and the role of the Federal Communications Commission. 

The 1934 Communications Act was passed with common carrier rules for a national monopoly telephone provider. Today, in contrast, the communications market is characterized by rigorous competition from several networks—like LTE, fiber optic, cable, DSL, and satellite—offering many digital services—including Internet access, television, video-on-demand, and telephone service. 

The overwhelming political consensus is that the older regulatory categories are no longer useful. As I said in response to your first white paper in January, “Like an old cottage receiving several massive additions spanning decades by different clumsy architects, communications law is a disorganized and dilapidated structure that should be razed and reconstituted.” 

It’s unnecessary to start from scratch in crafting reforms. During the last congressional attempt at reform, in 2011, the Mercatus Center released a study discussing and summarizing a model for communications law reform known as the Digital Age Communications Act (DACA). That model legislation—consisting of five reports released in 2005 and 2006—came from the bipartisan DACA Working Group. 

The DACA reports represent a flexible, market-oriented agenda from dozens of experts that, if implemented, would spur innovation, encourage competition, and benefit consumers. The regulatory framework report adopts a proposal largely based on the Federal Trade Commission Act, which provides a reformed FCC with nearly a century of common law for guidance. Significantly, the reports replace the FCC’s standardless “public interest” obligation with the general “unfair competition standard” from the FTC Act.

Those reports have held up remarkably well to the passage of time. The 2011 Mercatus paper describing the DACA reports is again attached for submission in the record. The scholars at Mercatus are happy to discuss this paper and the DACA reports further with Energy & Commerce Committee staff as they draft reform proposals. 

Notwithstanding the DACA recommendations for a reconstituted communications competition agency, Congress should also consider alternatives such as abolishing the FCC entirely and relying on antitrust agencies or merging the FCC’s responsibilities with the Federal Trade Commission. New Zealand, the Netherlands, Denmark, and other countries have merged competition and telecommunications regulators. Agency mergers streamline competition analyses and prevent duplicative oversight. 

Thank you for initiating discussion about updating the Communications Act. Reform can give America’s innovative technology and telecommunications sector a predictable and technology-neutral legal framework. When Congress replaces antiquated command-and-control rules with market forces, consumers will be the primary beneficiaries.

Sincerely,

Brent Skorup
Research Fellow, Technology Policy Program
Mercatus Center at George Mason University