Statement on House Telecom Reform Proposal

<?xml:namespace prefix = st1 ns = “urn:schemas-microsoft-com:office:smarttags” />Washington, D.C., September 23, 2005—The latest draft telecommunications bill from the House Energy & Commerce Committee is aimed at reforming the nation's telecom and cable laws. While it succeeds at changing the law, it replaces one set of complicated, technology-specific rules with another. It also introduces new government regulation over Internet-based communications and network infrastructure design. <?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” />

Congress should not expand the powers of the Federal Communications Commission by giving it a new role to regulate the latest technologies, but this is precisely what the discussion draft does. It creates no less than 30 new mandatory and discretionary FCC powers. These include the ability to create explicit rules, establish procedures, increase jurisdictional authority, and involve itself in determination proceedings and market oversight.

Some of the increase in FCC powers can be outweighed by the few positive aspects of this bill: it creates exclusive federal jurisdiction over broadband modem and IP-enabled services, and bars FCC and state price and entry regulation of these services.

The draft bill’s central failing, however, is that it relies on government forces to ensure the welfare of consumers. It seemingly ignores findings of fact that demonstrate the market’s ability to promote competition in communications services. Indeed, the discussion draft can be best summarized by what it left out—a “to be determined” in the section on Purposes/Principles/Findings. This is perhaps the most important section of any telecom reform bill.

U.S. communications is at an important inflection point. Cable, telephone, and wireless companies aim to compete against each other using the latest technologies. Our current laws, however, hinder this new competition by creating legal distinctions at odds with market developments. Unfortunately, this House discussion draft does not change the status quo.

For more information, contact Richard Morrison at (202) 331-2273