Telecom Reform, Consensus Needed

In the Washington, D.C. policy world, regulatory change requires consensus building. With rapid market changes since the Telecommunications Act of 1996, Congress and the Federal Communications Commission are now realizing that the health of the communications market depends on changing current laws. In stark contrast, many state regulators, including those in California, continue to support the regulatory status quo. So whose approach will win? And will any of it benefit consumers?

Responding to new technology and consumer demand, the telecom market has outgrown the strictures imposed by Congress in 1996. In light of the dynamic marketplace, we should expect our telecom laws

to change too. Some states have changed their approach toward telecom regulation. Others, like the California Public Utilities Commission, are applying the rules to new technologies and thereby increasing the regulatory presence. Indeed, while momentum builds in Washington for a more free market approach toward telecom, the California PUC has asserted itself in new communications areas.

Earlier this year, the California PUC approved the Telecommunications Consumer Bill of Rights, which expands its oversight into the highly competitive wireless market. In the local phone .market, the commission continues to consider price controls on SBC Communications Inc. for the rates it charges its competitors for access to its network. And watch out Internet telephony —the PUC would like to regulate voice over Internet protocol (VolP), too.

The continued economic regulation of telecommunications is unnecessarily adding costs to consumer phone bills. Innovation and convergence of technologies have created cross-platform competition. One member of the PUC has seen the light. Commissioner Susan Kennedy is co-chair of the Federation for Economically Rational Utility Policy (FERUP), a bipartisan group of state regulatory commissioners. This group will serve an important function in coordinating the state and federal role in upcoming changes to the Telecom Act.

And how will Congress respond? Congress could operate in a piecemeal fashion, addressing telecom policy issues based on technology or service sector. Or it could consider a comprehensive overhaul of the Communications Act of 1934 (as amended by the Telecom Act of 1996). Consumers will ultimately win either way — the law that was meant to stimulate competition is now hindering it because companies are unwilling to invest and take chances in an industry that is subject to outdated laws and regulations.

From a public policy perspective, a revamp of the 1996 Telecom Act is necessary. The fear is that state regulators, including the California PUC will resist change and attempts to reduce its power over communications policy. But it is a rare flipside occurrence that a rapidly forming consensus in Washington is driving policy, perhaps proving that it is not always as goes California, so goes the nation.”