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CONTACT: David Fish
April 28, 2004
(202) 289-8928

Next Telecom Act Must Clear
Regulatory Underbrush

In Senate Testimony, Gifford Urges A Future of “Unregulation”

WASHINGTON D.C. - Testifying before the U.S. Senate Committee on Commerce, Science, and Transportation today, Progress & Freedom Foundation President Raymond L. Gifford told lawmakers the 1996 Telecommunications Act is a "qualified failure" in need of update and reform. One of its problems, he said, is its inability to deal effectively with the "packetized, broadband age." The failure is qualified because the sectors the Act left largely unregulated - wireless and cable - provide a roadmap for the future. Gifford is the immediate past chair of the Colorado Public Utilities Commission.

"On Monday, President Bush noted that 'clearing out the underbrush of regulation, .we'll get the spread of broadband technology, and America will be better for it.'" Gifford told the committee. "President Clinton's administration championed 'the unregulation of the Internet.' Unregulation and clearing out the underbrush should be the charge you accept."

"Communications is no longer local, but instead national and even international in scope," he said. "A packetized communication, be it voice or data, does not followed a prescribed geographic path. The traditional jurisdictional distinctions cannot hold." The former regulator told senators "regulatory burdens need to be minimized.and incentives for special interests to manipulate regulation to preordain a given market outcome need to be written out of the next Act." Furthermore, the FCC and state commissions "must have a different charge in the age of spectrum and photons."

Gifford warned "a premature 'common carriage' requirement on all physical layer connections could destroy the integration that serves consumers best." He said the intercarrier compensation system "must be radically reformed so that access arrangements between carriers are rationally related to cost or left to the market, as is done currently with the Internet backbone market." He told senators "the flourishing of networks means that universal service policy needs to be rethought and refocused."

An 'after-the-fact' model of regulation, used by the Federal Trade Commission and the Antitrust Division "is better suited for the next Communications Act," Gifford argued. "[Because] It is law-applying rather than law-making.minimizes regulatory errors.[and] has the added advantage of allowing technological ingenuity and entrepreneurial dynamism to take the market in places regulators cannot imagine." He urged reconsideration of the size and structure of the FCC and consideration of "a single agency administrator, like Great Britain's communications regulator." Finally, he said "State regulation, in its traditional role of regulating prices, dictating contractual terms and conditions, has no place in the next Communications Act."

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation