There has been a lot of discussion lately about how the Federal Communications Commission (FCC) should be organized. Several news organizations mentioned that this was a topic of discussion as part of the work of the FCC transition team for President Donald Trump. (Full disclosure: I was a member of the team. My work there was confidential and the opinions I express here are my own.) Modernizing the FCC was discussed at the recent State of the Net program (0), and there was much agreement that the staff structure limits technical analysis. Larry Downs discussed the staff structure in a Forbes article (1), as did Bret Swanson in his recent TechPolicyDaily piece (2).
There seems to be a growing consensus that the FCC’s structure (3) is outdated and hinders its work. What should be done? Implement a structure that moves away from antiquated silos — wireline, wireless, and media — to one that reflects the dynamic digital ecosystem and that empowers sound analytical work.
Why doesn’t the silo structure work?
The existing structure limits how people think, encourages regulations that limit innovation, and facilitates industry capture.
As Swanson pointed out (4), people began recognizing at least 25 years ago that the traditional silos were going away. His blog led me to look at my first paper (5) on convergence again — “Square Pegs and Round Holes: Mismatches Between Government Policies and Converging Communications Market” — which I coauthored 24 years ago. Our point then was if laws and regulations remain fixed within silos, then the industry would be bottled up and customers would suffer.
Boy, were we right. The laws authorizing the FCC’s regulation and the staff structure still reflect the old wireline, wireless, and media structure. Unsurprisingly, the staff and commissioners often think in these silos. For example, the agency produces separate analyses for fixed-line broadband (6) and wireless broadband (7). The wireless report is called the “19th Mobile Wireless Competition Report,” as if wireless competition exists separate from all other modes of communication. That it is the 19th report illustrates how the FCC has barely changed its industry model since 1995.
This silo mind-set was also reflected in the agency’s January 2016 broadband report (8), which noted (9) that fixed-line and wireless are “distinct” and explained that “because the Commission has not yet established a mobile speed benchmark, deployment of mobility is not reflected in the current assessment.” So because the FCC had not decided what constituted good mobile broadband, it would omit any consideration of mobile’s contribution to our nation’s broadband networking?
What would liberal laws and regulations look like?
Happily, customers are not so stuck in the past. As Pew Research found (10), customers have demonstrated a growing preference for technology-neutral broadband, with mobility being important for many of their applications. Our laws should reflect this marketplace reality.
The US is far behind even many developing countries when it comes to laws and rules reflecting convergence. In Tanzania, for example (11), regulations distinguish between neither types of facilities nor between types of services, and companies have flexibility in how they use radio spectrum. El Salvador and Guatemala allow (12) radio spectrum license holders to change how spectrum is used.
To return the US to a position of world leadership, guiding principles for our policies should include: (1) Any person should have the right to purchase communications services from anyone else at any time (i.e., no entry restrictions for network, functions, applications, and content); (2) Anyone should be allowed to provide any communications service using any legally placed and acquired technologies (i.e., no technology restrictions); and (3) No government activity or regulation should provide an uneconomic favored position to any provider (i.e., no distortion of customer-led markets).
What would a convergence-friendly FCC look like?
It would elevate the roles of high-quality analysis, fact-based decision making, and enforcement of rules protecting customers and liberal markets.
A new structure would be up to the FCC and Congress, but one that would satisfy my criteria would include a bureau of economics that analyzes markets and conducts regulatory impact assessments, a bureau of engineering that assesses technologies and is responsible for radio spectrum and equipment licensing, a competition bureau that enforces rules that protect liberal markets, and a consumer protection bureau. The first two bureaus are all about analysis, and the latter two are all about enforcement, with the engineering bureau also playing a significant enforcement role with respect to radio spectrum and equipment.
Is changing structure enough to modernize the FCC?
No. Effective leadership will be needed to address the adaptive challenges of letting go of long-held traditions and embracing new values of rigorous analysis, political and industry independence, transparency, etc. Congress will need to act to focus the agency on ex ante regulation only in the presence of monopoly and on managing scarce resources — such as radio spectrum and funds for universal service — consistent with dynamic and competitive markets.