PFF Project Proposes FTC-like Regulatory Model for FCC
The FCC would operate more like the FTC, tackling individual instances of alleged market power abuse rather then exerting proactive economic regulatory control, under model legislation from academic and think tank scholars led by the Progress & Freedom Foundation (PFF). The proposal released Fri. is the first from PFF’s Digital Age Communications Act (DACA) project on Telecom Act reform (CD Feb 2 p5).
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The proposal was drafted by the Regulatory Framework Working Group, one of the DACA project’s 5 such units. The other groups -- on federal-state relationships, universal service, spectrum and institutional reform -- are expected to flesh out the proposed regulatory framework. Once that is done, the project will suggest legislative language aimed at making the recommended changes.
The FCC should move away from complex “regulation based on techno-functional” groupings or “silos,” as some call them, the draft said: “The regulator would act principally through adjudication, responding as antitrust authorities do, to correct abuses as they occur, largely eliminating the elaborate web of rules and regulations that has grown up under the existing statute.”
After reviewing several models, working group members “concluded that regulation in the digital age should be based, almost exclusively, on competition law principles drawn from antitrust law and economics,” the report said. The development of competition eliminates the need for laws aimed at limiting monopoly power in industries such as telephony and cable, the study said.
The group rejected an often-discussed “layers” approach pushed by MCI because: “Nothing in the concept of layers provides any help in deciding how to regulate any particular layer. As a network engineering concept, layers may be a useful tool for thinking through some regulatory issues. But the marketplace position of services, not the particular layer with which a service may be most closely identified, must drive the application (or not) of regulation.”
The proposal departed from an FTC model in one way: The FCC would retain power to order interconnection of communications networks “in situations in which markets are not adequately providing interconnection” and lack of interconnection could hurt consumers.
The group also urged reduction of the FCC’s merger review authority, limiting it to “ensuring that the merger does not create any violation of the Communications Act or an FCC rule.” The report said “the FCC’s vague ‘public interest’ authority over mergers has both required a separate proceeding and, because of its indeterminate nature, permitted the Commission to impose conditions that are unrelated to any competitive impacts unique to the merger.”
One working group member said while not all the changes may occur quickly, the proposal reflects a variety of views and easily could provide a map for change over time. The Regulatory Framework Working Group, led by PFF Senior Fellow Randolph May, included representatives from Northwestern U., the Heritage Foundation, U. of Cal.- Berkeley, U. of Colo., Kan. State U. and 2 other PFF representatives.