The Old Rules Just Don’t Fit Anymore: A Panel Discussion on the Proposed Revision of the Telecommunications Act of 1996 John Windhausen, Jr., Past President, Association for Local Telecommunications Services Randolph J. May, Senior Fellow and Director of Communications Policy Studies, The Progress & Freedom Foundation Richard S. Whitt, Vice President, Federal Law and Policy, MCI, Inc.

2 The Communications Act: Past, Present and Future? A Presentation to Educause April 6, 2005 John Windhausen, Jr. President Telepoly (202)

3 The Radio Act of 1927  Established rules to prevent interference among radio broadcasters  Federal Radio Commission operated under Interstate Commerce Commission  Meanwhile, AT&T increasingly acting like a monopoly over telephone service; DOJ threatening additional antitrust scrutiny

4 The Communications Act of 1934 Title I: Creation of the FCC Title II: Common Carrier Provisions to regulate AT&T Title III: Radio Provisions to Govern Broadcast Industry Title IV: Legal, Administrative Title V: Penalties Title VI: Repealed 1927 Act

5 Services, Technologies, Entities were all clearly separate. Telephone Services were provided by AT&T (and independent, non- competing rural telcos) using copper wires to allow two-way communications Radio (and later TV) broadcasters used the radiofrequency spectrum to provide one-way information

6 Long Before VOIP, New Services Created Tensions – Satellite, Wireless Telephony Both Cellular companies and Satellites had to receive spectrum licenses under Title III. Cellular provides two-way services like a common carrier, therefore Title II applies as well. Satellites can provide either one-way (broadcast-like) or two-way (common carrier-like) services

7 Cable Communications Policy Act of 1984 Cable companies were a different entity (neither telcos nor broadcasters) Cable Companies used their own technologies (coaxial cable) Cable companies provided a different service (they did not generate content like a broadcaster, but did not engage in two-way communication like a telco) So, Congress inserted new Title VI to regulate cable television service. Previous Title VI moved to become Title VII.

8 The “Silos” Title II: Telecom Title III: Broadcast Title VI: Cable

9 The “Layers”: AT&T started to provide data processing service in the 1970’s in competition with IBM. The FCC’s Computer Inquiry Rules distinguish between “transmission” (basic services) and “content” (enhanced or information services).

10 The Telecom Act of 1996: Breaking down the “Berlin Wall of Telecommunications. “ Opened the local telephone market to competition from long distance companies, cable companies, electric utilities (Municipalities?) Allowed the RBOCs into long distance and manufacturing. Gave the FCC greater regulatory flexibility to regulate different firms in different ways depending on their market position.

11 Since then.... Cable and ISPs are providing VOIP – telephone service over the Internet – competing with Telcos under different rules. Municipalities are constructing their own broadband networks in competition with the private sector Unlicensed users of the spectrum are becoming widespread (Wi-Fi and Wi-Max)

12 What Regulatory Structure Should Apply to the 21 st Century? Alternative #1: Based on technology? (I.e. fiber optic cables, IP-based) Advantages: deregulating broadband technologies may promote deployment; providing greater certainty. Disadvantages: Difficult for regulators to differentiate lines between technologies; consumer impact may be discriminatory

13 What Regulatory Structure Should Apply to the 21 st Century? Alternative #2: Based on the type of Entity (I.e. all telcos, all cable companies, etc.) Advantages: Provides parity of regulation; level playing field Disadvantages: One company may provide several services – are all of them regulated? What if companies have different market power? (incumbents vs. new entrants)

14 What Regulatory Structure Should Apply to the 21 st Century? Alternative #3: Based on the Service Provided (I.e. landline telephone service, cable service, wireless telephone service, TV, etc.) Advantages: can provide parity; easiest for consumers to understand Disadvantages: Service boundaries are increasingly blurred (IPTV, wireless and wireline).

15 What Regulatory Structure Should Apply to the 21 st Century? Alternative #4: No regulation Advantages: Eliminates regulatory uncertainty, may promote investment, antitrust law can prevent monopolization Disadvantages: May lead to higher consumer rates if no competition; antitrust enforcement difficult

16 How Will the Re-Write of the Telecommunications Act Affect Education Technology? Will a new Act provide greater certainty, promote technological innovation, give educational institutions a greater choice of providers? OR Will a new Telecom Act yield a new round of interpretation, litigation and confusion for telecom technology consumers?

17 Next Steps Summarize any actions required of your audience Summarize any follow up action items required of you