Cleland served as Deputy United States Coordinator for Communications and Information Policy in the George H. W. Bush Administration. Eight Congressional subcommittees have sought Cleland’s expert testimony and Institutional Investor twice ranked him the #1 independent analyst in his field. Scott Cleland has been profiled in Fortune, National Journal, Barrons, WSJ’s Smart Money, and Investors Business Daily. Ten publications have featured his op-eds. For a full bio see: www.ScottCleland.com.
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The most modern part of America’s economy has the most obsolete law.
Americans know the Internet, wireless, and broadband have revolutionized communications. In six years, nearly three quarters of Americans have become smart-phone or tablet users!
House Energy and Commerce Committee Chairman Fred Upton and Subcommittee Chairman Greg Walden understand America’s biggest communications disconnect.
They know the core of America’s communications law was written in 1934 based on 19th century technology and regulatory assumptions and is in serious need of overhaul. They know America has 1G communications law in a 4G world.
Chairmen Upton and Walden are showing much needed leadership in thoughtfully and diligently beginning the important multi-year task of modernizing and simplifying communications law for the 21st century.
They appreciate the risks of relying on 1934 technology law that has no living authors and technology assumptions that predate the TV, computers, and cellular, let alone today’s world of the Internet, broadband, smart-phones and apps.
They rightfully have concerns that outdated law that incorrectly presumes monopolies and that is inherently hostile to competition and innovation could snag 21st century growth and innovation in the legal blight, rubble and underbrush of the distant past.
Why force companies of today to run an obstacle course of obsolete technology law in order to grow and innovate? Much of this law has outlived its usefulness and is a drag, distortion, and discouragement of further communications growth and innovation.
So what’s the need for change? What isn’t working for a 21st century marketplace?
Technologically, legacy law assumes inefficient, analog, electrical, continuous-voltage function technology, the opposite of today’s hyper-efficient, digital, and discontinuous-voltage technology of computers.
This profoundly wrong technology predicate means the core law presumes all communications technologies have monopoly economic characteristics requiring preemptive, technology-specific, or “silo-ed” regulation.
A converged Internet world burdened with myopic silo-regulation inherently suffers from huge and unnecessary inefficiencies and impediments to competition and innovation.
Another fundamentally incorrect technology assumption of legacy law is that “place” matters.
In the monopoly wire line-centric world of the distant past, “place” was literally how and where the government regulated most everything.
Today, both mobile-wireless and the Internet make “place” largely irrelevant. People are no longer tied to a wired place and companies can access the Internet virtually anywhere.
Simply, people expect to be able to communicate and access the Internet from anywhere, when legacy law still assumes they somehow should be tethered to a specific “place.”
Economically and competitively, much of legacy 1934 law still incorrectly presumes monopolies still exist.
Today there is no telephone monopoly when 75% of Americans have chosen a competitive alternative. And there’s no cable monopoly when 46 million American households subscribe to a cable competitor.
Incorrectly assuming monopolies exist, means legacy law also incorrectly presumes monopoly economics exist. That’s despite the important change in policy toward competition in the 1996 law update and the advent of digital competitive economics.
That profound inherent economic conflict essentially means American communications law is at war with itself.
While legacy law assumes Government network unbundling needs to be done via regulation, digital technology naturally unbundles itself into infinitely-interchangeable building-block technologies.
Tellingly, IP technology enables engineers, and often users, to easily and quickly configure, devices, transmission technologies, and networks before a regulator can even collect their thoughts.
Simply, obsolete law assumes competition is not possible without Government, whereas modern law would recognize that digital and Internet technologies, with their ever-increasing cost efficiencies, naturally enable robust facilities-based broadband competition.
Legally, the FCC increasingly is finding obsolete law dysfunctional in the 21st century. It loss of authority in Comcast v. FCC, and its upcoming likely partial loss of authority in Verizon v. FCC, increasingly leaves the FCC with square pegs to put in round holes.
To stay relevant long term, expect the FCC to work cooperatively with Congress in updating the Communications Act.
As for spectrum, since there is no legal requirement for modern management, accountability or accounting of Government spectrum use, it hoards over two-thirds of this critical natural resource.
This wasteful Government spectrum hoarding denies the private sector the spectrum it needs to keep pace with exploding demand for mobile bandwidth. This benign neglect is becoming a growth cap on the mobile revolution.
In sum, the need for modernizing America’s communications law is urgent and undeniable.
Legacy law is not working for the 21st century marketplace; increasingly it is working against it.
[Originally published on The Daily Caller]