Telecom Act 20th Anniversary Sparks Kudos, Criticism, Including of FCC

The 1996 Telecom Act and its implementation drew plaudits and criticisms Monday, the 20th anniversary of its being signed into law by then-President Bill Clinton. AT&T, NTIA and others issued statements that lauded the landmark law, which amended the 1934 Communications Act and set the terms for phone competition, phased out much cable-TV rate regulation, eased some broadcast ownership restrictions, expanded universal service subsidies and encouraged advanced telecom services (now commonly called broadband). But AT&T criticized FCC regulation, and others offered mixed or more critical assessments of the law, with CTIA saying the act was “highly regulatory” and not as effective as a 1993 budget act's spectrum provisions that “took a decidedly different approach to the wireless sector.”

The Telecom Act was the bipartisan product of an administration and legislators that crafted “a statute that was far-reaching in its scope and visionary in its impact,” said Jim Cicconi, AT&T senior executive vice president-external and legislative affairs, in a blog post with an excerpt of a longer piece in the Federal Communications Law Journal. (FCLJ had recollections from many telecom heavy hitters.) The 1996 act’s framers “embraced a wise humility toward technology and its future development,” Cicconi said, noting the 1934’s act’s 60-year legacy and the six years it took to hammer out what became the 1996 act. The new law “provided a roadmap for the future of the nation’s communications landscape,” he said. “Indeed, the framers of the Act did their work better than they perhaps knew, piloting the ship of telecommunications policy through a foggy harbor into an open and unknown sea towards a destination of today’s cross platform communications marketplace.”

But Cicconi criticized the FCC, "which now appears ready to extend pre-1996 monopoly-era regulations, and rules to today's competitive broadband markets." Such a course reversal risks jeopardizing the success of the 1996 act "by turning back towards outmoded and unnecessary regulation rather than advancing successful policies based on regulatory restraint and confidence in competition" initiated under the Clinton administration, he said.

The 1996 act removed regulatory barriers from communications companies, fueling broadband investment, said NTIA Administrator Larry Strickling. “We have witnessed an incredible transformation of our communications landscape. As we look forward to the future, we must continue to support innovation and economic growth by strengthening competition and the free flow of information. In today’s fast-changing digital economy, multistakeholder processes are the most nimble and effective means for addressing our most pressing policy challenges,” he said, noting NTIA’s multistakeholder efforts.

The Telecom Act is still encouraging new technology and innovation, said Gary Shapiro, CEO OF CTA. “Overall, in the last two decades, the Act has not hindered companies from creating new products and services, and thanks to the Internet, new services and business models have benefited the American people.” The Internet as "we know it today -- a platform for accessing information and developing new consumer markets -- is a product of this Act," he wrote.

Incompas President Chip Pickering hailed the 1996 act for promoting innovation and competition, helping create new companies, new technologies and new industries. “If you’ve ever used an ATM, an app for an on-demand service, or high-speed wireless connection on your home computer, you’ve seen firsthand the innovation unleashed by the ’96 Act,” said Pickering, a former congressman who worked on the law as a staffer for then-Sen. Trent Lott, R-Miss.

CTIA is happy to toast the Telecom Act’s 20th anniversary, but was more enthusiastic about the “light-touch” wireless approach of the spectrum provisions of the 1993 Budget Reconciliation Act, said Senior Vice President Tom Power. He said those provisions “generated massive investments, innovation” and consumer benefits by authorizing spectrum auctions and shielding wireless services “from much of the command-and-control style regulation” governing the telecom industry.

While the 1996 act sought to promote competition in local wireline markets, “it didn’t play out that way,” Power said. “That’s no knock on Congress; it’s just that technology is hard to predict.” Broadcast ownership rules remain “mired in the courts,” he said. The 1993 spectrum provisions did much to realize the 1996 act's promise of greater competition, universal service and media innovation, he said.

American Enterprise Institute Visiting Fellow Roslyn Layton said development of the Internet and mobile communications were unqualified successes since 1996, but said the FCC could do better. "Reducing regulatory barriers to entry, not adding more, should be job number 1," she said. "Nine lawsuits against the FCC suggest the agency has lost its way, that process reform is long overdue, and that Congress needs to step up oversight." She backed a new law that would "replace the Communications Act with a simple Digital Act that sets up a common framework for all networks, technologies, services and applications. No one technology should be favored over any other."

Former FCC Commissioner Harold Furchtgott-Roth and Arielle Roth, fellows at the Hudson Institute, analyzed Telecom Act questions in FCLJ paper. (Furchtgott-Roth also worked on the law as a staffer, for Rep. Tom Bliley, R-Va.) "None of the drafters of the 1996 Act could have predicted the state of the communications sector on the occasion of its twentieth anniversary," they concluded. "And no one knows what the next twenty years will bring. But one thing is sure: the fate of the 1996 Act will remain contentious. Calls for a new statute will intensify as long as technology progresses at a feverish pace. The 1996 Act was a rare accomplishment by the 104th Congress. Whether a future Congress will be up to the task is yet to be determined."

Phoenix Center officials critiqued the 1996 Act's unbundling provisions. "While unbundling may have been a sensible policy for the monopoly communications world of 1996 (but recognizing the incentives problems were unavoidable), the presence of inter- and intra-modal competition and the inherent incentive problems with unbundling make it unsuitable for today's marketplace," said Chief Economist George Ford and President Larry Spiwak in a summary of another FCLJ paper. "Instead, the United States needs a new policy regime for the communications market of the 21st century. Hopefully, with the benefit of hindsight and lessons learned from the U.S. unbundling experience, future regulatory interventions in the competitive communications marketplace will proceed with more humility and wisdom."