Sunday, February 28, 2010

Regulatory Pendulum Swings: But Which Way?

In the telecommunications business, the regulatory pendulum swings all the time, though slowly. So periods of relatively less-active regulation are followed by periods of relatively more active rule-making, then again followed by periods of deregulation.

It has been apparent for a couple of years that the regulatory pendulum in the the U.S. telecom arena was swinging towards more regulation.

What now is unclear, though, is whether such new rules will largely revolve around consumer protection and copyright or might extend further into fundamental business practices.

Current Federal Communications Commission inquiries into wireless handset subsidies and contract bundling, application of wireline Internet policies to service wireless providers, as well as the creation of new "network neutrality" rules are examples.

But so will the settting of a national broadband policy likely result in more regulation. And there are some voices calling for regulating broadband access, which always has been viewed as a non-regulated data service, as a common carrier service.

One example is a recent speech given by Lawrence Strickling, National Telecommunications and Information Administration assistant secretary, to the Media Institute.

He said the United States faces "an increasingly urgent set of questions regarding the roles of the commercial sector, civil society, governments, and multi-stakeholder institutions in the very dynamic evolution of the Internet."

Strickling notes that “leaving the Internet alone” has been the nation’s Internet policy since the Internet was first commercialized in the mid-1990s. The primary government imperative then was just to get out of the way to encourage its growth.

"This was the right policy for the United States in the early stages of the Internet," Strickling said. "But that was then and this is now."

Policy isues have ben growing since 2001, he argued, namely privacy, security and copyright infringement. For that reason, "I don’t think any of you in this room really believe that we should leave the Internet alone," he said.

In a clear shift away from market-based operation, Strickling said the Internet has "no natural laws to guide it."

And Strickling pointed to security, copyright, peering and packet discrimination. So government has to get involved, he said, for NTIA particilarly on issues relating to "trust" for users on the Internet.

Those issues represent relatively minor new regulatory moves. But they are illustrative of the wider shift of government thinking. Of course, the question must be asked: how stable is the climate?
Generally speaking, changes of political party at the presidential level have directly affected the climate for telecom policy frameworks. And while a year ago it might have seemed likely that telecom policy was clearly headed for a much more intrusive policy regime, all that now is unclear.

A reasonable and informed person might have argued in November 2008 that "more regulation" was going to be a trend lasting a period of at least eight years, and probably longer, possibly decades.

None of that is certain any longer. All of which means the trend towards more regulation, though on the current agenda, is itself an unstable development. One might wonder whether it is going to last much longer.

That is not to say some issues, such as copyright protection or consumer protection from identity theft. for example, might not continue to get attention in any case. But the re-regulatory drift on much-larger questions, such as whether broadband is a data or common carrier service, or whether wireless and cable operators should be common carriers, might not continue along the same path.

You can make your own decision about whether those are good or bad things. The point is that presidential elections matter, and the outcome of the 2012 election no longer is certain.

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