Washington

Economist/Authors Call for Scaling Back FCC Authority

Argue that government policies have not sufficiently promoted broadband or kept up with converging, competitive marketplace 4/05/2013 02:12:35 PM Eastern

A pair of deregulatory-minded economists say
that the FCC's broadband policies have not been much help to the broadband
rollout, that it has been too slow to auction new wireless spectrum, that the
FCC should get out of the merger review business, and that the regulatory silos
need to come down in an era when the media are converging. They also say the
fault is Congress' not simply the agency's.

That
is according to Robert Litan and Hal Singer, co-authors of The Need for
Speed
,
a new book on broadband telecom policy. They were being interviewed for C-SPAN's Communicators series. The book calls for narrowing of FCC authority
in the face of competition as a way to drive even more competition and
investment.

Singer
said that the U.S.'s regulatory policy
has not helped to spread and strengthen broadband. The book argues that U.S. policy has likely
"gotten in the way." He cited for one example the net neutrality
fight, criticizing the FCC for not allowing network providers to enter into
agreements for priority delivery -- the FCC's network neutrality rules have a
prohibition on discrimination. The book argues the FCC should have allowed for
such priority deals, then police any abuses on an "after-the-fact"
basis, the argument cable operators and other ISPs have made.

Singer
also criticized the FCC's approach to speeding up new spectrum for wireless.
"The FCC has been very slow at finding new spectrum and auctioning it to
wireless providers.

Litan
also criticized the FCC for not treating the wireless and wired marketplaces as
one market. The commission, for example, does not include wireless and wired
together in its report on the competitiveness of the broadband marketplace.
Litan says both Congress and the FCC need to recognize that industry regulation
should not be siloed.

"And
the FCC needs to recognize that it will have less to do in the current
competitive marketplace," he said. "Its duties and functions need to
be scaled back."

An
FCC spokesperson was not available for comment at press time, but when FCC
Chairman Julius Genachowksi announced his departure two weeks ago, he listed a
number of broadband-related successes during his tenure
,
including $250 billion in investment since 2009 (when he took the job),
migrating phone subsidies to broadband, developing the incentive auction proposal,
and the network neutrality rules, which the chairman has said "innovation
and private investment."

Singer
said that while the book criticizes the FCC, they recognize that Congress is
partly responsible for the problems. "It is not to be meant as an attack
on the FCC. The instructions come from Congress. 'Write me a report on
competition in the wireless market.' This directive [from Congress] came over a
decade ago and they are still doing it." He said that the notion the FCC
is just going to "wake up and fix itself" is fanciful. "I think
the direction is going to have to come from Congress."

Singer
and Litan say the FCC should not be in the duplicative merger review business.
Both the FCC and Justice/FTC review mergers, with Justice focused on antitrust
and the FCC going beyond that to the public interest benefits given that the
mergers involve the transfers of licenses of public spectrum. Singer said that
the extra review puts the FCC in the position of "giving away things to
competitors who complain the loudest. So long as you vest the agency with that
kind of power to move around millions or billions of dollars to special
interests," he says, "you are going to get hoards of lobbyists
walking the halls of the agency looking for a handout. We think on net that
this is not good for society." He cited the Comcast/NBCU merger.

Singer
said that they were not advocating for giving a pass to anticompetitive
mergers, just that Justice or the FTC ought to be able to handle that review
with input, though not a supplemental vote, from the FCC. "We don't need
two votes when one will do," added Litan, a former prosecutor with the
antitrust division at Justice.

Litan,
who worked as an economist in both the Carter and Clinton White House's was
asked whether someone reading the book might interpret the book as a call to
deregulate the communications industry. He said that was a fair interpretation
and that the facts have changed and times have changed. In a world of
convergence, he said, there is more competition and less need for regulation.
He also pointed out that the Carter administration deregulated the airline and
trucking industry, which he did because they were competitive. "Well,
guess what, the communications industry has reached that kind of state. It is
no longer heresy for a Democrat to say deregulate.

Litan
also pointed out that the book made arguments that might not sit well with some
Republicans as well. One of those, he said, is that they are concerned about
vertical integration, and would put in place protections for aggrieved parties.
They argue for FCC ALJ's -- there is actually only one -- making determinations
of discrimination rather than parties having to go to federal court.

Asked
who he would like to see as the next chairman, Singer said the real issue is
changing the system by which that chair is lobbied. "Just getting the
right commissioner right is not getting to do the trick." Litan said
commissioners needed to recognize the world has changed and essentially ask
Congress to narrow the FCC's authority because the world has changed.

Singer,
formerly with the Securities & Exchange Commission, is a regulatory
consultant with Navigant Economics, while Litan is director of research at
Bloomberg Government, a for-pay info service that provides economic analysis of
the business impact of government decisions.

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