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Weekly UpdatesI. INTRODUCTION
As we approach the ten year anniversary of the enactment of the Telecommunications Act of 1996 ("1996 Act"), (1) a fairly broad consensus has emerged that the existing "stovepipe" regulatory framework contained in the statute is woefully outdated and an impediment to the development of sound communications policy. (2) So, Congress is beginning to consider whether new communications legislation is needed to supplant the 1996 Act. In light of the profound technological and marketplace changes that have occurred in the last decade, especially those attributable to the accelerating proliferation of digital technologies and services, any new legislative reform effort should include an examination of the division between federal and state regulatory authority, the amalgam of subsidies known as the Universal Service system, and management of the spectrum.
But there is nothing more important to the project to conceive a new act than the replacement of the existing statute's stovepipe regulatory model with a new framework that reflects today's digital age competitive marketplace realities. Indeed, this effort has to be at the heart of any serious effort to write what one might call a new Digital Age Communications Act.
The purpose of this brief essay is to show why a replacement regulatory regime is needed. Its purpose is not to prescribe what the new model should look like, although I will conclude by suggesting that some form of market-oriented model should be adopted.
II. THE EXISTING REGULATORY FRAMEWORK: VERTICAL STOVEPIPES BASED ON TECHNO-FUNCTIONAL DISTINCTIONS
Stovepipe regulation refers to the fact that (1) the act contains definitions for variously denominated communications services, such as "telecommunications," "information services," "cable service," "mobile service," "broadcasting," and "open video system," and (2) different regulations apply depending upon a service offering's classification. Hence, the stovepipes, or vertical "silos" or "smokestacks" as some prefer, refer to the distinct sets of regulations that attach to a service offering once it is classified under one definition or the other.
The existing stovepipe regulatory framework no longer makes sense. With a bit of poetic license, you might say the fires of the digital revolution have destroyed the stovepipes. In any event, the point is that the old stovepipe paradigm, with its origins rooted in the original Communications Act enacted in 1934 ("1934 Act"), is now obsolete.
The current regime is obsolete because the statutory definitions found in the 1996 Act that are the foundation of the existing regulatory model rest upon what I have called "techno-functional constructs." (3) These techno-functional constructs simply no longer work well in a digital world. (4) These particular techno-functional constructs are necessarily implicated in many of today's most hotly contested regulatory battles, for example, those involving the statutory definitions of "telecommunications" and "information service."
Telecommunications is defined as "the transmission, between or among points specified by the user, of information of the user's choosing, without change in the form or content of the information as sent and received." (5) An information service is "the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications ... but does not include any use of any such capability for the management, control, or operation of a telecommunications system or the management of a telecommunications service." (6) Now, these definitions are nothing if not grounded firmly in techno-functional constructions: transmitting information among points "specified by the user," (7) "without a change in form or content," "generating," "storing," "processing," "retrieving," "transforming" information, and so on. (8)
Think for a moment about the meaning these words convey. What does it mean to say "transforming" information, or transmitting information between two points "without change in the form or content" of the information? For example, I send you an instant message, or "IM," typing a letter in one font on my keyboard. As a result of your or my terminal settings or Internet Service Provider's protocols, the letter appears on your screen in another font, or without the smiley face I attached to it. Has there been a change in form or content of the information sent or received? Has there been a transformation of the information?
This surely is the stuff of digital age philosophers. That is why, in early 2004 in connection with thinking about the then just-over-the-horizon but sure-to-come fights regarding the new Internet telephony, or Voice over Internet Protocol ("VoIP") services, I referred to the distinctions to be suggested and argued for purposes of regulatory classification as metaphysical. Certainly, the statute's definitions are in accord with Webster's definition of metaphysics: (1) "of or relating to what is conceived as transcendent, supersensible, or transcendental;" (2) "highly abstract or abstruse;" (3) "expressions of attitudes about which rational argument is impossible." (9) In fact, so convinced was I of the importance of hastening an understanding that the current techno-functional regulatory regime rested on collapsing ground that I could not resist dashing off a brief commentary entitled, only half facetiously, The Metaphysics of VoIP. (10)
It is not only the telecommunications and information service stovepipes which rest on techno-functional constructs. Consider the statute's "mobile services" definition, which includes terms such as "a regularly interacting group of base, mobile, portable, and associated control and relay stations ..." and so on. (11) The definition of "cable service" turns on whether the transmissions are "one-way," and either "video programming" or "other programming service[s]," and whether any "subscriber interaction" is required for the selection of such video programming. (12) Whether a transmission is "broadcasting" or not depends on whether radio communications, which itself turns on whether the transmission by radio is of writings, signs, signals, pictures, and sounds of all kinds, "intended to be received by the public," are disseminated, whether "directly or by the intermediary of relay stations." (13)
However serviceable these definitional constructs may have been at an earlier time, when analog systems were by far the prevalent communications transmission mode, they no longer are serviceable in a world in which digital technology is rapidly displacing analog. The old saying "a bit is a bit is a bit" really does have important implications from a regulatory policy perspective. It is economically, if not technically, infeasible to distinguish among voice, data, and video bits that travel along in the same communications stream. In other words, "[o]nce all communications are reduced to bits and bytes, all media will constitute substitutes for one another, and attempts to segment markets based on the means of conveyance will become increasingly problematic." (14)
I do not mean to deny the regulators' ingenuity or their good intentions in creating these definitional constructs, or in striving to render them serviceable for as long as possible. Take the FCC's landmark Computer H proceeding from the early 1980s. (15) It was then, when data processing capabilities and communications services first were becoming intertwined in nascent online applications such as e-mail and data retrieval, that the FCC created the regulatory distinction between basic and enhanced service. And it was this distinction that was carded over into the 1996 Act in the form of the current "telecommunications" and "information services" definitions. (16) In essence, a basic service was pure transmission capacity while enhanced services were applications with computer processing capabilities dependent upon telecommunications to be carded from one place to another. (17)
The FCC's purpose in creating this new distinction was salutary: if the new online services had been classified as just another form of basic communications, the services would have been subject to public utility-style regulation under the common carrier mandates of Title II of the 1934 Act. (18) The FCC thought, correctly, that online services could and would develop on a competitive basis, and therefore, should be free from the economic regulation to which common carders were subject. (19)
Acting under the constraints of the 1934 Act, the FCC's Computer H decision was sound policy. Online services, from the early CompuServe and Prodigy services, to the upstart America Online, and on through the birth and spread of the ubiquitous World Wide Web, did indeed flourish on an unregulated basis. Without any real controversy, Computer IF s "basic" and "enhanced service" definitions were embodied in essentially the same form in the 1996 Act as "telecommunications" and "information services."
III. THE PROBLEM: DIGITAL TECHNOLOGY AND ABUNDANT BANDWIDTH UNDERMINE THE STOVEPIPES
What once may have been wise policy, and manageably serviceable, in a predominantly narrowband communications environment is much more problematic today as broadband networks become more ubiquitous. Recall that in the narrowband world, at least as a matter of shorthand, we could, commonly if not universally, equate voice with telecommunications, data with information services, and video with cable service. For a long time, limited bandwidth in the narrowband world masked the inherently problematic nature of the separate techno-functional boundaries upon which both the 1934 and 1996 acts' regulatory boundaries rested.
The abundant bandwidth of broadband networks, which enables fast-growing services such as Internet access and VoIP Internet telephony to be technically and economically viable, tugs mightily at the regulatory mask. Is high speed cable modem Internet access service "cable," "telecommunications," or an "information service"? The FCC deemed cable modem service an unregulated information service under the 1996 Act's definitional scheme. In June 2005, a divided Supreme Court handed down a decision in National Cable & Telecommunications Association v. Brand X Internet Services, which reversed an appeals court decision holding that cable modem service is a combination of "telecommunications" and "information service" potentially subject to public utility-type regulation. (20) What about the high speed Digital Subscriber Line ("DSL") Internet access services offered by the traditional telephone companies? Until September 2005, when the FCC finally reclassified it as an unregulated information service not long after the Brand X decision was handed down, (21) DSL was classified a regulated telecommunications service.
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