The FCC Transition?

The FCC Transition?
May 9, 2013

Scott Cleland

Scott Cleland is a precursor: a proven thought leader with a long track record of industry firsts.... (read full bio)

Timing is everything.

That’s why, Tom Wheeler, the President’s nominee for Chairman of  the FCC, could become one of the most consequential FCC leaders in American  history.

As a longtime communications industry leader and also an  accomplished historian, he appreciates more than most anyone the hinge in time  in which he now finds himself.

The FCC is in the throes of a seminal historical transition. Like  the 1913 Kingsbury Commitment that created a national telephone monopoly. Like  the 1934 Communications Act that created the FCC and mandated universal  telephone service. And like the 1996 Telecom Act that mandated competition  policy replace monopoly regulation.

Today, companies and consumers have adapted to, and enjoy the  benefits of, the transition to the competitive Internet marketplace that we all  live in today. In contrast the Government, particularly the FCC and Federal  holders of radio spectrum, have not made the transition.

And to make matters worse, they are inherently hostile to  transitioning their mission, methods and mindset to the new competitive Internet  era.

Common carrier regulation ended for: railroads 37 years ago;  trucking and bus-lines 33 years ago; and airlines 29 years ago. Why does the FCC  still cling to 1887 common-carrier railroad regulation for communications when  it became obsolete in every other industry?

Common carrier regulation of communications is unnecessary and  irrelevant, given the Internet, robust facilities-based competition, and the  mobile broadband revolution of smart-phones and tablets.

Why can’t the FCC make the transition to the modern reality where  competition, consumer choice and innovation wildly out-perform regulation?  Market forces have delivered universal availability of both wire line and  wireless broadband in less than a decade when it took the FCC several decades  longer to deliver universal availability of telephone service.

Under FCC regulation the telephone changed little for over a half  century. In seventeen years of competition policy, consumers and businesses have  enjoyed the vast choice of: hundreds of Internet- enabled devices and several  broadband providers offering different technology options.

Still there are many inside and outside of the FCC that stubbornly  deny market reality. They define “the public interest” to be what the few think  is best for the many, rather than letting the many continue to choose what’s  best for themselves from the panoply of choices in the competitive Internet  marketplace.

As the Administration’s point person responsible for the DTV  transition from analog to digital television four years ago, Mr. Wheeler  understands big transitions and has successfully led one. His proven transition  leadership skills and experience will be essential given the many strategically  important transitions currently in train that need to be successfully led at the  FCC.

First, the FCC transition must be led. The FCC can no longer ignore  reality and torture obsolete statutes, precedents and regulations to  procrastinate and avoid the needed FCC transition to the competitive Internet  reality.

If the courts tell the FCC they do not have the statutory authority  to do what they believe is necessary, the FCC should either appeal, or propose  to Congress the legislative authority that they believe they need to operate as  a modern FCC.

Continuing to ignore the courts, Congress, and the Constitution is  not a sustainable or productive FCC policy. It is akin to holding one’s breath  until one gets one’s way.

The FCC transition requires strategic leadership to navigate from a  legacy-dependent, backward-looking, self-centered institution to a more modern,  humble, nimble and externally-focused institution able to keep up with the  times.

The FCC is in desperate need of a leader that understands that the  FCC can’t be the only part of the communications ecosystem that is not modern.  The American consumer and competitive, innovative industries deserve better.

Second, the IP transition must be led from the obsolescent monopoly  telephone price regulation regime to an enforcement regime of consumer  protection. This transition cannot be ignored as the number of subscribers to  the Public Switched Telephone Network (PSTN) has fallen by two thirds due to  competition and wireless/Internet substitution.

And during Mr. Wheeler’s expected tenure that number of legacy  subscribers to the PSTN is expected to drop to ~10% of Americans, similar to the  number of legacy over-the-air broadcast consumers.

Continuing to operate a system designed for everyone, when only  ~10% may still use it, makes no sense.

Third, the spectrum transition must be led from the Government  controlling ~85% of the nation’s radio spectrum suitable for wireless broadband, to about 20%  over the next decade or two.

Controlling ~85% of spectrum makes no sense when the Federal  Government only uses 1% of the nation’s energy; provides 8% of the nation’s employment; produces 12% of the nation’s GDP; and gets by with 30% of the nation’s land.

Leadership is desperately needed to transition the Federal  Government from wasting valuable radio spectrum to applying modern,  good-government, management and accountability practices to spectrum.

Fourth, the public safety transition must be led to ensure that the  9-11 recommendation for an interoperable public safety network finally happens,  and does not fall on its face again because of avoidable FCC implementation  mistakes.

In sum, this is an exceptionally consequential hinge in time for  the FCC. Mr. Wheeler has the opportunity and challenge to lead the FCC into the  modern era, so the FCC can return to being part of the solution and not the  problem for consumers.

Simply, the FCC can no longer kick the proverbial can down the  road; that road is ending.

[First published at the Daily Caller]

Scott Cleland

Scott Cleland is a precursor: a proven thought leader with a long track record of industry firsts.... (read full bio)