Marketplace Changes Demand Reforms to 1996 Telecom Act, Free State Foundation Says
Major changes in the U.S. telecom marketplace in the 15 years since passage of the 1996 Telecom Act highlight the need for reforms to that legislation, said Free State Foundation President Randolph May Wednesday during an event. The pro-deregulation think tank was promoting its new book, Communications Law and Policy in the Digital Age, which focuses on how U.S. telecom law and policy should change over the next five years. Reforms should reflect changes to the marketplace since 1996 -- the switch from analog to digital, the switch from narrow-band to broadband networks and the switch from a mostly monopolistic marketplace to one that’s highly competitive, May said. “Those changes call for a new communications law, and certainly, absent waiting for the new law, changes in the direction of communications policy,” he said.
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The wireless industry has flourished since enactment of the 1993 Budget Act and the 1996 Telecom Act, said Seth Cooper, a Free State Foundation research fellow and one of the contributors to the book. In 1993, there were 13 million wireless connections in the U.S.; now there are 321 million, he said. While the 1993 and 1996 bills allowed major growth in the wireless industry, the FCC has begun to implement new restrictions on wireless and other telecom services, such as the net neutrality order, that could signal further regulation in the future, Cooper said.
The Universal Service Fund (USF), a product of the 1996 Telecom Act, is in need of reform, said Daniel Lyons, an assistant professor at Boston College Law School and another of the book’s contributors. The USF is in principle a good idea, but its current execution is “a mess,” Lyons said. Only about 25 percent of USF funds go to the Lifeline and Link Up America programs that help low-income consumers keep access to telecom networks, he said. The real behemoth of the USF is the High Cost program, Lyons said, though he said the FCC has made strides in capping funding for that program at its current $4.5 billion annual level and transferring that money over to the Connect America Fund for broadband expansion.
Telecom policy reform presents a “once in a generation” opportunity to fix the USF, Lyons said. True USF reform should involve returning it to its core mission of funding low-income access to telecom networks, as well as making sure the program reflects the current competitive telecom environment, he said. Those subsidies should go directly to customers through a voucher system akin to food stamps, Lyons said. The USF’s High Cost and E-Rate programs should be shuttered, he said. Cancellation of High Cost would likely cause rural rates to rise, and would thus be a major political stumbling block, Lyons said, noting that the Lifeline program would still help low-income consumers in rural areas. The USF should ultimately be a line item in the federal budget, though that would also be politically problematic, he said.
The 1967 Public Broadcasting Act also needs to be overhauled to reflect the digital age, said Ellen Goodman, a professor at the Rutgers School of Law-Camden and another book contributor. The debate over public broadcasting funding is stuck in a rut, she said, with political factions starkly divided between those advocating increased federal public broadcasting funding and those who advocate ending that funding. There is truth in both sides’ arguments, but “the political future is pretty clear,” Goodman said. While an overhaul of the 1967 act would free public media from confinement within the broadcast distribution platform, it should not abandon the medium entirely, she said -- public broadcasting was a “crucial” medium when other lines of communication failed in areas affected by Superstorm Sandy.