Jonathan Spalter

To Help Keep The Tech Bull Running, FCC Must Forbear

For those of age back in 1996, many of us were doing the Macarena, quoting Jerry Maguire and tuning into a new sitcom called Everybody Loves Raymond — all while spending a whopping 30 minutes a month on this new thing called the internet.

Hotmail launched in July of that year. The only businesses worried about Amazon were bookstores. And, innovations from instant messaging to iPhones had yet to arrive. It’s no wonder the 1996 Telecommunications Act states the word internet a mere 11 times. Yet 22 years later, this relative footnote in the 128-page law that still governs U.S. innovation policy today has transformed virtually every aspect of our economy and our lives.

It’s time for our laws to catch up with our lives, and our nation’s system of checks and balances offers an avenue to progress. It may not roll off the tongue, like Jerry Maguire’s help me, help you. But it most certainly can help ensure, in a timely way, that the rules communications and technology companies operate under are modern, fair and consistent for consumers and our economy.

The tool is called forbearance, and it allows regulators to periodically review the rules on the books to see if any have outlived their purpose. If an agency — in the case of communications, the Federal Communications Commission — finds a rule no longer is necessary, then it is required by law to forbear from enforcing the rule. That is why USTelecom is petitioning the FCC for national forbearance from outdated rules created in 1996 requiring incumbent local exchange carriers to sell access to parts of their networks to startup companies at below-market rates set by regulators as a way to stoke competition in local telephone service.

When the rules were crafted more than two decades ago, virtually all (97 percent) U.S. households had a landline, compared to just 42 percent today. Only 40 million wireless devices were connecting in our country — versus now when our nation has more wireless devices (400 million) than people (328 million). And texting, social media and other nonvoice forms of communication were still off on the horizon. In 2018, even though competition has become white hot, the same old rules still remain on the books. The world has changed — and so must the rules.

Now, the capital markets are poised to acknowledge the day-to-day consumer reality of a fundamentally altered marketplace. After the close of the final trading day of September, the most ambitious overhaul of how stocks are categorized in nearly two decades will be executed. “The lines among media, communications, and content are blurred. It is time to acknowledge this convergence and the overlapping services these companies provide,” said David Blitzer, chairman of the S&P Dow Jones Index Committee.

Government policies should follow suit. Legislative and regulatory constructs are not meant to last forever. With today’s rising competition across entertainment, media and technology, it’s the right time to revisit the rules and determine which still make sense and offer a constructive, societal benefit — and those that have passed their expiration date and now put downward pressure on the competitive scales and on vigorous investment in faster, stronger and world-leading U.S. networks.

This last point is critical. Key to the digital transformation of the past 22 years is the fact that the nation’s nearly 2,000 broadband providers connected the country by investing more than $1.6 trillion of their own capital to build, expand, manage and continually upgrade the nationwide infrastructure that was called in its early days the information superhighway.

This capex rate dipped in the final years of the prior administration, but it appears to have recovered last year as the FCC demonstrated a sustained commitment to pro-investment policies. In fact, one market analysis shows that a fresh round of forbearance could yield consumer savings of up to $1 billion over the next 10 years, all while creating 6,000 jobs and broad economic reverberations that could yield as much as a half a trillion dollar bump to U.S. GDP.

Policymakers can have a meaningful impact if they take actions that catch the rules up to the realities of modern digital life.

Getting U.S. innovation policy right has never been more essential to the road ahead for our economy and our nation’s global leadership. One thing regulators can do today to help keep the tech bull running is step up to the plate and forbear.


NOTE: This op-ed originally appered in Law360 on September 26, 2018.  View the op-ed here.