Geoff Feiss - November 02, 2005
Montana Telecommunications Association
Regulatory Parity
MTA Commentary—11/2/05
FCC Chairman on Regulatory Parity
Last week, Kevin Martin, the Chairman of the Federal Communications Commission (FCC) gave a speech to a gathering of telecommunications industry execs.
His speech is worth quoting extensively because it so succinctly lays out the issues, and solutions, for promoting continued investment in and development of this nation’s telecommunications capabilities.
For example, Mr. Martin asked, “What is the key to ensuring a bright future for…integrated [telecommunications] service offerings? From a regulatory perspective, … it is technological and competitive neutrality…[A]ll providers of the same service must be treated in a similar manner regardless of the technology that they employ.
The FCC Chairman noted that the Commission recently had “leveled the competitive playing field between different types of providers” when it
“adopted an order ending the regulatory disparities between” high speed Internet services offered by telephone companies and similar services offered by cable companies.
He added, however, that there’s much work still to be done. For example, he is proposing that the FCC look into “how the local franchising process is working and what actions, if any, the Commission should take to fulfill Congress’s directive that franchising authorities not grant exclusive franchises or unreasonably refuse to award additional competitive franchises, [adding that] it is the Commission’s responsibility to help ensure technological and competitive neutrality in communications markets…[and] that we should always be looking to remove unreasonable roadblocks to competition.”
In addition to the Commission’s role of “foster[ing] innovation and infrastructure investment,” Chariman Martin noted “Congress has also instructed the Commission to make sure that rural America does not get left behind by this technological revolution…To do this, the Commission must establish a ‘specific, predictable, and sufficient’ mechanism to preserve and advance universal service,” the federal statutory policy which ensures that “rural areas have access to ‘reasonably comparable’ services…at ‘reasonably comparable’ rates.”
The Commission needs to address both the way it collects funds available for universal service investment, and the way it distributes these funds. On the collection side, Mr. Martin noted that “The current…method…simply does not reflect the competitive and dynamic communications market that exists today.
For example, it doesn’t account for the increase in bundled service offerings, the increasing migration to wireless and [Internet-based] services or the shrinking long distance market. Whatever we do to ensure the sufficiency and sustainability of the universal [service] fund, it is critical that people who live in rural and high cost areas continue to receive service at affordable rates…[W]hatever rules the Commission ultimately adopts, these rules must impact all technologies – both new and old – equally. Regulation must not have the effect, unintended or otherwise, of favoring the adoption of certain technologies over others. In addition, it is also imperative that the solution be faithful to Congress’s directive to “preserve and advance” universal service.
On the distribution side, the Commission “is also facing increasing challenges,” the Chairman noted. For example, he said that the demand for universal service funds is growing, and that
a lot the fund’s growth in recent years is attributable to new competitive eligible telecommunications carriers (or CETCs), particularly wireless CETCs, that have begun to receive funding. The number of CETCs is increasing dramatically and is one of the primary drivers of fund growth. Since 2000, CETC … payments have grown from about $1.5 million annually to about $333 million annually.
He added that he “repeatedly [has] expressed [his] concerns with the Commission’s policies of using universal service support as a means of creating competition in high cost areas,” and expressed his doubt whether “it is viable in the long term to continue subsidizing multiple competitors to serve areas in which costs are prohibitively expensive for even one carrier. [He] also expressed concern about how CETC support is calculated. For example, even if their costs are lower, they receive support based on [the] higher costs [of the incumbent carrier.”
Further, Chairman Martin “expressed [his] concerns with the fact that CETCs are not required to meet all of the same obligations as the incumbents. … Placing [the] same obligation[s] on all ETCs would be fully consistent with a policy of competitive and technological neutrality among all service providers.”
In short, regulation should not pick winners and losers. It should not discriminate between providers or services. However, we are currently faced in the telecommunications industry with a variety of regulatory treatments of similar services. It’s good to know that the Chairman of the Federal Communications Commission is working so hard with industry to promote innovation while preserving access to advanced communications in Rural America.
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