- The Washington Times - Sunday, December 19, 2004

When I was growing up, when someone would get religion (it was a red state) and profess faith, but then fall away from their religious practice and slip back into their former way of life, it was called “backsliding.” Even though he knew better, some temptation from his former life was so powerful he was willing to go back to his bad old ways.

Well, we’ve just had some serious backsliding at the Federal Communications Commission (FCC), the regulatory agency for broadcast and communications technologies.

The FCC has been one of the most rogue agencies in recent memory. Charged with writing regulations to carry out the will of Congress in the Telecom Act of 1996, the agency has been rebuked by the D.C. District Court no less then three times for writing regulations that flew directly in the face of the Act’s deregulatory intentions.

The FCC has behaved this way because regulators cannot be trusted to deregulate. They micromanage industries, they pick winners and losers, they usurp the normal function of markets by interfering with prices. But regulators do not deregulate.

Finally this year, the commission seemed to get religion. In just the last few weeks, the commission made the correct decision on Voice over IP (VoIP), determining states could not regulate this transforming new technology. State utility commissioners, natural FCC constituents, want desperately to tax and regulate VoIP. They view it as a chance to raise revenue and to regulate. But the FCC did the right thing in the face of what must have been enormous temptation.

And earlier this year, the FCC announced that if a company built a new broadband network, it would not be forced to lose money on the new network. In other words, broadband networks would be free of the kind of line-sharing rules that plague existing telephone networks, allowing competitors a virtual free ride while they cherry-pick the best customers.

This was the right decision on broadband. It made economic sense and showed respect for the rights of those who create, invest, build and own. It was the principled thing to do.

But the FCC’s broadband decision was also a victory for the Bells, and thus occasion for that most powerful of all temptations for regulators:to try to please all sides. Having made a decision that favored “one side,” the natural tendency for a regulator is to look for an opportunity to do something that favors the “other side” next time.

Well, it’s next time.

On Wednesday, the FCC announced new network-sharing rules that replace the ones the court tossed out (for the third time) this past March. Until recently, the assumption was that, chastened by the courts and driven by the free-market convictions of Chairman Michael Powell, the commission would do the right thing and quickly phase-out line-sharing and unbundling regulations.

But the FCC has backslid, striking out for the third time in its duty to carry out the intent of Congress through the Telecom Act of 1996. The commission acknowledges the damage done by unbundling regulations but can’t resist leaving them in place for another year on mass market lines, and indefinitely on high-capacity lines used by businesses.

The FCC seems to have worked from a foregone political conclusion that high-capacity business lines would remain under the unbundling regime, and then manufactured an absurd standard for impairment to justify their conclusion.

It is unbelievable that almost a decade after the ‘96 Act, the FCC still has not carried it out. It is almost as if the FCC purposely tried to thwart the intent of Congress. The FCC failure will result in more lawsuits and continued regulatory uncertainty for telecom companies and investors. It is all the proof Congress should need that it’s time for new telecom legislation that not only completely deregulates communications, but also reforms the FCC.

Tom Giovanetti is president of the Institute for Policy Innovation (IPI), a public policy research institute in Dallas.

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