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Endangered silos?


By Scott Bradner


Historically the pillars of telecommunications regulation around the world have been 1/raise money for the government, 2/protect incumbent carriers, 3/raise money for the government, 4/ maximize response time to technological change, 5/ protect incumbent carriers, 6/ regulate based on transport not services, and 7/ raise money for the government.  Basing telecommunications regulations on these pillars has worked, for some definition of worked, for a long time. But, at least at the US Federal Communications Commission (FCC), things may, just may, be on the verge of changing.  It will take some time yet to know whether any change will actually be for the better.


A quick glance at your phone bill will verify the revenue generating imperative that the telephone regulators have been working under and show how well they have carried out that imperative.  A quick glance at the coverage maps of the major regional telephone companies will show you how well the telephone regulators have protected the incumbent carriers.  A quick glance at the phone on your desk will show you how well this combination has protected us from innovation.


Over many years the regulators have built up very impressive accretions of facility-based regulations.  There are separate regulatory regimes for each of the legacy types of service: fixed-wire telephone, wireless telephone, cable TV and satellite.  The regulators have steadfastly insisted that this division makes sense in spite of the last ten years of service convergence.  Somehow telephone service over twisted pair copper wire, coax cable, cellular radio, satellites or over IP over any of the above were different things and needed to be regulated on their own.


The divisions in the real world have been getting far less clear for a number of years and, with so much convergence of services over IP, any facility-based differentiations are almost entirely in the minds of the regulators and the incumbent carriers.


But some glimmers of understanding may be coming from the FCC.  FCC Commissioner Kathleen Q. Abernathy, in remarks prepared for delivery at a October 21st Yankee Group Telecom Industry forum, asks the Commission to move away from what she calls "old regulatory silos" towards regulations based on the "functional nature of the services being offered rather than the legacy category which the provider happened to belong."  Heady stuff, but she does not stop there.  She points out that the FCC recently asked for public comment on any rule change that would serve the public interest and implies that changes might even be made.


But it will not be easy for the FCC to do what would help most, which is to get out of the way and let the revolution created by the new technologies that render the traditional telecommunications companies endangered species run its course.  Do not try to protect the remainders of the Bell System with regulations.  I do not hold out much hope for this to happen soon.  Even someone as forward looking as Commissioner Abernathy seems to be missing a basic problem when she says that one of her top priorities is to ensure that the FCC remains relevant as the world changes.  Preservation of regulators or incumbent carriers should not be a design goal -- an innovative telecommunications industry should be.


disclaimer:  Silo-protection used be a goal at Harvard, that may be changing but the above is my evaluation