FCC chairman: Telecom rules are broken

Michael Powell wants laws that are written for the Internet, not in spite of it.

FCC Chairman Michael Powell is blunt in assessing telecommunications and broadband laws these days. They're kaput, he says. Finished. Yesterday's mayonnaise. The existing system is "dated--it does not match reality anymore," he said at a conference in Aspen, Colo. today.

This is pretty much conventional wisdom these days. The 1996 Telecommunications Act was aimed at boosting local phone competition, while allowing the Baby Bells into long distance. The Bells have fought the rules forcing their monopolies open at every step of the way, and have largely won. But they've gotten into the long distance business anyway.

Things would look a lot worse if the focus of the telecommunications business hadn't abruptly shifted from voice to broadband services. The Baby Bells now have competition from the cable companies, which have the lead in high-speed Net subscribers. AT&T has abandoned the traditional consumer phone business, but is using cable lines to offer VoIP that still competes with the Bells. Cell phones are also undermining the local phone business.

All of which is creating competition after all, but the telecommunications law is built for the pre-Internet era, not this world of rival broadband platforms.

Congress is probably going to reopen the Telecommunications Act next year, which will mean a flurry of lobbying and campaign contributions. Watch how companies are giving this fall for a taste of what's to come.

Powell suggested creating a new category of lightly regulated services that would include things like VoIP and wireless technology. Others (including us) have suggested a different system that would involve regulating similar applications and services the same way, no matter what kind of network they're on.