Next week, as part of the 2014 Consumer Electronics Show in Las Vegas, I’ll be speaking on a panel discussing the future of Internet-based telephony, or what is referred to in Washington as the “IP Transition.”
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As I’ve written about this topic before, the U.S. in the midst of a profound technology transformation, as the decaying and obsolete public switched telephone network (PSTN) is being replaced by native Internet telephony running on the same wired and wireless broadband networks that deliver Web access and television programming.
Already, more than half of all U.S. homes have cut their connection to PSTN, and the pace is accelerating. But policymakers in Congress and the FCC have so far failed to take needed action to ease regulations that limit the ability of incumbent carriers to retire the increasingly unmaintainable networks, or to set timetables to complete the switchover in an orderly fashion.
Newly-arrived FCC Chairman Tom Wheeler has promised to make the IP Transition a priority. (I’ll be listening closely to his comments on this subject during his on-stage interview at CES with CEA President Gary Shapiro.)
Preparing for next week’s panel, I was repeatedly reminded of an event I moderated in early December, a commemoration by the Progressive Policy Institute of pioneering Internet policy work done during the 1990’s by both Democrats and Republicans, often working together. Those being recognized for their contribution to today’s robust Internet ecosystem included former FCC Chairmen Bill Kennard and Michael Powell, along with White House policy leaders Ira Magaziner, Karen Kornbluh, and Larry Irving.
During the course of a remarkable ninety-minute discussion, the honorees emphasized that during this critical phase in the emerging commercial Internet, important policy decisions were made on a bi-partisan basis.
Both parties also recognized that for the Internet’s true potential to be reached, governments needed to adopt a kind of Hippocratic Oath. As Ira Magaziner, Senior Advisor for Policy Development during the Clinton Administration put it, by and large Washington’s response to calls for Internet regulation were “first do no harm.” Or as Michael Powell, FCC Chairman under President George H.W. Bush said, “We approached it with a kind of respect and humility.”
During those early days, as the panelists reminded us, the U.S. government frequently resisted the temptation to regulate or otherwise control the deployment of Internet technologies or content, trusting instead to the market and, more to the point, to the users themselves.
Doing the right thing, understandably, wasn’t always easy, especially when it meant giving up control. Given the government’s funding of early Internet technology, for example, the Clinton White House found itself in charge of the assignment and coordination of Internet addresses and website URLs, which the Department of Commerce oversaw through a contract with Internet pioneer Jon Postel.
But under a policy initiated during the Clinton Administration and continued under President George H.W. Bush, these key features of Internet governance were turned over to a new international NGO, the Internet Corporation for Assigned Names and Numbers. Since 1998, ICANN, along with other engineering-driven governance organizations coordinated through the international Internet Society, have overseen the explosive growth of the Internet ecosystem in a truly multistakeholder model.
It hasn’t always been pretty. But the continued and mostly failed efforts of national governments and the United Nations to usurp ICANN to pursue anti-Internet agendas demonstrates the wisdom of taking governance as far out of the hands of traditional regulators as possible.
As former FCC Chairman Bill Kennard pointed out, a bi-partisan majority of Congress also made critical contributions to the early Internet by passing the 1996 Communications Act, the first major overhaul of communications law since the breakup of the former AT&T in the 1980’s.
Though the Act didn’t come close to deregulating the communications and broadcast industries completely, many of its provisions recognized, as Kennard said, “the failure of legacy regulation.”
The FCC under Republican Michael Powell continued Kennard’s efforts to keep Internet access competitive and expanding. During his term as Chairman, for example, Powell exercised what he called “vigilant restraint,” issuing a key ruling, later upheld by the U.S. Supreme Court, which held Internet access service was not intended by the 1996 Act to be treated as a traditional telephone service, and was therefore not subject to mandatory unbundling and rate determinations overseen by the slow-moving FCC.
“We didn’t say it was completely unregulated,” Powell reminded the audience. “We believe that it was an important architecture and the government should have a degree of oversight.”
As several of the panelists noted, these decisions encouraged unprecedented investment in increasingly high-speed cable-based Internet access, and spurred incumbent telephone companies to develop their own triple play services offering broadband voice, data, and television based on Internet protocols and advanced technologies including fiber optics.
Light touch regulation of cellular networks, meanwhile, has translated into mobile broadband investments in 4G technologies that are now in the billions of dollars annually. And satellite providers are stepping into the fray as well.
Going forward, inter-modal broadband competition will surely do more to discipline the market than increasing the current level of government intervention.
In retrospect, all the panelists agreed that there was more that could have been done to protect the Internet from the unintentional consequences of excess regulation—including regulation designed to foster Internet adoption.
In particular, the group noted, not enough has been done to protect embryonic technologies from the clutches of national and local governments that believe they know better than the users both what users want and how their needs will change as those technologies evolve.
The transition from PSTN to all-IP networks for voice services is certainly one key piece of unfinished business. While the work of the Internet policy pioneers made possible the free-wheeling world of Voice over Internet Protocol services including Skype and Vonage that users have enthusiastically embraced, no one in 1996 would have imagined that such services would, less than two decades later, have become both better and cheaper than the long-cherished PSTN. And yet they have.
The 1996 Act includes no provision for the retirement of the old network, nor for wresting oversight of incumbent wireline phone companies from a combination of federal and state regulators who have no incentive to acknowledge their diminished relevance in an all-IP world. The IP revolution, at least in this quarter, is being stalled by inertia and self-interest.
Just hours before PPI’s Digital Pioneers event, ironically, senior House Republicans Fred Upton (R-Mich.) and Greg Walden (R-Ore.) announced plans for a major rewrite of the Communications Act starting this year. There is no doubt such a rewrite is badly needed. The old Act, and the FCC that is organized to enforce it, is built around a set of assumptions that have long since been upended.
The law assumes that voice, television and Internet are separate services offered by separate providers, and that different network technologies including PSTN, broadcast radio and television, cable, satellite and mobile each offer unique products requiring separate oversight.The FCC itself is compartmentalized to treat these different services and technologies, well, differently.
But in an all-IP world, as Nicholas Negroponte famously wrote in 1995, “bits are bits.”
The convergence of everything with everything now generates a dizzying supply of conflicting and unnecessarily complicated multi-level regulation, deterring even more investment in next generation technologies and the services they would make possible.
That was hardly the intention of the drafters of the 1996 Act, nor of the policy pioneers who both advised and interpreted it.
Rather, as former FCC Chairman Kennard said at the event, the 1996 Act “didn’t go far enough in really putting a stake in the ground that we weren’t going to regulate the Internet with traditional telephone regulation. And, as a result, we’re still fighting these battles….[I]t is unfortunately casting a shadow over investment and in the industry as a whole.”
Unfortunately for consumers, the bi-partisan spirit that characterized the first decade of Internet policymaking has frayed badly. While Congress, the White House, and the FCC were united in opposing recent attempted international incursions into Internet governance, domestic policy more often finds the parties butting heads rather than locking arms. Passage of a new Communications Act will prove even harder this time.
Today in Washington, there’s a new generation of digital policy pioneers. Let’s hope they can rise to the new challenges of the IP revolution. And heed the wisdom of the first generation who, thankfully, are still providing guidance and leadership.
My new book, “Big Bang Disruption: Strategy in the Age of Devastating Innovation,” co-authored with Paul Nunes, will be released on Tuesday, Jan.7th. Still plenty of time to pre-order!
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