First Principles for an Effective Rewrite of the Telecommunications Act of 1996

The increasing centrality of the Internet in modern communications, together with massive changes in the landscape of the telecommunications market, have intensified the calls for Congress to overhaul the Telecommunications Act of 1996. In this paper, we analyze this looming legislative challenge by dividing it into two sets of issues: first, issues concerning the proper substance of telecommunications policy reform; and, second, issues concerning the appropriate institutions for carrying out that reform. In Part I, we argue that Congress should require regulators to adhere more closely to (and justify departures from) basic antitrust principles in developing the substance of competition policy. In particular, we explore how those principles would have brought greater predictability and analytical rigor to the FCC's implementation of statutory provisions requiring incumbent telephone providers to lease parts of their networks to competitors. Moreover, we explain how antitrust principles can now inform the current debate over whether to regulate broadband platforms to prevent discrimination against independent providers of applications like voice over Internet protocol. In Part II, we turn to Congress's institutional choices in reforming telecommunications regulation. Despite our advocacy for antitrust-oriented rules of decision, we argue for a continued reliance on the FCC, rather than antitrust courts, as the appropriate institution for superintending the efficient development of competition throughout the industry. Not only does the FCC enjoy specialized expertise in the economics and technology of the telecommunications industry, it also enjoys a distinct advantage over courts in developing and enforcing complicated - and necessary - prescriptive rules, such as those governing interconnection and its associated intercarrier fees. At the same time, the FCC will increasingly need to refocus its energies from prescriptive regulation to a new emphasis on after-the-fact enforcement and market-monitoring, much like the role played today by the Federal Trade Commission