by Peter Huber, Michael Kellogg, and John Thorne
We began our 1992 treatise on Federal Telecommunications Law(1) by noting that "[t]he telecommunications industry is in a period of enormous transition." The assumption that the entire telephone system was a natural monopoly was already giving way to the recognition that telecommunications markets can and should be competitive. The curtain was coming down on a regulatory paradigm that had governed the industry for most of the century. In our second treatise, Federal Broadband Law,(2) we examined the patchwork of largely obsolescent laws governing the convergence of telephony, broadcast, and cable.
As we described in our first book, the old paradigm of telecommunications regulation rested on three basic pillars. First, the protected franchise: would-be competitors were barred from competing or even interconnecting with the enfranchised carrier; natural monopoly thus became a self-fulfilling prophecy. Second, the quarantine: the monopolist was restricted to its regulated sphere and barred from exporting its expertise (and the corrosive influence of its monopoly) into adjacent competitive markets. Third, cradle-to-grave regulation: prices, terms, and conditions of the monopolist's service had to be sold to regulators before they could be sold to customers.
We documented in detail the steady if slow senescence of this regulatory paradigm. On February 8, 1996, the President signed its official death certificate. The Telecommunications Act of 1996 purports to mark the final end of a regulatory model embodied in the original Communications Act of 1934. The model is "as dead as Elvis," as Representative Oxley remarked of the legislation itself, about a month before it finally passed.(3)
Like the legislation itself, however (and like Elvis), the old regulatory model has life in it yet. The new Act does indeed eliminate the AT&T consent decree, which has governed, and often stifled, the telephone industry for fourteen years. It also begins to dismantle barriers to local exchange competition, and launches a (complex) process for allowing Bell companies to enter markets hitherto forbidden to them. Laws governing broadcasters and cable providers have been adjusted in important respects, and a whole new layer of cyber-sleaze regulation has been added. But the hodge-podge of overlapping and conflicting regulatory regimes described in Federal Broadband Law is still largely in place. And as we document here, many other barriers to entry, natural and unnatural, quarantines, and invasive and pervasive regulation will be with us for quite some time, all to the benefit of lawyers and regulators and the detriment of consumers and the economy generally. The King is dead. Long live the King!
This supplement is a collaborative work. The three authors contributed equally to its writing, and all of us worked on all of its sections. We accept joint and several liability for all errors and omissions. The opinions expressed herein are those of the authors and should not be attributed to any company.
Endnotes
1. Michael K. Kellogg, John Thorne & Peter W. Huber, Federal Telecommunications Law (1992 & Supp. 1993, 1995) (hereinafter FTL).
2. John Thorne, Peter W. Huber, and Michael K. Kellogg, Federal Broadband Law (1995) (hereinafter FBL).
3. Bliley Predicts Telecom Bill Action; Foreign Ownership Provision Dropped, 13 International Trade Reporter (BNA) 41 (Jan. 10, 1996).