Regulation and the entire regulatory paradigm is in flux, said David Irwin, Managing Partner, Irwin, Campbell & Tannenwald, who spoke at this week’s USTA Telecom conference in Las Vegas. He described regulators as “somewhat out of touch and not willing to admit it.” The big problem facing telecom regulation, he said, is that technology advancements now make it extremely difficult to classify and delineate networks and services, which has been the traditional approach to regulation.
The 1996 telecom act, “which was probably obsolete before the ink dried,” defined telecom in several ways that are problematic. The concept of “Information Services” was defined here. The hope was that this definition would help clarify and simplify the regulatory process, but this has not turned out to be the case. Irwin believes that the industry is now moving away from this framework.
Irwin also sees inherent legal flaws in the act. He described the act’s legislative process as driven by an intense lobbying process that filled it with confusing and conflicting language, resulting in a very problematic law. Supreme Court Justice Scalia has described the act as the worst piece of legislative drafting he has ever seen.
The FCC’s most recent Triennial Review “is chaos,” according to Irwin. He expects the latest regulatory paradigm – “old wires” and “new wires” – to be overruled by the courts. Irwin said that the Congress will have to take action to resolve the confusion. Irwin advises telcos to move toward offering new services and creating new revenue rather than investing their energy and money in regulatory battles and waiting for answers to be handed down.
With regard to the Universal Service Fund (USF), Irwin warns that its future is dubious except for “true” hardships, making this the top regulatory issue for rural LECs, many of whom receive substantial revenues from USF subsidies. Since non-voice services such as wireless, Internet, and video have successfully developed in rural markets without the support of a subsidy, many people will try to argue that USF funding should be reduced. Irwin said it may be necessary for the industry to wean itself off of USF. He counsels rural telcos to reinvent themselves as broadband providers, and feels that triple play services offer them the best opportunity for the future.
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