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CHAPTER III - Approaches to Governance

How should government maximize the public interest in the regulation of communications? While both Democrats and Republicans are committed to achieving this goal, their ideas about what constitutes the public interest and what means should be used to pursue it differ in a number of ways. To stake out the contrasting views of the parties, and to explore how much common ground may lie between them, representatives of the two parties laid out the key premises that help to shape their approaches to communications policy.

David Redl, Chief Counsel for Communications and Technology on the House Committee on Energy and Commerce, began by framing his perspective in two ways—generationally (he is a Millennial) and politically (Republican). He started by noting that his generation has grown up in a world shaped by the Internet, a world that is very different from one dominated by monopoly providers who needed to be carefully regulated. To illustrate the differences between generational experiences, Redl quoted his former boss at the CTIA-The Wireless Association, Steve Largent, who once remarked that “his own generation fought to have unlisted telephone numbers, while Redl’s generation voluntarily puts their phone numbers on Facebook.”

The Internet, which carries a large and still growing percentage of all electronic communications, is not evolutionary but revolutionary, bringing with it fundamental changes in our economic assumptions. Today, neither time nor distance is relevant in calculating the cost of communications (though, as discussed later, location, along with demographic factors like age and income, still influence access to communications capabilities). And as available bandwidth continues to increase and variable communication costs continue to fall toward zero, the need to count and charge for the number of bits sent and received may also disappear.

Redl argued that policymakers should approach the Internet as a unique entity and resist the temptation to fall back on older regulatory paradigms. History may be informative, but it is not dispositive. In a communications environment that is shifting, policymakers need to be willing to question old assumptions and embrace new ideas. For example, is the concept of a common carrier still valid in the Internet age? Does the goal of reaching 100 percent broadband adoption need to be reconsidered when some households may not see a need for a fixed broadband connection? And what will happen when the next generation wireless standard, 5G, arrives and further blurs the line between wired and wireless communications?

In the midst of these questions, how should we move forward? Redl offered a simple formula: incent innovation, dis-incent regulation. Accept market decisions, even if they may not fit with one’s preconceptions. Avoid deciding in advance what is acceptable, but try to understand and respond to changing circumstances. And recognize that rules need not be perpetual but can be time-limited or subject to being revisited and revised.

Speaking for the Democratic position, former FCC Chairman Reed Hundt agreed with Redl that “generational change means cultural change,” which should be reflected in our approach to policymaking. The attitudes of Millennials are, in fact, completely different than those of earlier generations. They are much more pragmatic and less concerned with right and wrong; they believe in experimenting and making changes based on the results of those experiments; they value community over individual action; they are very tolerant and have a deep belief in equality, but they are unwilling to accept a “one size fits all” model of regulation. They are acutely aware that the standard of living has gone down for many, especially those near the bottom, and that economic inequality has increased substantially. Their bottom line is that government is broken and the way it works needs to change.

Like Redl, Hundt suggested that the fundamental problem of government is not too much partisanship (real as that may be) but the persistence of 18th century government in the 21st century. In fact, Hundt asserted that, “There is nothing about the structure of existing government agencies and departments that maps against the realities of life today.” In other words, there is a deep mismatch between the nature of many of the problems that need to be addressed and the mechanisms available to address them.

Beyond structural changes to the regulatory process—a long-term project that is not amenable to quick fixes—there are discrete policy areas that include but go beyond communications issues that remain high priorities for action for Democrats:

  • Although the form that monopolies take today may be different than the past, the problem of monopoly power has not gone away and will need attention.
  • The problem of economic inequality needs to be addressed. Increasing the minimum wage is one immediate goal. Making vital government services more widely available by digitizing them and putting them online is another potential lever for addressing inequality.
  • Despite progress in increasing access to broadband, more needs to be done to move the number of households without broadband service to zero.
  • Balancing the priorities of energy and the environment remains an urgent priority. Current policy is clearly out of date: Even though the “product” is identical everywhere, we continue to leave much regulation of energy to the 50 states. The Department of Energy is mainly concerned with atomic weapons, and the Federal Energy Regulatory Commission (FERC) is largely ineffective. Despite the crucial importance of energy policy, there is no equivalent of the FCC for energy in this country. What is needed is an agency with clear powers to deal with energy regulation.
  • Finally, after years of stalemate, it is high time to deal with the problem of immigration. Sustaining economic growth depends on having an immigration policy that recognizes the value of attracting people who can contribute to this country’s strength rather than focusing just on keeping out those who might be security threats. One question that needs to be asked is why is an enforcement agency (Department of Homeland Security or DHS) in charge of immigration policy? In a country that has been built by immigrants, it would seem to make sense to address this issue strategically, not just defensively.

Karen Kornbluh, Executive Vice President for External Affairs at Nielsen, who also served as an advisor to the Clinton campaign, added that a Clinton administration’s agenda would have a strong focus on promoting economic growth and inclusion, and on the role that government can and should play in serving the real needs of people. She confirmed several of the points Hundt made and added a few other issues that were identified as priorities for a Clinton administration:

  • A major focus for policy should be on the needs of “Main Street”—ordinary citizens who have been left out or left behind by economic development and technology development trends.
  • In terms of education and economics, every child should have an opportunity to learn computer science and have access to higher education. Other policies support the development of targeted “nanodegrees,” the deferral of student loan payback for entrepreneurs, and providing flexible benefits for workers who change jobs frequently.
  • Internationally, the free flow of information should be guaranteed.
  • Government needs to work smarter to help citizens feel that government is efficient and accountable. The top citizen-facing government services should be updated and made easily available online.

Following these presentations, the conference participants contributed their perspectives, expressing support for or questioning some of the priorities or adding issues to the list of priorities.

FCC Commissioner Mignon Clyburn and Howard University PhD student and Guest Scholar Alisa Valentin both challenged the notion that “distance is dead” as a result of modern communication technologies. They both noted that there remains a large distance—both geographical and economic—between advantaged and disadvantaged regions of the country. In particular, Commissioner Clyburn asserted, there is a persistent gap between the availability of high speed networks in rural areas of the country compared to urban centers, and counties that are marked by “persistent poverty” (many of which are rural)i typically have poor access to telecom services. Professor Allan Hammond of the Santa Clara University School of Law cautioned that more technology is not always the solution to every problem. In fact, indiscriminately pushing technology could actually widen the gap between the haves and have-nots of the country.

Rob Atkinson, President of the Information Technology and Innovation Foundation (ITIF) noted that the issue of economic inequality is actually quite complicated. Recent studies from credible sources (e.g., the Federal Reserve Bank of San Francisco and the Congressional Budget Office) indicate that while average wages have increased, median wages for full-time workers have also increased over the past eight years. While it is true that the largest gains have gone to the top earners, incomes have also risen for workers at the bottom.

The real cause of stagnant income for many, he suggested, is not the distribution of income but rather the historically slow growth in productivity, which is the most fundamental factor driving income gains. Over the last decade, productivity has increased only about 12 percent, compared with an increase of 34 percent in the 1990s. The average annual rate of productivity growth from 2007 to 2015 has declined to 1.3 percent, well below the long-term rate of 2.2 percent per year from 1947 to 2014. And for the first time that productivity data has been collected, the U.S. experienced a decline in productivity over three consecutive quarters. The most important question, Atkinson concluded, is how we can harness technology to increase productivity and be a reliable engine of prosperity.

Kathleen Ham, Senior Vice President for Government Affairs at T-Mobile, added that “a lot of problems can be solved by healthy competition,” and that supporting competition, which in turn spurs innovation, can obviate the need for regulation. However, she noted that governments tend to like the status quo, which can diminish their commitment to promoting competition.

Joanna Shelton of Google noted that much of the rest of the world is tightening control over the Internet and other networks. For example, Europe is currently redoing all of its communications regulation with minimal public input. It is important that the U.S. serve as a counter to this trend by making sure that it protects the values of competition and innovation that have set this country apart from other countries. She cited the work nearly 20 years ago of Ira Magaziner, then a senior advisor to President Bill Clinton, on a “Framework for Global Electronic Commerce” that started from the premise that well-functioning markets are highly efficient allocators of capital, and that the Internet is “as close to an optimum market as we have seen.” Given that government should intervene only when there are market failures, Shelton argued that there is no compelling reason for the government to get involved with regulating the Internet. The U.S. remains a “shining example” for the rest of the world in supporting a free Internet—and it is important that it maintain that role.

FCC Chairman Wheeler raised a note of caution about offering any recommendations that called for an expanded role for the FCC without addressing the reality that overall funding for the Commission has been steadily declining in recent years. Budget cuts have led to the elimination of staff positions, including economists and engineers, with the result that the agency is currently operating with the lowest number of full-time employees in modern history. Wheeler noted that given that the message to the FCC from Congress has been for it to “do less with less,” a larger role for the Commission would necessitate a reversal of this stance.

ENDNOTES
i The U.S. Department of Agriculture, defines counties as persistently poor if 20 percent or more of their populations were living in poverty over the last 30 years (measured by the 1980, 1990 and 2000 censuses and 2007-11 American Community Survey 5-year estimates). Using this definition, there are currently 353 persistently poor counties in the United States, comprising 11.2 percent of all U.S. counties. Available online: www.ers.usda.gov/topics/rural-economy-population/rural-poverty-well-being/geography-of-poverty.aspx.

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