Convergence and competition - at last.

• Author: Bush, Antoinette Cook

Nearly nine years after enactment of the 1996 Telecommunications Act and thirteen years after the 1992 Cable Act, the convergence set in motion by these landmark statutes is beginning to materialize. Intermodal competitors are entering each other's voice, video, and data markets, investing substantial capital to build out the facilities necessary for large scale competition and operation. Indeed, despite nearly a decade of false starts, cable operators seem poised (finally) to roll out local phone offerings in the near term to compete against the regional bell operating companies ("RBOCs"). Such entry is significant considering that today, cable is the largest provider of wire-based broadband services. Moreover, while RBOC partnerships with Direct Broadcast Satellite ("DBS") operators have temporarily filled their video needs, their long term plans clearly revolve around the provision of fiber-based video offerings.

While a boon for consumers, who enjoy increased choices and lower costs, this convergence presents significant challenges for policymakers contemplating revisions to the 1996 Act. Indeed, constrained by an obsolete statutory scheme, the FCC has engaged in regulatory incrementalism rather than regulatory overhaul during the past several years. Agency gradualism, coupled with technological advances and the rapid expansion of IP-based services, has caused regulatory policies to fall behind current marketplace realities. In light of the gap between regulationand the actual marketplace and technological realities, some members of Congress and the FCC, as well as many leaders of the communications industry, recognize the need for legislative and regulatory action to rationalize the policies applicable to voice, video, and data service providers.

The policy model for converged service providers should be the same light touch regulation applied to the wireless industry. As exemplified by developments in the wireless market over the past ten years, the existence of unregulated facilities-based service providers not only results in decreased prices, but also expanded and innovated services for consumers. With the advent of PCS (and Nextel-type) technologies, the wireless marketplace experienced a significant increase in facilities-based competition, directly resulting in dramatic price declines and a substantial increase in innovative content-based service offerings. Lacking regulations covering their facilities or the bundles they...