Maintaining Critical Rules to Enable Sustainable Communications Infrastructures

• Publication year: 2010

Georgia State University Law Review

Volume 24 , „

Article 2

Issue 4 Summer 2008

3-21-2012

Maintaining Critical Rules to Enable Sustainable Communications Infrastructures

Barbara A. Cherry

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Recommended Citation

Cherry, Barbara A. (2007) "Maintaining Critical Rules to Enable Sustainable Communications Infrastructures," Georgia State

University Law Review: Vol. 24: Iss. 4, Article 2.

Available at: http://digitalarchive.gsu.edu/gsulr/vol24/iss4/2

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MAINTAINING CRITICAL RULES TO ENABLE SUSTAINABLE COMMUNICATIONS INFRASTRUCTURES

Barbara A. Cherry*

Introduction

Under traditional monopoly regimes in the United States, the combination of regulatory requirements imposed on telecommunications carriers enabled the development and sustainability of telecommunications infrastructure that was widely available, affordable and reliable. With the transition from monopoly to competitive regimes, some regulatory requirements within the industry-specific telecommunications regime had to be modified to continue pursuit of underlying policy goals. For example, universal service policy was modified in the Telecommunications Act of 1996 to shift reliance from implicit subsidies within the rate structure to a combination of explicit funding mechanisms and rate rebalancing.¹ However, explicit funding mechanisms have presented their own sustainability problems.

Further deregulatory telecommunications policies are also shifting the boundaries between the traditional industry-specific (common carriage/public utility) and general business legal regimes, but in ill-defined ways and with considerable conflict in interpretation among the courts.³ This is exemplified by considerable disagreement and uncertainty related to judicial interpretation of the preexisting savings

* Professor, Department of Telecommunications, Indiana University.

1. Barbara A. Cherry & Steven S. Wildman, Review of Federal Universal Service Policy in the United States, in making universal service policy: enhancing the process through Multidisciplinary Evaluation 167, 167-69 (B. Cherry, A. Hammond & S. Wildman, eds., 1999).

2. See Barbara A. Cherry, Back to the Future: How Transportation Deregulatory Policies Foreshadow Evolution of Communications Policies, 24 THE INFORMATION SOCIETY 273, 283 (2008).

3. Barbara A. Cherry, Consumer Sovereignty: Redrawing the Boundaries Between Industry-Specific and General Business Legal Regimes for Telecommunications and Broadband Access Service 13-31, Paper presented at the 35th Telecommunications Policy Research Conference (TPRC 2007), Arlington, VA (2007).

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clause in section 414 of the Communications Act of 1934 as well as interpretation of the new antitrust-specific savings clause in section 601(b) of the Telecommunications Act of 1996, the FCC's Truth-in-Billing rules and its savings clause, and the savings clause for state regulation in section 332(c)(3)(A) related to CMRS services.⁴ Perhaps most notable is the FCC's classification of broadband access services as information services in its Cable Modem Declaratory Ruling⁵ and Wireline Broadband Access Order,⁶ and thereby not subject to common carriage regulation under Title II of the Communications Act of 1934. These FCC orders have triggered debate regarding important issues collectively referred to as network neutrality.

I have previously asserted that mischaracterizations of the law of common carriage and its relationship to other bodies of law have created a foundational problem for constructive discourse of deregulatory policies for communications technologies in general⁸ and for network neutrality in particular.⁹ The mischaracterizations lie in an inadequately understood and misrepresented description of the lineage of legal principles that evolved in the United States to address differing forms of access problems.¹⁰ More specifically, the mischaracterizations arise because the statutory regime—instead of the common law—is misidentified as the original regulatory regime of common carriage.¹¹ Such mischaracterizations have led "to a conflation of the legal bases for addressing access problems for end

4. See id. at 13-29.

5. See generally Inquiry Concerning High-Speed Access to the Internet Over Cable and Other Facilities; Internet Over Cable Declaratory Ruling; Appropriate Regulatory Treatment for Broadband Access to the Internet Over Cable Facilities, 17 F.C.C.R. 4798, 4802 (2002) [hereinafter Cable Modem Declaratory Ruling].

6. See generally In the Matter of Appropriate Framework for Broadband Access to the Internet Over Wireline Facilities, Universal Service Obligations of Broadband Providers, 20 F.C.C.R. 14,853, 14,858 (2005) [hereinafter Wireline Broadband Access Order].

7. Barbara A. Cherry, Misusing Network Neutrality to Eliminate Common Carriage Threatens Free Speech and the Postal System, 33 N.KY. L. Rev. 483,501 (2006).

8. See Cherry, supra note 2, at 277-281.

9. See Cherry, supra note 7, at 500-03.

10. Id. at 500.

11. Id. at 501.

2008] MAINTAINING CRITICAL RULES 949

user customers and competitors. As a result, there is a preoccupation with regulation of the provider-to-provider relationship, and unsubstantiated reliance on antitrust principles to address provider-to-customer access problems." Furthermore, such preoccupation with the provider-to-provider relationship, or wholesale market, and antitrust theory is symptomatic of an analytical failure to consider critical issues of policy sustainability.¹³ Yet, based on a historical analysis of the evolution of legal rules and the effects on network infrastructures in the United States, I have asserted that the sustainability of deregulatory telecommunications policies will likely require retention of elements of the common law principles of common carriage and public utilities.¹⁴

This article builds on this prior work, utilizing a complexity theory perspective for both framing the inquiry and guiding analysis, to examine the fundamental question as to what legal rules are necessary for the sustainability of critical communications infrastructures that generate the desired emergent properties of widespread availability, affordability and reliability. This paper asserts that, just as a market economy requires an institutional infrastructure to sustain it, critical network infrastructures with desired emergent properties require specific legal rules for their sustainability. Historically in the United States, infrastructures providing varying types of essential services, such as transportation and communications, were governed by principles embedded in common carriage and public utilities. These legal principles were left intact under deregulatory policies for transportation,¹⁵ but have been eliminated for broadband by the recent FCC rulings that triggered the network neutrality debate.¹⁶ Thus, this article asserts that, properly framed, the network neutrality debate in the United States is symptomatic of the need for a deeper inquiry as to the critical legal

12. Mat500.

13. Id. at 503.

14. Id. at 504.

15. See Cheny, supra note 2, at 27&-281.

16. See, e.g., Cable Modem Declaratory Ruling, supra note 5; Wireline Broadband Access Order, supra note 6.

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rules necessary for sustainable communications infrastructures with certain desired properties.

In search of identifying such critical legal rules, analysis starts with examination of policy developments in the United States. It stresses that a historically accurate understanding of legal developments in the United States reveals the importance of common law principles of common carriage and public utility law—which include imposition of ex ante requirements on providers in the retail market—in generating the desired emergent properties of widely available, affordable and reliable transportation and telecommunications infrastructures. It also shows how recent FCC policy decisions affecting broadband access services, whereby common carriage obligations are not imposed in either the wholesale or retail markets, is a radical departure from the deregulatory policies that have been adopted for transportation as well as narrowband telecommunications networks. It is the elimination of the common law scaffolding for application to broadband infrastructure that has triggered the current network neutrality debate; yet, at the same time, it is the misleading discourse of network neutrality that not only masks the significance of the inapplicability of the common law principles in the retail broadband market but also blocks inquiry into the legal rules in the retail market that may be necessary for the desired network properties to emerge.

This article also incorporates prior research stressing the importance of liability rules on economic incentives to invest in performance, such as network reliability, of communications systems.¹⁷ In this respect, liability rules for telecommunications carriers in the United States evolved along a unique trajectory,

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differing in substantial ways from that of all other common carriers.

17. See generally Barbara a. Cherry, Improving Network Reliability—Liability Rules Must Recognize Investor Risk/Reward Strategies, in rethinking rights and regulations: institutional

Responses to New Communication Technologies 309, 309-33 (Lome Faith Cranor & Steven S. Wildman eds., 2003) [hereinafter Improving Network Reliability]. See also barbara a. cherry, the Crisis In Telecommunications Carrier Liability: Historical Regulatory Flaws and Recommenced Reform (1999)...