Reflecting on twenty years under the Telecommunications Act of 1996: a collection of essays on implementation.

• Author: Wright, Christopher J.
• Position: Jonathan E. Nuechterlein through Christopher J. Wright, with footnotes, p. 44-82

JONATHAN E. NUECHTERLEIN *

I was a new telecommunications lawyer at the FCC when the 1996 Act (1) was passed. Within the Commission, people greeted the event with two distinct reactions. In public, they revered the far-sighted magnificence of this landmark legislation. In private, they began puzzling over the details and became more and more confused. For example, no one could tell exactly what role Congress wanted the Commission (as opposed to the states) to play in the pricing of network elements and interconnection. This was a glaringly obvious question, so why was it so hard to discern Congress's answer from the text of this highly detailed law?

The 1996 Act and its interpretive conundrums followed me when I left the FCC later in the year to join the Solicitor General's office. There I prepared briefs explaining to the Supreme Court why the FCC was right to read the 1996 Act as it did. I spent many long hours staring hard at the cryptic turns of phrase in Sections 251 and 252. (2) What I found was uncanny. For almost every major dispute, Congress had given each side almost equivalent statutory ammunition. An oblique phrase in one corner of the statute would balance a seemingly contradictory phrase in another. The Supreme Court noticed this too, calling the 1996 Act "a model of ambiguity or indeed even self-contradiction." (3)

This self-contradiction may have been no accident. The legislative enterprise often requires compromise. Sometimes compromise takes the form of a clearly articulated middle-ground solution. But sometimes, as in the 1996 Act, legislators compromise by enacting statutory ambiguity. Such ambiguity consigns important policy issues to years of legal uncertainty and punts their ultimate resolution to agencies and courts. But ambiguity also comes with a political benefit: each legislator can tell disparate constituencies that he or she had their best interests in mind and can blame someone else for any contrary interpretation that wins out.

Of course, Congress faces acute political challenges whenever it enacts major legislation with high commercial stakes. In the telecommunications sector, however, Congress also faces the equally difficult challenge of seeing around the technological bend. The 1996 Act was passed mainly to increase competition among circuit-switched providers of landline telephone services. Congress acknowledged the Internet but did not clearly foresee the broadband revolution and thus had little to say about broadband Internet access (fixed or mobile). By the time I rejoined the FCC in 2000, that statutory omission had become painfully clear, as stakeholders began arguing about whether and how the FCC should regulate broadband Internet access. Sixteen years later, that dispute has only intensified.

All this said, it would be unfair to criticize Congress too harshly for politically expedient compromises and lapses of technological foresight. Arguably, the 1996 Act was among the better legislative packages Congress could have been expected to pass in the mid-1990s, given the political constraints and widespread technological assumptions. For example, by centralizing various policy issues at the national level, the 1996 Act enabled the FCC (eventually) to rationalize an increasingly chaotic intercarrier compensation regime and bring universal service support into the modern era. Congress also wisely gave the Commission forbearance authority to undo statutory mandates that outlive their usefulness.

If and when Congress considers new telecommunications legislation of comparable scope, it should draw two main lessons from the 1996 Act and its aftermath. First, as with the forbearance provision, Congress should continue legislating on the premise that competition, when effective, promotes consumer welfare more effectively than traditional regulation can and that policymakers should retain broad discretion to deregulate as appropriate.

Second, because this is a field characterized by unpredictable technological flux, Congress should enact mainly high-level principles and leave most of the details for the Commission and the marketplace to address as industry conditions evolve. There will always be room to question and litigate the wisdom of the FCC's regulatory choices. Ideally, however, that litigation should concern whether those choices make economic and technological sense in today's marketplace, not whether they comport with obscure statutory phrases written many years ago with different regulatory problems in mind.

* Jonathan Nuechterlein is General Counsel of the Federal Trade Commission. The views expressed here are his own and not necessarily those of the FTC or any Commissioner. He served as Special Counsel at the Federal Communications Commission from 1995 to 1996, as Assistant to the Solicitor General from 1996 to 2000, and as FCC Deputy General Counsel from January 2000 to early 2001.

(1.) Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified as amended in scattered sections of 47 U.S.C.).

(2.) 47 U.S.C. [section][section] 251, 252 (2012).

(3.) AT & T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 397 (1999).

COMMISSIONER MICHAEL O'RIELLY *

I will be forever grateful for the opportunity to work on the Telecommunications Act of 1996, (1) albeit as a very junior staffer. That legislative experience laid a solid foundation for the rest of my congressional career and eventually helped lead to my current position.

Generally, I believe that it is extremely helpful when Congress speaks on a particular issue, especially those that are communications-related, because it clarifies what is expected of regulators and industry participants. Appropriately, Congress should be complimented for enacting the 1996 Act, since it was the first comprehensive overhaul of the statute in over 60 years. And many of its fundamental principles still hold true, especially the idea that competition and free markets should reign over monopolies and regulation.

But in many regards, as can be the case with ambitious legislative efforts, the Act was a melding of different themes and compromises. Certain central provisions that seemed paramount at the time were somewhat backwards-looking and perhaps, in retrospect, naive. For instance, responding to the judicial breakup of AT&T (2) by opening the then-existing long distance market in exchange for local switched access voice competition. (3) The relevance of those markets quickly faded, but some of those provisions have taken on an unforeseen life of their own. Equally important, the adoption of general and vague statutory language in order to reach consensus has enabled many practitioners and the Commission to abuse such provisions for unrelated, unintended or ulterior purposes.

It is important to note that, at the same time the Act was being implemented, the unregulated tech economy rushed ahead, making many statutory provisions and assumptions obsolete, and leaving the Commission in the dust or even on the sidelines. While certainly there were discussions regarding the nascent Internet during the Act's formation, no one could have envisioned the colossal role it would eventually assume in the communications regulatory environment or Americans' daily lives. Since then, the disruptive effect of the Internet has blurred the lines between telecommunications, media and technology industries, and the Commission seems intent on dangerously flexing its regulatory muscle to impose legacy rules on modern technology to avoid being made irrelevant in the future.

My central lessons from the 1996 Act experience add up to this advice for my friends on Capitol Hill: be specific, include sunset provisions where appropriate to keep new technologies free from old rules and bargains that have nothing to do with them, and be forward-looking. There used to be greater trust between the Congress and the Commission with regards to executing the provisions of a law. That no longer holds, and it is all-important that Congress write exactly what it wants and does not want from the Commission. Do not leave it up to chance. At the same time, spending a majority of energy on the hot topics of the moment, like imaginary net neutrality problems, prevents real focus on shaping the law for decades to come, rather than on the past.

* Commissioner Michael O'Rielly is currently serving his second term as a Commissioner of the FCC. In 1996, he was a Telecommunications Policy Analyst for the House Committee on Energy and Commerce.

(1.) Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (codified as amended in scattered sections of 47 U.S.C.).

(2.) See United States v. AT & T, 552 F. Supp. 131 (D.D.C. 1982), consent decree terminated sub nom., United States v. W. Elec. Co., No. 82-0192, 1996 WL 255904 (D.D.C. 1996) (terminating consent decree nunc pro tanc, as of Telecommunications Act's February 8, 1996, effective date).

(3.) 47 U.S.C. [section][section] 251, 271 (2012).

MICHAEL PELCOVITS *

The Telecommunications Act of 1996 (1) provided two important, and very different, mechanisms for increasing competition in wireline telecommunications markets. First, it removed barriers to entry, such as the legal prohibitions and obstacles (such as access to right-of-way) that were essential to new entrants. (2) In the same category, I also include the Act's imposition of very basic market rules, such as interconnection obligations that were a necessary foundation to introducing competition in previously monopolized markets. (3) Second, the Act enabled a regulation-intensive path to competition, whereby incumbents were required to offer unbundled network elements ("UNEs") at regulated rates. (4) I believe the first mechanism was a great success and the second a great failure. As the success is relatively obvious, let me focus on the failure.

The concept behind the "regulation-intensive" UNE approach was that certain elements, or components, of the local...