The 1996 Telecommunications Act.

• Author: Robbins, Jim
• Position: Telecommunications Act of 1996: Ten Years Later Symposium

1. INTRODUCTION II. THE 1996 ACT: A NEW HOPE III. REFORM BUT WITH CAUTION IV. CONCLUSION I. INTRODUCTION

   Without a doubt, the Telecommunications Act of 1996 ("1996 Act") has been a triumph for the cable industry and consumers, ushering in a new era of competition that has greatly benefited the public interest. The law's implementation has not been perfect. But on the whole, it has reinvigorated and revitalized telecommunications as we know it, arguably hastening the greatest sea change ever to affect this country's telecommunications infrastructure.

   The 1996 Act was also just the first step. In the ten years since passage, the world has changed dramatically. Internet-enabled wireless devices are becoming ubiquitous. Broadband service is fast becoming available just about everywhere. And we are moving to an on-demand world in which the consumer has total control. As Congress makes the difficult choice of either revising or rewriting the 1996 Act, lawmakers have much to consider. But they would be wise to retain some core principles, including the 1996 Act's dedication to the encouragement of facilities-based competition and to regulatory parity. Only with built-out facilities, where like services are treated alike, can competition flourish and consumers truly benefit.

   As Congress began work on the 1996 Act fourteen years ago, the cable industry was living under the Cable Television Consumer Protection and Competition Act of 1992 ("Cable Act"). The Cable Act could only be described as overbearing and burdensome. Its complicated price regulation was making it impossible for Cox and other cable operators to fund needed investments to expand our channel capacity and transform infrastructure from one way analog networks to two way digital networks. Accordingly, our customers were being denied the new services they desired.

   It was a frustrating time for us. As an industry, we saw rate regulation as a harsh, overbroad, and misguided effort to curb the rising cost of cable service because it ignored the fact that cable service was providing, on a highly capital intensive network, the additional content demanded by our consumers. Indeed for two decades, cable operators were in a full court press to wire the entire country as demand increased exponentially. People wanted cable service so badly that they literally chased our trucks down the street. Those days brought great promise and prosperity, but they also spurred inevitable growing pains. Service was sometimes sporadic. Telephone wait times could be long. And, yes, as cable operators added more and more content to the mix, they had no choice but to pass those costs on to customers in the form of higher prices. Customers, of course, were not interested in our economics. Many cable critics, meanwhile, seemed obsessed with forcing an artificial correlation between cable rate increases and the rate of inflation. This was folly. The overall inflation rate never had much to do with the higher license fees we were paying to add new programming or the money we were spending to build out our networks. It was an apples-to-oranges comparison if there ever was one. But such obvious realities were ignored by our critics.

   In short, the Cable Act was bad medicine for consumers and for the industry. It erected economic barriers for many cable operators to make necessary investments to improve capacity and service, add new channels, or otherwise experiment with new technology. Meanwhile, the Federal Communications Commission ("FCC") issued decision after decision to try to bring order to chaos. But, while the FCC often did the best it could, its edicts could be confusing and contradictory. We won some small victories. One example, the "going-forward" rules, allowed us to modestly increase rates when we added new channels sought by our customers. But by this point, direct broadcast satellite competitors such as DirecTV and EchoStar were already plowing millions of dollars into marketing campaigns designed to peel off our customers. The cable industry fought hard and largely survived these circumstances. But, to use a sailing term, the Cable Act put us in irons. We were anxious for a fair shake in the marketplace because we knew we were building out a superior telecommunications platform.

2. THE 1996 ACT: A NEW HOPE

   Over time, the cable industry was able to make its case against the Cable Act. But our opportunity really came in the mid-1990s when Congress--concerned that current telecommunications regulations were strangling competition--initiated a massive overhaul of the 1934 Communications Act. The mantra was the encouragement of facilities-based competition as a substitute for regulation. It was a chance for the cable industry to finally throw off the shackles of the Cable Act and enter a new era in which we could compete for voice and data customers and in which telephone companies could compete in our core video business. Confident that our entrepreneurial spirit, marketing prowess, and new focus on customer service (the latter was always a Cox strength) would win the day, we happily welcomed the telephone companies ("telcos") into a world where line of business restrictions would be a thing of the past. We were ready for competition. And the 1996 Act was a great gust of fresh air and source of hope for those of us toiling under the Cable Act's repressive regime.

   In contrast to some of my cable-industry peers, I was an early believer in residential telephony. In fact, as passage of the 1996 Act approached, Cox started installing telecommunications equipment in select markets so that we would be ready to go...