Will Ideology Block Opportunity? Regulatory Reform in the Infrastructure Industries.

AuthorMayo, John W.
PositionAnnual Symposium Issue

TABLE OF CONTENTS I. INTRODUCTION 200 II. THE PRACTICAL NEED FOR REGULATORY REFORM IN THE BROADBAND COMMUNICATIONS SECTOR 201 III. LOW HANGING FRUIT 206 IV. CONCLUSION 210 I. INTRODUCTION

It is no secret that the United States is politically fractured. Citizens have increasingly retreated or have been drawn to information streams that identify different profound problems facing the country and which offer vastly different solutions. (1) This tendency creates and reinforces knee-jerk resistance to policy proposals from the opposition political camp. Democrats often reflexively reject Republican proposals, and Republicans similarly and with equal speed reject out-of-hand policy proposals offered by Democrats.

In some cases, this political polarization is based on fundamental and substantive grounds that stem from profound ideological differences. In such cases, proposals for policy change fail to gain traction or end in stalemates. (2) Even in the rare instances where the roughshod politics of the stronger party prevail to advance a policy, the results remain vulnerable to the likelihood of reversal in the event that the influence of the politically stronger group falters. (3)

While this ideological standoff is disheartening, it need not bring policy progress to a halt. Indeed, in the realm of regulatory reform, a number of practical opportunities exist to improve economic welfare, and careful consideration of those opportunities points toward considerable agreement, if not consensus among policymakers of all political stripes. These opportunities create a potential path for practicality to forge agreement, even in the face of widespread ideological discord across American society.

This basic thesis is no more evident than in the set of infrastructure industries that policymakers across the political spectrum have identified as crucial for U.S. competitiveness in the 21st century. As a case in point, this paper will focus on broadband technologies (both wired and wireless), which policymakers of all political stripes have identified as crucial for economic growth. (4) In the specific case of broadband, there is little to no disagreement that numerous regulatory policies touch upon, and may be constraining, the deployment and adoption of broadband in the United

States. (5)

  1. THE PRACTICAL NEED FOR REGULATORY REFORM IN THE BROADBAND COMMUNICATIONS SECTOR

    Any discussion of forward-looking regulatory policies governing broadband infrastructure should begin with three widely agreed to premises. First, broadband deployment enhances Americans' personal lives and stimulates productivity and economic growth.(6) Second, next-generation broadband networks will require massive capital investments. (7) Third, the investments necessary to produce widely-deployed next-generation broadband infrastructure in the United States will be provided almost exclusively by the private sector. (8)

    Given these basic premises, regulatory policies governing the broadband sector take on additional importance. Specifically, in addition to the traditional role of consumer protections afforded by regulation, it is essential that modern regulation be fashioned to complement and accelerate the deployment of next-generation broadband networks. Indeed, with the rapid growth in demand for mobile and fixed broadband services, the economic fact is that failure to enable infrastructure buildout will produce an array of maladies ranging from elevated prices to reduced quality. These realities, in turn, require a careful review of the regulatory structure governing broadband communications, especially regulations pertaining to broadband infrastructure. It is important to note, however, that such a review and consequent reforms should be driven not by the ideological distaste for regulation so often championed in political discourse, but rather by the practical possibilities that regulatory reforms could accelerate America's efforts to deploy and adopt 21st century broadband. Both individuals' personal lives and the United States' competitiveness would benefit from such reforms.

    The potential for practical regulatory reform is especially promising in the modern broadband sector. This is for several reasons. First, the regulations governing the communications sector were largely established within an environment of monopolistic provision of communications services, which starkly differ from the 2018 marketplace.(9) Through the passage of the Telecommunications Act of 1996 ("Telecommunications Act"), the telecommunicationsindustryhas evolvedrapidlyintoan ecosystem in which effective competition is the norm. (10) Competition among broadband providers has increasingly taken on characteristics in which firms race to deploy next-generation facilities that have more bandwidth, and provide higher quality at greater speeds and at lower prices. (11) In such a Schumpeterian environment, it is especially important to be aware of the potential for existing regulations to slow innovation and the time-to-market deployments of next-gen broadband facilities. (12) More fundamentally, where consumers are protected by competition (and the general protections afforded by the United States' agencies enforcing competition policy, such as the Federal Trade Commission (13)), some regulations that would otherwise be necessary for consumer protection are no longer required.

    Second, in some cases, regulations that govern the communications sector were designed to be congruent with particular point-in-time technologies. (14) But the technologies that provide modern communications are stunningly different than those employed only a few years ago. (15,16) Consequently, it would seem incontrovertible that technology-specific regulations that were established to govern the wireline provision of plain-old-telephone service ("POTS") are unlikely to advance economic welfare in a world in which consumers increasingly turn to wireless smartphones to handle an array of voice, data, and video communications services. Similarly, arduous regulations governing large macro-cell antennas to support cellular service become deterrents to the rapid deployment of much more densely-packed, but substantially smaller, micro-cell antennas that are required to provide next-generation 5G wireless services.(17) Such regulations are ripe for reform.

    Third, given the overwhelming need for capital investments to expand and enhance the broadband platform in the United States, regulations that retard investment also become candidates for reform. In some cases, the investment-retarding effects of regulation may be offset by countervailing and significant consumer protections afforded by the existing regulation. In other cases, however, regulatory reforms may be identified that can ensure consumer...

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