Time For A Restructured FCC? Freedom of Consumer Choice Act Says Yes

Time For A Restructured FCC? Freedom of Consumer Choice Act Says Yes

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Over the past three months, there have been calls for the Federal Communications Commission (“FCC”) to take on a streamlined role in telecommunications regulation. Legislators and commentators have expressed concerns about the impact that an intrusive FCC may have on innovation, consumer prices, and regulatory costs, particularly in the area of broadband access. Legislators, such as Senator Jim DeMint, Republican of South Carolina, have expressed a preference for the model followed by the Federal Trade Commission (“FTC”).

According to The Washington Post, recent discussions between Google and Verizon have included a proposal that the FCC take on an adjudicatory role, playing referee where there are violations of anti-competition rules.

So what would an adjudicatory FCC look like? At its barest elements, an adjudicatory FCC would look more like a court than a legislative body. Instead of coming up with new rules to address the continued changes in technology, services, and customer relations, an adjudicative FCC, much like the FTC today, would either review complaints about anti-competitive behavior and settle them in a court-like fashion, or bring an action in court itself against an offending company.

For example, if the FCC determined that one Internet service provider (“ISP”) was pricing its broadband access plan below the price of another competitive broadband provider solely for the purpose of driving the competitor out of the market, the FCC would file a complaint in district court against the ‘offending’ ISP for violating federal antitrust law. Similarly, a competitor could file a complaint with the FCC asking that the FCC find offenders in violation of applicable FCC rules.

Whatever the scenario, there would be a couple of benefits to broadband providers and consumers. The first one is time. A show cause action at the agency level takes far less time to resolve than a rule making procedure. Like the courts, most actions are settled. Even at the FTC, you will find a complaint filed in district court along side a settlement agreement, and the FCC could follow this practice as well in court proceedings.

Another advantage is there may be fewer rules to follow. A FCC operating as an adjudicatory agency would be operating in an environment that is assumed to be competitive. As such, the primary standard for an adjudicatory FCC would be whether a broadband provider’s actions were anti-competitive.

This is the approach Mr. DeMint’s S.3624, the Freedom of Consumer Choice Act would have the FCC take on a case-by-case basis. An adjudicatory FCC would apply the anti-trust laws and analytical methods used by the FTC to reach a conclusion. For the broadband provider market, this may bring about a greater degree in regulatory certainty in that there is less apprehension that a new regulation is lurking on the horizon.

Consumers may benefit as new products and new service bundles come to market faster as a result of a broadband provider’s ability to focus on complying with well settled anti-trust law, as opposed to facing a new rulemaking process.

The likelihood of such a restructure is currently not high. First, the FCC is not on board with either Google-Verizon’s proposal or that of Senator DeMint. Second, Senator DeMint’s proposed legislation has been sitting in the Senate’s commerce committee since July 2010, and with only eight Republican co-sponsors, it may never get to a Senate floor where Democrats hold the majority.

If mid-term election results are driven mainly by the ‘less-government’ fervor witnessed over the last 16 months, the likelihood of a restructure may increase.

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