Policy Documents

Why Stovepipe Regulation No Longer Works: An Essay on the Need for a New Market-Oriented Communications Policy

January 30, 2006

In the ten years since enactment of the Telecommunications Act of 1996, the telecommunications industry has undergone profound technological and marketplace changes. In this article, I argue that the current statute regulates communications services, variously denominated as telecommunications, information services, cable, mobile, or the like, differently, even though these services increasingly compete against each other in the marketplace. This differential treatment occurs because the existing statutory service classifications are based almost entirely on outdated techno-functional constructs that force regulators to make metaphysical regulatory distinctions. Competition and convergence in the marketplace have undermined this so-called "stovepipe" regulatory scheme of the 1996 Act. 

It is time for the existing "stovepipe" model of regulation to be confined to the dustbin of communications policy history. In its place, Congress should adopt what I call a new Digital Age Communications Act, a market-oriented regime that would employ antitrust-like principles focusing on marketplace competition and the enhancement of consumer welfare to determine whether there is a need for regulatory intervention.