The Heritage Foundation

Executive Summary #1318es on Internet And Technology

September 7, 1999

September 7, 1999 | Executive Summary on Internet And Technology

Executive Summary: Broadband Telecommunications for the 21st Century: A Legislative Report Card

Congress is currently considering five bills that address America's limited high-speed telecommunications (or "broadband") capability--especially in terms of the Internet and advanced communications services. This "broadband telecommunications crisis" is due in part to the tremendous increase in consumer demand for online access, but it is largely the result of the highly intrusive and complex system of federal, state, and local regulations governing telecommunications.

An alternative to this outdated framework--explained in more detail in a companion paper, "Broadband Telecommunications in the 21st Century: Five Principles for Reform"--is based on five key principles that enabled the small niche market of high-tech computers to become America's largest, most innovative, export-enhancing and job-producing industry within the past 20 years. Principles like deregulation and free markets, legal simplicity and stability, uniformity and regulatory parity, a single open market system, and regulatory agency constraint were crucial components of the government's "hands-off" approach to the computer industry. Simple, uniform, and time-tested standards, such as strict contract enforcement, patent and trademark protection, property rights, voluntary standard-setting and common-law resolution of disputes, and a free and open market, were also applied.

Unfortunately, the broadband telecommunications bills now before Congress do not fully embrace these principles. For the most part, they promote an approach that merely tinkers with the current system. Worse, some propose new legal theories and regulatory regimes to micromanage desired market outcomes. However, two of these bills do hold some promise: the Internet Regulatory Freedom Act of 1999 (S. 1043) and the Internet Freedom and Broadband Deployment Act of 1999 (H.R. 2420). Both measures propose a fair degree of deregulation and build on the "hands-off" model of legal governance. But they are not comprehensive enough to ensure increased accessibility to broadband services and technologies in the short term.

Congress should use the five core principles to determine how each bill would enhance the accessibility and functionality of the broadband market. Moreover, each bill should be evaluated based on the following industry-restrictive standards:

  • Freedom from regulated boundaries;

  • Freedom from mandatory access for incumbent carriers;

  • Freedom from mandatory access for other carriers; and

  • Freedom from state and local interference.

As the table shows, using these standards, the five bills before Congress would receive very different grades based on the amount of regulation they encourage. More can be done to improve these bills and ensure the development of a vibrant broadband telecommunications industry for the 21st century.

Adam D. Thierer is a former Alex C. Walker Fellow in Economic Policy in the Thomas A. Roe Institute for Economic Policy Studies at the Heritage Foundation.

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