The field of telecommunications law, policy, and regulation is a subset of the larger fields of governance and regulation generally, and the regulation of media and communications in society in particular. Telecommunications law and policy generally concern the ownership and control of and access to large-scale electronic networks that connect people and businesses. These networks may be fixed (primarily involving the use of fiber and wires) or mobile (primarily involving the use of radio frequency spectrum), but that terminology is increasingly becoming antiquated as new technologies create products and services that are more difficult to define.
Telecommunications law and policy generally involve the application of state power through public regulation to secure three objectives: (1) the promotion of competition in the provision of telecommunications services to end users; (2) ensuring that those services are widely available to all sectors of the public, including the poor and those living in rural areas; and (3) aiding citizens and consumers through the often complex choices associated with telecommunications networks in the face of technological change.
Relationship Of The State To Telecommunication
The story of telecommunications regulation is, first and foremost, the story of a relatively recent triumph of a set of governance values that (1) reject state ownership and monopolies, and (2) promote competition and consumer choice. These values have been adopted by most national and regional policy organizations, the end-user community, and the telecommunications providers themselves. Further, organizations such as the World Trade Organization (WTO) and the Organization for Economic Cooperation and Development (OECD) have placed reform and better regulation of the telecommunications sector near the heart of their missions. These values are so ingrained in this industry sector that it is now difficult to imagine a nation deciding to nationalize its telecommunications sector or otherwise limit competition in some manner.
In terms of policy orientation, the telecommunications industry is typically subject to regulatory control instead of direct political control. The complexities associated with telecommunications regulation often require sustained expertise that is commonly found in public regulation. In modern societies there is also a tendency to view direct political control over media and communications systems with suspicion. Accordingly, in this sector, policies may be originated at the political level, such as the enactment of legislation to govern the sector, but they are often implemented and enforced by public regulators or civil servants who act within a communications-themed ministry or government department.
The European Union, for example, enacts policies to ensure that national regulatory authorities within the telecommunications sector stand independent from their national governments (as well as stand independent from the business sector). For example, the EU Framework Directive requires, inter alia, that EU member states insure the independence, impartiality, and transparency of their national regulatory authorities in the communications sector.
Because many observers conclude that formerly separate technologies are converging, so that different media and communications service providers will offer similar services over digital networks, there has been an increased interest in what is known as converged regulation. The notion of converged regulation, while perhaps based on an unproven causal connection between regulatory structure and successful economic or social outcomes for the public, at least satisfies common sense with the notion that one regulator will be better equipped to deal with converged product offerings than multiple regulators. In practice, this has meant the merger of what were formerly separate media and telecommunications regulators. A notable recent example of this trend is in the UK, which created Ofcom (Office of Communications) from five different legacy regulators in 2003.
It was common throughout the world prior to the 1980s for most telecommunications providers to be state-owned, or in certain cases, private firms with monopoly power. In those countries with state ownership, the concept of modernized telecommunications regulation was unheard of: the state informally regulated the conduct of the enterprise directly through its ownership and control. Nevertheless, the situation remained far from ideal because the state-owned telecommunications firms were remarkably inefficient and consumer choice was lacking. State ownership of telecommunications firms is definitely now in disfavor as a policy option. However, the phenomenon continues to exist in isolated circumstances; for example, as of October 2006 Australia continued to own a 51 percent stake in that country’s largest telecoms provider, Telstra, and was finalizing its plans for privatization.
Privatization And Securing Competition
By way of example of how a private firm’s monopoly power in telecommunications was addressed through public regulation and policy, one only needs to consider the example of the United States. In 1984, using competition law as the instrument, the US government settled a lawsuit against AT&T and partially broke up AT&T’s then-existing monopoly on telecommunications services and equipment. Subsequent regulatory and legal decisions at both the state and federal levels further limited the reach of AT&T’s market power and the market power of the so-called regional Bell operating companies that succeeded to AT&T’s local networks after the 1984 break-up. Finally, the Telecommunications Act of 1996, as well as legislation intended to promote the cable television and wireless industries, resulted in the current situation where the goal of US telecommunications regulation is to seek intermodal competition – competition between differing platform owners. Intramodal competition efforts, such as the efforts to promote local loop unbundling and similar network access regimes, have generally failed in the US, at least on a national level.
It may be useful for the reader to imagine a large-scale telecommunications network, constructed and maintained for years by a publicly owned or private monopoly. Attempting to change that situation by fostering a climate where multiple private networks exist and interconnect with each other while still sharing certain key facilities and resources is complicated. The picture becomes even more complicated when one adds in other goals, such as permitting end-users to move from network to network without undue delay or cost. This process has generally been called telecommunications liberalization. Finally, at the same time as liberalization measures are taking effect, the telecommunications law and policy often requires or encourages the network to be upgraded for better safety and data transmission purposes. Accordingly, telecommunications regulation abounds in policy complexity.
The United Kingdom is generally credited as the first significant country to privatize the ownership of its state-owned telecommunications firm. In 1984 the UK privatized British Telecommunications by selling a 51 percent stake, and also established an independent telecoms regulator known as the Office of Telecommunications, or OFTEL, a regulator that continued in existence until 2003, when it was replaced by the new UK regulator, Ofcom.
Europe has also been a leader in the development of telecommunications competition and modernization of policy in the sector, albeit in the wider economic and social project of greater European integration. Europe’s early efforts to regulate the telecommunications sector and put it on the path to competition and private ownership started before the EU even existed as an entity. Early European measures prohibited member states from preventing competition in the telecommunications sector – both in terms of service and equipment manufacture. Later EU directives – effective from July 2003 – enacted a comprehensive regulatory framework that covers everything from universal service to radio spectrum regulation.
Regulation At The Global Level
At a global level, the pre-eminent institution of telecommunications regulation is the International Telecommunications Union (ITU). The ITU, which has most of the world’s states as members, serves mostly in a coordinating role in two key areas: (1) radio-frequency spectrum, and (2) standardization of telecommunications networks. It is perhaps in the area of radio-frequency spectrum where the ITU has had the most influence, hosting world radio conferences and adopting the ITU radio regulations to which ITU member states adhere. Certain inherently transnational applications that involve radio spectrum usage, such as satellite and maritime communications, have greatly benefited from ITU coordination. The ITU has not played a significant direct role in the process of telecommunications liberalization.
One important milestone in the advent of telecommunications regulation at the global level was that in February 1997, 69 members of the WTO agreed to open their basic telecommunications networks to competition as of January 1998. The number of parties to that landmark agreement has since grown, as has the number of countries that have adhered to the associated WTO Reference Paper that sets forth telecommunications regulatory principles, such as interconnection, universal service, regulatory independence, and fair allocation of scarce resources like radio-frequency spectrum.
Achievements Of Regulation
With a few exceptions, the advent of modernized telecommunications regulation is very recent. The question remains, therefore: has public regulation in the sector of telecommunications been successful? One common critique of telecommunications regulation is that – because it ultimately aims at producing the benefits of a competitive marketplace – telecommunications regulation ought to be replaced by the robust application of general competition law. Competition law alone, however, would probably not produce the outcomes associated with the regulation of telecommunications networks. Nor would competition law have an ongoing institutional mechanism to perform many of the common tasks found in telecommunications regulation, such as the coordination of the usage of radio-frequency spectrum, or the creation of technical standards that enable products and services to be made widely available.
Further, available evidence indicates that a telecommunications regulation approach that is based on the underlying goal of promoting competition where possible furthers the public interest. The introduction of competition has lowered prices and increased choices for end-users of networks, without sacrificing quality of service or universality. Nonetheless, public regulators certainly make errors, and the history of telecommunications regulation has seen numerous policy interventions that have proved unsuccessful, such as the US attempt to promote competition by requiring telecommunications carriers to open portions of their networks to competitors. Similarly, inter-carrier compensation policies, special taxes, and fees adopted or required by telecommunications regulators all over the world often lead to retail service fees or situations that confuse or victimize consumers. On balance, however, the world’s 20-year experiment with privatization and competition in the telecommunications sector has largely been a successful one.
Simply adopting laws and policies that legally permit new entrants to compete in the telecommunications marketplace may be an insufficient policy step if one desires robust competition to develop. This is because large-scale networks are costly to construct (most being developed initially as monopolies or state-owned firms) and – if true end-to-end communications with all members of society are important – there needs to be a method to interconnect networks. Not only is interconnection important, it is also a means to permit end-users to migrate as customers from one network to another, taking both their end-user equipment (e.g. their telephone) with them, and also the means by which the network addresses them (e.g. a telephone number). In other words, in a competitive system the transaction costs for someone to switch to a competing provider should be kept as low as possible. If an end-user must purchase new equipment and change their telephone number, it will impede competition.
Thus, standardization of telecommunications equipment design and network interfaces becomes important. Accordingly, telecommunications regulations often specify what technical standards should apply to devices that interact with the network. This enables a telephone user to move to a different part of the same jurisdiction and still be able to plug their telephone into the same type of wall jack. Telephone number portability functions in a similar manner: it generally enables users to retain their telephone when switching providers, and sometimes even when switching geographic locations.
Access To Telecommunications
In recent years, telecommunications law and policy have taken on increasing importance in the overall governance community, because telecommunications networks serve as the means by which people access the Internet. Increasing the number of high-speed, so-called broadband, connections between end-users and the Internet (enabling the use of video applications and other bandwidth-intensive uses) has therefore become an important policy issue. Policymakers are also grappling with the terms and conditions of the relationships between network owners, such as cable or telephone companies, and Internet application providers, such as Google or Yahoo! The issue, often called network neutrality, is whether network owners should be prohibited from discriminating among the various applications that run over their networks.
The management of radio-frequency spectrum by society is a function usually delegated to telecommunications regulators by policymakers. Working in conjunction with frequency allocation plans agreed on an international and often regional level, telecommunications regulators make decisions about (1) the service and technical rules associated with particular frequency bands, and (2) the terms and conditions under which that spectrum is licensed to individual users. Because radio-frequency spectrum is often made available on an exclusive-use basis to end-users, there is often competing demand for the limited number of licenses that governments make available. One method of resolving that demand is to auction the radio spectrum license to the highest bidder. Radio spectrum auctions have proved to be an attractive license assignment mechanism for two reasons. First, the auctions have sometimes turned into significant revenue raisers for the government involved, raising the internal political profile of the telecommunications regulator. Second, and perhaps more important, auctions have demonstrated themselves to be efficient assignment mechanisms because they tend to result in the spectrum license being awarded to the person who values it most highly.
Telecommunications regulators have, however, also realized the public value associated with the unlicensed use of radio spectrum in the so-called spectrum commons. The US innovated the unlicensed use of spectrum through its Part 15 radio regulations. For years, low-power devices – often with consumer implications such as cordless telephones and remote controls – took advantage of regulations by the Federal Communications Commission (FCC) permitting unlicensed uses in certain frequency bands. The advent of WiFi technologies in the 1990s changed the debate, however. The remarkable success of WiFi – an unlicensed wireless technology – caused proponents of the spectrum commons to lobby for the increased usage of unlicensed spectrum.
One important concern in the regulation of telecommunications is how to ensure that poorer and harder-to-connect members of society have access to telecommunications networks. The series of policies that is designed to address this potential problem is often called universal service. Universal service regulations often involve two elements. First, these policies typically declare what types of telecommunications services the policy will legally enable all people – regardless of their economic status – to secure. Second, these policies usually specify a mechanism by which society funds the universal service obligation. The funding mechanism, such as a special tax on communications services, can be explicit, and may require special obligations of the dominant network owner to connect people to its networks under special rate plans.
Universal service obligations and related government programs are designed to ameliorate the so-called digital divide. The digital divide attempts to measure the significance of those numbers of people in society who do not have access to, or understanding of, the digital technologies provided by telecommunications providers, such as Internet access (particularly broadband) and mobile telephony.
Because most telecommunications products and services are ubiquitous in society, a great deal of telecommunications regulation covers consumers’ dealings in the marketplace, such as fair terms and conditions for telecommunications contracts. Consumer-focused intervention also deals with policies relating to how telecommunications networks connect people to public safety providers. For example, policies may be enacted that require or enable telecommunications providers to give certain end-users (e.g. fire and rescue teams) priority during public safety emergencies. Some policies directly target network end-users themselves, making it illegal to disrupt telecommunications networks or use them in an annoying manner, such as telemarketing restrictions, or restrictions on the use of autodialing devices.
One recent area of telecommunications law and policy that deals with consumers is the issue of consumer privacy. Telecommunications regulations now commonly describe what are the acceptable uses of customer-specific data by telecommunications carriers with respect to marketing practices, sharing with third parties or affiliates of the carrier, and cooperation with law enforcement organizations. Other forms of telecommunications regulation deal with the fact that networks are physically intrusive in society. Accordingly, regulation may cover, for example, terms and conditions for the emplacement of wireless antenna devices, or the sharing of conduit or utility pole space among service providers.
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