The FCC Moves to Update Telecom Regulations

For many years we relied on the fax machine for moving documents quickly between locations. In recent years, the fax machine has become a bit of a dinosaur. With email and scanning, we rarely send a fax these days. It served its purpose but its time has come and gone.

Apparently, the FCC believes that the legacy regulations for the telecom industry have become a bit antiquated as well. The FCC Chairman, Julius Genachowski, has said that outdated rules may be suspended. The FCC creates regulation to promote a healthy competitive marketplace. And, they don't feel like the old regulations from the 70's and 80's are still doing their job. So, the FCC is moving to update telecom regulations - and that will affect pricing!

To connect to the internet and provide services that require broadband, wireless operators, rural providers and competitive local exchange carriers or wireline companies have had to lease special access lines from the big incumbent carriers. The wholesale rates have been subject to governance by the Local Regulatory Commission. And, while this arrangement has made it possible to expand services rapidly, it now appears to be creating a bottle neck.

Of course, there is argument amongst the telecom companies that are most affected by this change to the competitive landscape. The companies that own the lines that are counting on lease rates remaining at their current level say that the pricing needs to continue to be regulated to preserve the necessary capital to continue to build out the infrastructure and telecom network.

On the other side of the argument, some companies feel like their "hands are tied". They can't be competitive with the rates that have been set by regulation that is over a decade old.

Wireless competitors are the primary drivers of this movement. It is much easier to increase bandwidth wirelessly than it is to put fiber in the ground or air. At some point, all data moves from the wireless network to the fiber that criss-crosses the country, but wireless is also quickly becoming a reasonable alternative for providing big bandwidth right to the door of a business. The limitations imposed by the legacy copper that is in just about every structure are becoming a non-issue.

In typical government fashion, things don't move too quickly. The FCC has determined that it doesn't have enough data to make an informed decision. So, they are in the process of collecting that data now. And, once they have the data, it must then be evaluated. When the decision is finally made, it is sure to shake things up. We'll be watching!