At this Reg-Markets Center event, Federal Communications Commission (FCC) chairman Kevin J. Martin will present his views on balancing deregulation and consumer protection, examining the role of regulatory action when a marketplace fails to produce sufficient competition or access to new communications services and devices. He will review FCC initiatives
Download Audio as MP3 intended to stimulate infrastructure development and consumer choice in broadband services and encourage more competition in video services. Chairman Martin will also provide a framework for thinking about the future of telecommunications policy. Reg-Markets Center executive director Robert W. Hahn will introduce Chairman Martin and moderate the discussion following his remarks.
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Welcome and Introduction:
Robert W. Hahn, AEI
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Kevin J. Martin, Federal Communications Commission
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FCC Chairman Reflects on Record of Balancing Deregulation and Consumer Protection
WASHINGTON, JANUARY 12, 2009--The past eight years have seen a significant transformation of the telecommunications industry. Since 2001, broadband subscribers have increased twenty-fold, from 5 million to 100 million users. Fiber optic lines have seen a similarly stupendous jump, from 80,000 to more than 4.1 million, a network that connects more than 13 million U.S. households. Today, callers are paying a third less for long-distance phone services and 80 percent less for international calls compared to 2001. The cost of wireless phone service is down 50 percent over the same period and smart phones have revolutionized how consumers access information on the go. At the start of 2009, Americans are paying less for better connections than ever before.
Kevin J. Martin has witnessed--and helped to shape--this change as chairman of the Federal Communications Commission (FCC) since 2005 and as a commissioner since 2001. At an AEI Reg-Markets Center event on January 8, Martin, whose chairmanship ends this month, offered a defense of his record at the FCC and reflected on the kind of regulatory environment that would best encourage telecom investment and protect U.S. consumers.
"I have approached our decisions with a fundamental belief that a robust, competitive marketplace, not regulation, is ultimately the best protector of the public interest," Martin said. To promote competition, for example, the FCC has reclassified all broadband delivery platforms (cable modem, DSL, wireless) as "information services," and all three are subject to the same rules and regulations.
However, according to Martin, regulators play an important watchdog role. "In order to have credibility when removing unnecessary or outmoded regulations," he argued, "those of us who adhere to a market-based philosophy must be willing to acknowledge an important fact: there are times when regulators may need to step in." Regulation is required when a market fails to allow for competition or when social goals like public safety fall outside the scope of the market, he added.
Martin's careful line between deregulation and consumer protection was tested in 2008 when the FCC conducted an auction for a large swath of electromagnetic spectrum--the so-called "C block." In an effort to spur competition, the FCC imposed an "open-platform" requirement on the auction winner allowing third party wireless applications (like Google's Gmail) to use the spectrum owner's network for free. (Google supported the "open-platform" rule.)
As Reg-Markets Center executive director Robert W. Hahn and Allan Ingraham of Empiris wrote last year in Regulation magazine, it is unclear if consumers will reap any benefits from the requirement. "If the revenues that a provider receives from applications are reduced, the provider may be forced to increase the price charged for basic cell phone service," they wrote. "That could, in turn, reduce the number of cell phone subscribers and reduce cell phone use among existing subscribers."
Nonetheless, Martin defended the rule in his speech at AEI, arguing that an open network will help ensure that innovation will be oriented around consumer interests.
Unpopular decisions are part of the FCC's work, explained Martin. He advised his yet-to-be-appointed successor that "you have to be willing to be unpopular and to call things as you see them."
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