February 2006

The Tenth Anniversary of the Telecommunications Act of 1996: A Tough Act to Follow?

The Telecommunications Act of 1996 was the first successful attempt to rewrite the sixty-two-year-old Communications Act of 1934. Since then, it has been criticized as being vague and poorly written. The recent tenth anniversary of the 1996 law coincided with the release of a new book entitled A Tough Act to Follow: The Telecommunications Act of 1996 and the Separation of Powers (AEI Press, 2006) by Harold Furchtgott-Roth, a former commissioner of the Federal Communications Commission (FCC), providing a unique opportunity to reexamine the act and current proposals to replace it. In light of Mr. Furchtgott-Roth’s observations about the broad and seemingly unchecked power of the FCC, will current legislative proposals to address existing problems be successful? On February 8, AEI hosted a panel discussion to consider the act’s effects on the industry and what lessons are apparent for those writing new legislation.

Kevin Martin
Federal Communications Commission

For a few years after the Telecommunications Act of 1996 passed, everyone loved it. Since 2001 however, when the value of telecommunications securities started to slump, the act’s reputation has fallen as well.

The commission has demonstrated its commitment to the principles of network neutrality in trying to make sure that it is creating a level playing field for competition to occur among platforms in the marketplace rather than in the halls of the commission. We adopted principles of talking about how consumers should be able to access whatever content they desire on the Internet across the networks, regardless of whether it is coming from cable modem or DSL networks.

One thing I would like to emphasize is that the commission is supposed to be implementing Congress’s policy view, not vice versa. Congress should be passing laws and telling the commission how they should be implemented.

Larry Pressler
Former Senator (R-S.Dak.)

The 1996 act was an example of good legislating under very difficult terms. It was a bipartisan bill, and it was a bill that had input from hundreds of members of Congress, which led to very awkward phrasing. So while the bill is criticized for being clumsy, it is important to recognize that the bill was actually signed into law.

While the act has been an immense tool for economic development, it has not been as successful as we would have liked. This is expected in a bill that is based on compromise, but also because the cable companies have not entirely lived up to the standard of what we expected.

The particular problem with legislating in this area, aside from the fact that there is relatively little political gain, is that someone is always using someone else’s wire or terminal. The attempt was to deregulate, and to an extent we did, but we really re-regulated a lot of how things get done.

And by design or by luck, we made the right decision in not trying to regulate or tax the Internet. It has proved to be the right decision now because the Internet has expanded so much since that time.

Thomas Bliley
Former Representative (R-Va.)

Overall, the act has opened up business in a tremendous way. When one looks at what the phone companies could do ten years ago and what they can do now, it is clear that the act has facilitated the development of long-distance and broadband services.

Fortunately we adopted a Hippocratic oath in regard to the Internet. If we would have been too specific, we might have done serious harm. We only mentioned the Internet a few times in the entire bill. As a result, it has blossomed to a size that few could have imagined.

If members of Congress try to rewrite the act or make changes to it, they will look more at the Internet, but they will have much more experience to go with than we ever did. Attempting to rewrite it will not take another sixty years, but it might take another ten to alter it.

Harold Furchtgott-Roth
Former FCC Commissioner

The Telecommunications Act of 1996 really came about because everyone realized how bad the current state of law had become under the original 1934 act that spawned the commission. The growing lack of correspondence between what Congress would write and what government agencies would do was the focus of much animated debate during the 1970s, 1980s, and 1990s. The law was outdated in terms of technology, but there was also a great deal of concern that the FCC was acting somewhat on its own.

I would like to add, however, that every time technology changes, the law does not need to change as well. One needs only to look at traditional property rights and contract rights to see that processes are in place to accommodate many types of technology. The larger issue at hand is the influence that the commission has in writing and enforcing rules after Congress has written and passed its own laws.

AEI intern Tom Church prepared this summary.