Section 10 Forbearance: Asking the Right Questions to Get the Right Answers

According to its preamble, the stated purpose of the Telecommunications Act of 1996 is to "provide for a pro-competitive, de-regulatory national policy framework designed to accelerate rapidly private sector deployment of advanced telecommunications and information technologies and services to all Americans...." The key statutory tool to facilitate Congress's deregulatory mandate is contained in Section 10 of the Act, which provides the Federal Communications Commission with the express legal authority to forbear from enforcing various portions of the Communications Act once certain conditions are met.

However, the FCC's precedent in implementing Section 10 prevents the agency from using its forbearance authority as a way to establish some sort of "Title II Lite." Perhaps the most important lesson learned from the FCC’s Phoenix Forbearance Order is that when contemplating forbearance from any regulation or mandate, the first and most-important step is to ask the right question. That is: does removing the regulation make society worse off? This simple question points to a cost-benefit analysis in which the agency considers the purpose of the regulation, provides an honest assessment of the efficacy of it (including the compliance costs and unintended consequences of the regulations), and then decides how much competition, if any, is sufficient to accomplish the same goal. In its Phoenix Forbearance Order, the FCC focused instead on a comparison of the observed level of competition to some unobtainable competitive nirvana, leading the agency far astray from its assigned task. And, given the FCC's repeated finding that Broadband Service Providers are "terminating monopolists" as a justification for implementing Open Internet Rules, the Phoenix Forbearance Order -- by rejecting the use of forbearance under monopoly and duopolistic competition -- stands in the way of using forbearance to create a "Title II Lite" form of regulation.