FCC Commissioner Ajit Pai

The United States is at a point where broadband and video have joined to form a virtuous cycle. The big question we face is how to fully transition from the analog world to a digital one based on the Internet Protocol, or IP.

The FCC recently decided to move forward with local experiments in which companies can move customers from old networks to IP networks. We are going to see what happens when aging infrastructure is turned off. These tests will give us valuable data. And we will then use that data to make a successful national transition to all-IP networks.

Once that happens, companies will be able to focus their investments exclusively on high-speed networks. Consumers’ appetite for Internet video is placing new demands on broadband providers to expand the highways that carry that traffic. Providers are doing just that. Cable operators are spending billions of dollars upgrading their technology using a new technical standard that transmits data much more quickly. Telephone companies are deploying more fiber. Wireless providers are expanding 4G LTE networks. And a new entrant, Google, is activating gigabit fiber in cities across the country.

One might ask: How has this all happened? Well, it wasn’t government fiat. It was private enterprise, taking risks to innovate and build, and competing for consumers in the free market, that brought about the digital revolution. It was our private sector that spent over one trillion dollars over the past fifteen years to upgrade cable systems, launch satellites, lay fiber, build towers, and deploy our broadband infrastructure. Rather than owning companies or directing capital spending, the United States Government has sought to create a regulatory framework that gives companies the right incentives to make these investments.

First, we have removed regulatory barriers to infrastructure investment. Second, we have created a free market for spectrum. And third, we have embraced free trade and foreign direct investment as a way to promote capital formation. Each has played an important role in fostering the innovation we see in America today. And I believe each serves as a valuable lesson for regulators going forward.

Now is the time to get moving with the Federal Communication Commission’s E-Rate reform. And yet, I fear that the Public Notice issued by the Commission’s Wireline Competition Bureau bodes poorly for real reform.

Reform should mean eliminating the priority system that arbitrarily favors some technologies over others. Yet the Public Notice doubles down on it. Reform should mean abolishing the discount matrix that encourages wasteful spending by well-funded districts and consistently underfunds small, rural schools and libraries. Yet the Public Notice builds on it. And although the Public Notice mentions streamlining the administrative process, the proposals to do so (such as making “simple changes” to the existing forms or changing “invoicing deadlines”) are overwhelmed by proposals that would saddle our nation’s teachers and librarians with more paperwork. Moreover, even if the right questions were posed, this is the wrong way to pose them.

If the Commission needs to focus comment on an issue, we should advance a concrete proposal -- which in the words of the FCC’s own process reform report “ensure[s] adequate notice of the potential final rule” and “focus[es] both drafters and commenters on the precise proposal under consideration.” And if the Commission wants to explore a new proposal, we should issue a further notice of proposed rulemaking to comply with the requirements of the Administrative Procedure Act.

[March 7]