Resetting the Post-Martin FCC

2/07/2009 2:00 AM Eastern

If it’s true that sunlight is the best disinfectant, then it might be time to tear the roof off of the Federal Communications Commission.

The title of a recently released congressional report examining the tenure of former FCC chairman Kevin Martin — “Deception and Distrust” — tersely summarizes what many in the industry and in government observed at the agency over the last few years. Martin’s tenure was marked by accusations of playing favorites in the rule-making process, internal pettiness and mismanagement and pursuing a myopic, anti-cable agenda.

To this end, the report was revelatory in that it substantiated allegations by current and former FCC employees that the agency was selective in the data it used to support some of its rulings and had exiled staff expertise based on personal loyalties. The report paints a picture of a secretive, almost monarchical chairman who tried very hard to fit square policy pegs in round holes.

The congressional probe, draft legislation that was introduced last year in Congress to reform the internal management of the commission and recent comments by acting chairman Michael Copps each highlight the most important short-term concern for the FCC: the need for more transparency and openness. Yet these efforts stop short of addressing perhaps the most fundamental issue raised by these recent controversies, namely the proper role of the FCC in the Internet age.

It is ironic that the agency charged with overseeing our communications industry — perhaps the country’s most dynamic sector and one President Obama is poised to leverage for a major part of his economic-stimulus efforts — is an inefficient and opaque bureaucracy that simply cannot craft rules (or get out of the way) fast enough to keep pace with the rapid innovation in the marketplace. A recent proceeding involving Comcast and BitTorrent is instructive.

The history of this matter has been well documented: a complaint was filed with the FCC in December 2007 that accused Comcast of “throttling” or degrading data transfers using peer-to-peer protocols such as BitTorrent. Over the course of the next seven months, the FCC held two major public hearings on the matter and received tens of thousands of public comments. A final decision against Comcast was announced on Aug. 1, 2008 (the official ruling was not released until Aug. 20). However, during that same seven-month period, Comcast had settled its difference with its P2P counterparts, jointly committing to a new interdisciplinary working group that is crafting rules and procedures to better to solve disputes.

The Comcast-BitTorrent accord represents the very real potential of self-initiated industry collaboration. Indeed, throughout the history of the communications market, such bottom-up efforts have successfully spurred innovation and settled disputes among stakeholders. Perhaps the most pertinent and enduring example of this can be seen in the development and continued maintenance of the Internet.

Stakeholders have consistently worked together to craft and implement standards that govern the way the Web works. From the development of e-mail protocols to the creation of the World Wide Web to the management of P2P traffic, the best solutions have always come from collaboration among engineers, network owners and other firms, not from government. Contrast the Internet’s self-governing success with the disastrous top-down effort to promote telephone competition through the 1996 Telecom Act, a titanic law that befuddled rather than guided the market for much of the last decade.

In a world where communication has become instantaneous, many expect remedies to be meted out just as quickly. Under its current regulatory mandate, the FCC is simply not equipped to keep pace with the ever-evolving communications market. Nor has it shown itself, particularly in recent years, capable of operating with the kind of transparency and objectivity that is essential to public confidence. As lawmakers consider ways to reform the FCC, and as President Obama contemplates reshaping the Commission, each should keep in mind the notion of industry collaboration.

In competitive and fluid sectors like the advanced communications arena, giving market dynamics a chance to work, instead of immediately imposing rigid legislation or regulation, often produces the most effectual policies.

In the meantime, the FCC should figure out how to regulate itself before Congress has to do the job.

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