The Fcc's Name Game: How Shifting Regulatory Classifications Affect Competition

Abstract

This article examines the consequences in using service definitions as the basis for a vertically driven regulatory regime in telecommunications despite converging markets and technologies. The article examines Internet-mediated telephone service as a case study for showing problems resulting from the Federal Communications Commission'd use of vertical regulatory silos that develop a single regulatory status regardless of whether changed circumstances favor a change in regulation.

Vertical regulation makes it difficult for incumbent stakeholders to change their regulatory classification. Incumbent telephone service providers continue to fit within the basic telecommunications services, common carrier regulatory model even as newcomers manage to provide a competitive alternative that qualifies for little regulation based on the information services classification.

The article proposes the use of a horizontal, layered approach to regulation consistent with what the European Union has endorsed. Adding to what others have written about a layered approach to telecommunications regulation, the article identifies likely difficulties in the implementation of a horizontal regulatory model, and also suggests remedies.

Keywords: Telecommunications, internet, regulation, regulatory asymmetry

JEL Classification: K23, L96, L50