In the 1970s, the Federal Communications Commission began a struggle to reconcile old communications laws governing telephones, broadcasting, and cable television with the new technological and business realities. The old regime was based on monopoly; and it was believed that regulation was needed to protect consumers, extend networks into new areas, and keep prices low. But technological developments made competition possible, and competition would make most of the old regulations unnecessary.
In 1996, when Congress overhauled telecommunications law, the FCC gained the authority to "forbear" from regulation. The hope was that the FCC could deregulate without Congress having to revisit the matter.
How is regulatory forbearance working?
In 1996 long-time observers could have provided a laundry list of regulations ripe for forbearance over the next few years. It might have included price regulation or perhaps rules restricting the ownership of broadcasting properties. And some of this has come about.
But one development was perhaps not foreseen. That is the extent to which forbearance has proceeded on a piecemeal basis. The FCC often forbears from enforcing rules as applied to one company in one place at one time, instead of broadly forbearing in entire rulemaking areas.
These individual decisions are not wrong per se—the legacy cost rules, for example, simply had to go—but what is the effect of deregulation that proceeds on a company by company basis?
Wouldn't a company that can obtain regulatory relief in an individual way decline to back industry-wide deregulation—where it must share the benefits with competitors? And doesn't it make the regulatory landscape awfully complex, and particularly biases in favor of particular companies or parts of a broader industry
One can see these piecemeal discretionary rulings, bit by bit, recreating a bizarre regulatory patchwork of just the sort that the Telecommunications Act of 1996 was intended to eradicate.
Regulatory forbearance is a good thing. But if it has encouraged both the communications sector and Congress to back away from real regulatory reform and if forbearance is highly selective instead of broadly applied, it is a mixed blessing at best.