In his keynote address at the 6th Annual Winnik Forum, Don Stockdale, the FCC’s new Wireless Bureau Chief, described the primary issues he faces as promoting innovation, making more spectrum available for commercial use, and expanding the deployment of wireless networks. Don began his appointment in June 2017, but has extensive experience as an economist and attorney in both the private and public sectors, with over 15 years of experience at the FCC alone.
Don indicated that the biggest challenges facing the telecom industry today are:
- How the FCC has evolved from being regulator of monopolies under the Communications Act of 1934 to a Commission dedicated to encouraging innovation and competition, especially in wireline and wireless communications; and
- What the Commission has been doing and should be doing to encourage wireless innovation and the deployment of 5G.
Don noted that fixed telephony was assumed to be a natural monopoly under the Communications Act of 1934, with the FCC and state public utility commissions sharing regulatory authority over incumbent operators. However, as companies such as AT&T and MCI began introducing innovative offerings, competition developed quickly, particularly in the long distance market, and the PCS auction significantly encouraged competitive entry into the wireless market. These developments challenged the FCC to adjust its regulatory regime to better accommodate competition and new entrants and to foster continued innovation. While the FCC adopted certain reforms in the late 1980s and early 1990s, Congress adopted the Telecommunications Act of 1996 as a more comprehensive approach that better reflected the dramatically changing long-distance and wireless landscape.
Since the 1996 Act, Don mentioned that the FCC has adopted several principles that guide its approach to promoting continued innovation and competition. First, the FCC has generally declined to regulate new and innovative services, with the goal of promoting innovation and competition through market forces. For example, the FCC decided not to regulate computer data processing service providers by exempting “advanced” or “enhanced” services and the commercial Internet from common carrier regulation. The FCC has also deregulated areas or used its forbearance authority where competition in communications markets has made regulation unnecessary. Next, the FCC has adopted techniques from antitrust and economics to “regulate more efficiently,” such as applying merger analysis techniques from the Department of Justice and the Federal Trade Commission and implementing the first two-sided spectrum auction in history.
In response to an audience question on how the FCC adjusts its approach to account for convergence and changes in technology, Don explained that the FCC bases competitive analysis on facts before it in the record. As conditions and markets change, the FCC’s view of relevant markets may evolve. In that vein, the FCC has declined to mandate the use of particular technologies and, instead, allows private sector companies to respond to consumer demand and drive the direction the marketplace is moving. For instance, Don highlighted how the FCC now allows flexible spectrum licenses with the goal of spurring the deployment of 5G technologies and services.
Don said that 5G promises to be a “truly transformative technology,” comparable to innovations in microwave, broadband, and satellite communications before it. However, Mr. Stockdale recognized that more spectrum is necessary if 5G is to reach its full potential, and no single spectrum range can meet all demands for 5G applications. Mr. Stockdale reported that the FCC is “doing everything [it] can” to free up all types of bands through the incentive auction, mid-band and spectrum frontiers proceeding. He also acknowledged that reducing or removing regulatory barriers to the deployment of broadband infrastructure, such as burdensome NHPA and NEPA review processes, through the FCC’s wireless and wireline reform proceedings will be crucial to 5G’s roll out. Overall, Mr. Stockdale promoted a lighter regulatory approach to drive competition and support the development of 5G and other technologies. Citing famed economist Joseph Schumpeter, Mr. Stockdale said “major innovations truly drive competition.”