Looking back at the Telecommunications Act of 1996. A strategic move by the States and the Communications industry.

It was the nineties …

Back on 8 February 1996, President Bill Clinton signed into law the Telecommunications Act of 1996.  The Act amended the Communications Act of 1934, intending to bring communications into the modern era.  The bill was written by BellSouth and other local telephone companies in hopes that they could expand into the “long line” telecommunications markets.  They themselves were facing local market competition from competitive local exchange carriers or CLECs.  In Florida, we referred to these competitors as alternative local exchange providers or ALECs.

CLECs and ALECs were in part the result of network technology deployed by cable companies that allowed the transmission of both telephone calls and video.  This was radical technology back then.  Who could imagine that you could watch local news or ESPN over the same line. 

For those of us who worked on the regulatory end of telecommunications, we were one of the first to see these changes in communications technology.  Back in 1994, I and a bunch of staffers from the Florida Public Service Commission were given a demonstration about downloading internet content onto television screens.  In addition we were shown a cellular phone designed for the early personal communications system (PCS).  

These demonstrations were intended to educate us on the network capacity needs that telecoms were facing and the approvals they would need in order to deploy capacity.  Unbeknownst to us, these demonstrations would put into our heads the narrative that these innovations would spur competition and increase consumer choice.

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The States take the bait ….

With the competition narrative in mind, Florida embarked on rewriting its telecommunications code.  The re-write of the code (Chapter 365) introduced three baskets of communications services, progressing from the most regulated basic services to services deemed as competitive and not needing heavy regulation. Light touch before light touch became a thing.

It was a brilliant bottom-up strategy implemented by the industry.  By getting public utility commissions onboard with the idea of competition and unleashing new technology, they were able to create a platform from which to change the national landscape for communications regulation.  Rather than having fifty states pushing back against an amendment of the Communications Act of 1934, the communications industry gained allies who, after ensuring they would have some piece of the regulatory pie, were willing to go to Capitol Hill and extol the virtues of the new legislation.

The irony for the States was that by around 2000, state public utility commissions’ involvement in communications regulation was greatly reduced.  They were precluded from the regulation of broadband services, including approval of broadband service prices.  A quick look at Florida Chapter 365 will show you that the three-basket competitive schema is no longer on the books.

The new shift …

There is a shift we should take note of; one that started with the Telecommunications Act of 1996.  Section 706 of the Telecom Act mandated a light touch approach to regulation of advanced telecommunications services, i.e., broadband.  This light touch led to later investment in what would become the social media platforms of today. 

Section 230 of the Communications Act has provided these platforms protection from liability resulting from content posted on their platforms by third parties.  I will delve deeper in another post.  Just bear in mind that thirty years after the Act, we are in another shift.

Alton Drew

8 February 2023

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