United States Senator

Technological and marketplace developments have forced a re-evaluation of the premises underlying communications regulation. Advances in transmission technology (internet protocol and wireless) and the digitization of content have fundamentally altered the marketplace. These innovations have attracted new entrants and greatly increased competition in the communications industry.

To adapt to these changed market realities and to enhance the potential of the digital revolution, the Digital Age Communications Act (DACA) establishes a new regulatory paradigm for communications regulation. It begins by abolishing the asymmetrical regulations of competing carriers and technologies, which are nonsensical barriers to investment, job growth, and free enterprise. In its place, DACA establishes a policy which holds that “economic regulation of communications markets should be presumed unnecessary, absent circumstances that demonstrate the existence of a threat of abuse by significant market power that poses a substantial and non-transitory risk to consumer welfare.”

DACA replaces the vague “public interest standard” -- which serves to promote regulation -- with an “unfair competition standard” similar to the one contained in the FTC Act, which would shift the agency’s presumption against regulation unless necessary. This approach would ground all of the FCC’s regulatory decisions in market-oriented competition analysis.

Under DACA, before issuing regulations, the FCC would have to find that marketplace competition is not adequate to protect consumer welfare, and that the benefits to consumers and to competition of a new regulation outweigh the cost.

Instead of pre-emptive, broad, and open-ended rulemaking proceedings that invite unprincipled political compromises which have a tendency to unnecessarily increase regulations, under DACA, the FCC’s decisions normally would be rendered through narrowly-tailored adjudicatory actions that are fact-based, and that focus on remedying particular claims of abuse of market-power. To promote regulatory certainty, DACA would also place time limits (aka: “shot clocks”) on the agency’s actions to prevent unresolved issues from lingering at the Commission for years.

To ensure the FCC’s regulations stay current in an ever-changing marketplace, DACA would automatically sunset each regulation after five years unless the agency decides that the regulation is still needed.

To encourage entry into the video-services marketplace, DACA would phase-out monopoly-era video franchises over 4 years.

To correct ongoing market-distortions from the outdated collection and distribution mechanisms of the Universal Services Fund, DACA reforms just the High Cost Program of the fund. First, it caps the program at its current level, unless Congress finds that it needs to be increased. Then it bases the collection mechanism on phone numbers, so that all communications service providers contribute fairly and in an economically-sound way that does not dampen demand for communications services. Then, DACA directs the FCC to devise a plan to provide performance-based block grants to the states to support universal basic service. The states must distribute these funds based on a new formula that would reach low-income and high cost households, sustain the viability of networks that serve these households, and be technology and service provider neutral. States would be subject to periodic audits to ensure that the funds are being used appropriately. Any money that a state has left over could be used for advanced services, e-911 services and public safety communications.

DACA does not preempt any state’s ability to establish their own universal service programs as long as they do not conflict with the principles established in DACA.

Although DACA would supersede any provision of state law relating to communications services, the states would maintain an important role in communications regulation. Under DACA, the FCC could delegate to any state or political subdivision the authority to enforce any federal rules, regulations or obligations. States would retain authority to protect consumers from unfair or deceptive acts, protect public safety and homeland security, and manage public rights-of-way. States would also be able to regulate the rates for basic local service where necessary.

Additional Resources:

Paradigm Shifts and Communications Policy Reform: Why We Need a New Digital Age Communications Act by JIM DEMINT
A step-by-step analysis from the Progress and Freedom Foundation
DACA Section-by-Section Analysis PDF file
DACA Bill Text PDF file
Letter from Alcatel (A Leading Telecommunications Equipment Manufacturer)
Letter from Missouri Public Service Commissioner Connie Murray PDF file
Dr. Ellig answers questions from the "Competition and Convergence" hearing on March 30th PDF file