Thanks to Jeff Hoel for providing the transcript for Episode 89 of the Community Broadband Bits podcast with Earl Comstock on the history of the 1996 Telecommunications Act. Listen to this episode here.
Earl Comstock: The fundamental goal was to modernize the Communications Act, to recognize the fact that we were now entering an era where video, voice, and data were all going to be able to run over the same network.
Lisa Gonzalez: Hello. You are listening to the Community Broadband Bits Podcast, from the Institute for Local Self-Reliance. I'm Lisa Gonzalez.
Recently, the DC Circuit Court interpreted Section 706 of the Telecommunications Act of 1996. Section 706 is one small piece of a complex and voluminous piece of legislation. Earl Comstock, Principal at Comstock Consulting speaks with Chris this week. He's a former congressional staff member who helped craft the bill and move it through the legislative process. In addition to participating in the development of the act, Earl has had a chance to see how it has been interpreted by past administrations, the FCC, and the courts. Here are Chris and Earl.
Chris Mitchell: Welcome to another edition of the Community Broadband Bits Podcast. Today, I'm speaking with Earl Comstock, the Principal at Comstock Consulting. Welcome to the show, Earl.
Earl Comstock: Nice to be here, Chris.
Chris: So, Earl, I want to get into some of your expertise, and we're going to be talking about the 1996 Telecommunications Act. But first, I want you to explain to our audience why they should think that you know anything about the Act. And I'll introduce you by way of saying that you and first met at a Freedom to Connect event, near Washington, where I sort of thought of you as being more of a cowboy. So, what experience do you have with the '96 Act?
Earl: Well, actually, I was one of the principal staff that worked on the '96 Act. I worked on the Senate side, both for Senator Ted Stevens of Alaska and also as a special counsel to the Senate Commerce Committee, which was the principal Senate committee involved in the drafting of the bill. And so I participated in literally everything from the very beginning of the bill to all the way through conference. And, you know, what's interesting is, most people think of the Telecommunications Act of 1996 sort of as this single entity. But it actually was the culmination of about four years of very solid and focused work by the Congress on, specifically, reformatting communications laws in the United States. This was the -- actually, it's the only major overhaul of the Communications Act of 1934 that had occurred up to that time, and, actually, has occurred since. So, in the 80 years since the Act was adopted, this was the one fundamental reorganizing and amendment of that statute.
Chris: What was the purpose? You said it took many years of studying what was happening, and coming up with a plan. What was the goal of the '96 Telecommunications Act?
Earl: Well, the fundamental goal was to modernize the Communications Act, to recognize the fact that we were now entering an era -- that we're in today -- where, because of the digitization of information, and no longer having to use sort of analog transmission technologies -- but you were going to digital -- the advent of fiber, the advent of protocols like TCP/IP -- you were now going to be able to use the same basic underlying infrastructure to transmit what had previously been -- required separate infrastructures -- namely, in particular, video, voice, and data were all going to be able to run over the same network.
Chris: The same basic telephone lines or the cable networks or the wireless networks -- basically, they're all going to turn into being able to deliver the same services.
Earl: That's right. Up until the advent of the digitization, and then, you know, particularly, the development of fast enough computer processing, you had a system where, in order to send video signals, which require a large amount of data, we really had to build a separate network. And that was the coaxial cable network. Narrowband digital information could run over the telephone network, which had been optimized for voice but also sent data. And then you had wireless that was coming along. And originally, you know, we used the wireless spectrum for sending telegraph messages. And then we advanced on to using it for radio. And then TV broadcasts. But, again, it took up large amounts of bandwidth to send, particularly, video information. And now with, you know, sort of, this convergence of not only digitization that allowed you to use the same physical infrastructure, but you had the computer industry converging as well, with high-speed processing and computer capabilities, which were going to necessary to do this packetized, digitized information flow. In fact, the one thing, I would say, that people really misjudged in the '96 Act was the length of time it was going to take for computer processing to become small enough and powerful enough to give you the kinds of devices that you have today. I think, if you'd asked people back when we were doing the '96 Act, they would have thought you'd have a device, like the iPad or your smart phone -- probably they would have put the date somewhere around early -- 2003, 2005. Instead of, you know, those devices rolling our really closer to the -- to 2010.
Chris: One of the things that Dwayne Hendricks, who I talked with in a previous podcast, is how some of the FCC policies really seemed to have slowed down the emergence of those devices, by not encouraging an environment where they would be able to seamlessly communicate. So, I think some of our criticisms of the FCC will be coming up a little later in the show. But one of the criticisms I've heard of the '96 Act is actually that the people who were crafting it didn't really understand what the Internet was, and they never used the term "Internet" in it. And so, I'm curious if you can respond to those sorts of charges.
Earl: Um, well, I'd certainly be happy to. First of all, the term "Internet" is in there. It's defined in Section 230, which was added in the '96 Act. But the main reason that you didn't have the term "Internet" in there is because the Internet is simply a term for a network of networks. And so, in a way, it's too broad a term. In fact, there was actually a provision that somebody had added -- a Congressman had added on the House floor -- that would have prohibited the FCC from regulating the Internet. But because the term was so broad, everybody looked at that and said, well, we don't know what that's going to result in. It's -- I mean, depending on how you look at that, the Internet could be anything from all of your applications and devices that might attach to this network, to the network itself, to some subset of the network. So, that provision was struck in conference. And so, that's the reason you don't see the term "Internet" in there, really. Because it's a vague, general description of an interconnection of networks. And the statute itself basically said, well, we don't care what technology you're going to use. It might be TCP/IP now. It might be something else in the future. This is a statute that is going to probably remain in effect -- if the last major iteration of the statute was any guide -- for the next 50 years. So, you know, while everybody's focused on the Internet, as if somehow it's the be-all and end-all of everything, the reality is, there will be a next-generation Internet, and probably another one after that.
And so these people, like Senator Stevens and Senator Hollings -- you know, members who had been here a long time -- knew that this legislation was not going to be being changed, you know, every other year, to address some new technology. They were trying to write it in technology-neutral terms. And that's why they really focused on -- what are you doing with this infrastructure? What is the goal here? So they focused on things like universal service, making sure that there would be support for the infrastructure that's needed, so that rural areas and high-cost areas and poor urban areas would all be served. Just like the telephone network had been rolled out before, they wanted to make sure this infrastructure was going to get deployed, that certain rules were going to be available, to make sure that there would be competition on that network. And to make sure that you weren't going to regulate more than you needed to.
So, they were VERY aware of the Internet. You know, for anybody who's interested in history and wants to go back and research it -- I mean, the "Internet" was featured on the cover of Time magazine in 1994. "Interactive," which is sort of a predecessor term for that, was featured on the cover of Newsweek in 1993. You had the Clinton-Gore administration, with their National Broadband Infrastructure. There were reports by the National Research Council; you know, the Office of Technology Assessment; the General Accounting Office. I mean, the term "Internet" was everywhere. Sex on the Cyberhighway. I mean -- people were very focused on it. And people forget that there was a whole section of the '96 Act that dealt with not only porn on cable but porn on computers. And so, if members weren't aware of the Internet, then how did they -- they must have been very prescient, then, to be sitting there dealing with Internet porn. So, it was very much front-and-center. The reality was, because people weren't focused, they didn't want to see anybody regulating the applications and services -- with the exception of this decency issue. They were really focused on the nuts and bolts of the underlying infrastructure that makes the Internet possible.
Chris: So, one of the things that I've been critical about -- and I say that very consciously, as someone who, you know, didn't really get involved in Internet policy, or wasn't interested in how these things worked until 2003 or later. And so when I look back, I think, well, the Telecommunications Act got everything wrong. We don't have competition. And in our conversations before today, you know, you've helped me to understand that that's not necessarily the fault of the Act. And, in fact, there are a lot of things the Act got right, but were later screwed up, in part, by the Federal Communications Commission, and courts maybe, and Congress getting involved -- I don't know. But I'm curious. How did things -- how did we not end up in the world that we hoped we would end up when we passed the Act?
Earl: The Federal Communications Commission is the chief culprit there. They took the statute. And, because the various bureaus inside the FCC were very closely aligned with certain segments of industry -- there was a cable bureau, there was a common carrier bureau, you know, there was a wireless bureau -- they all sort of protected their individual fiefdoms, and wrote -- rather than looking at this and saying, you know, now, with convergence -- and if you read the Telecommunications Act you can see this -- Congress basically said we're going to start moving everything toward what's called a common carrier regime, Title II. And the basic thrust of common carriage is: you, the network operator don't -- this is -- you're transmitting somebody else's information, just like a taxicab is picking somebody up and carrying them somewhere, or a hotel is renting a room, or, you know, UPS is delivering packages. I mean, this is -- you're taking information that is NOT yours. And your responsibility is to deliver it from point A to point B. We were supposed to be moving everything toward that. So you would have had -- had the vision of the '96 Act been followed -- you would have ended up with, essentially, elimination of the cable rules, by and large, and you'd have largely over-the-top video being delivered. People would be buying bandwidth, and using it however they saw fit. If they want to use it for voice, great. If they want to use it for data, great. If they want to use it for video, fine. Everybody would be competing. And you would go to individual websites, who might package information for you, or they might offer you different packages, services. But the bottom line is, you would be able to attach your device and come up with new services, new -- both information services or new transport services, to send across this. It would have been your basic "pipe" -- as Senator Stevens referred to it. It would have been used to transmit information, just like any other utility.
So, the goal of the '96 Act was, essentially, to start eliminating these silos -- the cable silo in particular -- and more toward a common carrier regime. That's why, if you look, there's a Section 10 of the Act, that was added, that basically said the FCC can waive any provision in the entire statute, if it's dealing with a telecommunications carrier, or a telecommunications service. Telecommunications is dealt with under Title II. And that was to be the prime provision of the statute.
Well, it turns out the FCC decided they didn't like Title II. And so they have basically interpreted the statute in a way that allowed them to not have to apply Title II. So they've turned the Act on its head.
Chris: And so, one of the questions I have, then, is -- so, you would say, then, that the '96 Act basically anticipated that -- For instance, if Comcast was delivering service to my home, that I would be able to get multiple ISPs that would be competing, using the Comcast infrastructure. And they would be competing on the service level with my business.
Earl: Exactly. That's exactly what was envisioned. And you have to understand. At the time Congress was writing the '96 Act, the FCC had in place for the last 15 years what was called the Computer II regime that did exactly that. It said that the telephone companies -- or anybody that was considered a common carrier -- could compete in these information or enhanced services markets, as long as they made available to other competing parties the underlying transmission network. And so, the goal was to apply that same type of regime to cable networks, which then would have allowed you to get the bandwidth you need to do over-the-top video -- to Netflix, to do Hulu, to do all these other things that you can do today, but albeit very slowly and without a whole lot of competition.
Chris: When a lot of us that are critical of the FCC look back on this, we blame the Bush administration. And you've spoken up in a number of places saying it's not that simple. When did the FCC start making these decisions that were moving away from the goals of the Act?
Earl: Literally within months of the passage of the Act. [laughs] So, starting under Chairman Hunt, followed by, particularly, Chairman Kennard. Chairman Kennard was really the person who was in the driver's seat when they made critical decisions about NOT applying this common carrier regime to cable. And once they'd made that decision -- and Senator Stevens, and Senator Burns, and others who were very concerned about universal service challenged that, and said, what are you doing? Why aren't you applying this to cable? Why isn't Internet over cable going to pay into universal service like data over telephone networks does? They were very distressed about that. And, you know, that was really the start of the unraveling of the Act. Once the FCC decided to treat cable as something different. And they did it several different times. In terms of not applying universal service. They did it in terms of not opening it up to competing ISPs. They did it in terms of giving the cable folks a reduced rate -- or not increasing the rate -- that they were going to pay for pole attachments, which was one of the requirements of the Act. And if you've got any doubt about the clout of the cable industry, there was also a provision in the '96 Act that told the FCC very specifically to open the set-top box market to competition. Here we are, 20 years later, and [laughs] we still don't have set-top box competition.
Chris: Right. I mean -- and the perfect example, I think, of where you're throttling innovation. Because the folks who make TiVo, wow, they had some great ideas; and those ideas were either stolen or they were prohibited from really being accessible to hundreds of millions of people.
Earl: Right. Well, when you look at what you can do on your smart phone, and compare that -- or on your Apple TV, or something else -- and compare that to what you can do with your set-top box, it's mind-boggling. I mean, why are stuck with this lousy search capability? And, I know, I think Comcast just finally came out with a box you can talk to. I haven't heard any reports as to how well it works. But, I mean, there's been very little innovation on the cable network at all.
And also, the thing that people forget is -- you know, when the Internet got started -- because you could buy connections -- from the phone company, they had to sell them to you. And you could attach electronic devices that met certain standards to that network. And the phone company couldn't say anything about that. If you wanted to use it to send data in a different fashion, you could. But that was because of regulations that allowed you to do that. You can't do that on the cable network.
Chris: I was just reading that -- in rereading a part of Reed Hundt's book -- um, "You Say You Want a Revolution," I think is what it was called -- and he talks about that. The telephone companies wanted to charge you the equivalent of long-distance fees for using your modem on their network. And, you know, that was regulation that prevented them from overcharging people. And that's what allowed so many of us -- I remember dialing in, I think it was infocom.com in Rochester, Minnesota, as a high school student. And, you know, reading about all kinds of things on the Internet at that time. And my parents never would have let me do that if we'd had to pay per minute.
Earl: Right. Well, that was the foreign exchange rules. And, I mean, certainly, you know, the FCC, under Chairman Hunt, did some good things, but he missed the bigger point, which was this digital convergence. And he missed the opportunity, then, to apply the rules that had been successful on the telephone network to the cable infrastructure. And, as he was warned, once they made the decision that broadband over cable was not going to be subject to these rules, it was inevitable, then, that they'd have to take away those rules for broadband over telephone.
And, you know, here's another indication of just how badly the FCC got it. In 1992, when Bell Atlantic committed to the state of New Jersey that they were going to -- you know, in exchange for rate deregulation -- they would build a broadband network. They had three different speed commitments that they made. One was "narrowband," which was 144 kilobits a second. So that was an upgrade from existing plain old telephone service. "Wideband" was 1.5 megabits a second. And "broadband" was 45 megabits a second symmetric service. This is in 1992. So, when people were talking about "broadband" -- when Congress was talking about "broadband" -- when you talk about Section 706 and the "advanced telecommunications" capability -- they were talking about 45 megabits and up -- a DS3 and up. Nobody would have considered, you know, 768 kilobits a second "broadband." Yet, you have the FCC, who, starting in the late '90s, decided, oh, well, we want to make sure that wireless qualifies as quote "broadband." So they, you know, they wanted to generate this fiction of "facilities-based competition." And the only way you could get more than two -- because there's just the cable network and the phone network, right? -- they had to create something more. So they kept the "broadband" speed very low so that wireless could qualify. And, lo and behold, whoa, we've got six people in the market. What do you know? Wow. Gosh. So fast. And the same thing with satellite. Yet nobody was going to use wireless or satellite as a replacement for a wire line.
You know, look at the way the government collects data today. And they talk about people "cutting the cord." Well, all they're doing is -- they're no longer paying for voice telephone service. But those people are keeping their broadband connection. So, right there, the government is busy misleading people as to what's really going on in the communications market, because they're trying to keep up the fiction of multiple facilities-based competitors.
Chris: When we talk about facilities-based competition, you made the point that, in the '96 Act, there was an expectation that if the competitive providers that were using other people's infrastructure chose to do so, they would have the option of building new infrastructure. But the FCC interpreted that as, over time, the new competitors would have to build their own infrastructure, because they would not always have access to the cable and incumbent telephone facilities.
Earl: When the statute was passed, one of the things -- one of the keys -- and, again, found in Title II -- was the right for competitors to connect their own networks or their own parts of networks, to the underlying existing infrastructure. And, you know, this was a recognition by Congress that, really, a competitor, to get started, was going to have to enter in a series of stages. It might start out reselling the existing -- either cable or phone network, we were thinking at the time. That, as they got customers, and therefore got a revenue stream, they might decide, oh, I want to add my own switch, or I want to add my own, you know, fiber ring, in a particular area. And so they would add those piece parts. But, again, they would continue to grow by competing -- reselling -- gaining size as they did that, they would probably want to control more of their network. In fact, you know, you see that today, with the recent decision by Netflix, to say, oh, we're going to -- instead of paying somebody else to let me use their network, I'm going to build sort of my own network, a little bit, and do this. But they're not building infrastructure that's reaching every home and business. They're building a series of point-to-point data connections that they have a lot of traffic on, and it makes sense. But what happened was, you know, the decision was made that, rather than saying we're going to open the cable network to this resale model, they said, oh, no, we're not going to do that. We're not going to let competing ISPs have a right to get access to the cable network. If you want to compete with them, you've got to build your own. Well, that left you with the phone network; and a couple of years later, they took away the phone rules that allowed people to get access to that. So we went from having literally thousands of independent ISPs, who were competing for our business to, now, we've got just a couple of major players.
You saw the same thing happen in long-distance. But for, you know -- When we did the '96 Act, there were over 400 long-distance providers. Well, there weren't 400 physical networks in the United States providing long-distance service. There were probably about half a dozen. And the rest of those people were reselling capacity on AT&T, or MCI, or Sprint's networks. Through resale, you got a lot of consumer competition, for both business and residential customers, but there weren't that many physical infrastructures that you were doing. That was a function of how much -- you know, maximizing the use of the existing facilities.
Congress thought when they did the '96 Act that the same model would apply. And it would have applied if the FCC had maintained its Computer II rules to the provision of broadband Internet service to homes.
Chris: If I was a competitive ISP, and I started off by leasing the facilities of the incumbent telephone company, and then I decided I was going to build my own fiber, that fiber, then, would still have common carrier requirements on it, right?
Earl: That's absolutely correct. When you're using the public rights-of-way, the basic statute says you get access to the public rights-of-way -- and poles, ducts, and conduits -- if you're going to be a common carrier. And, you know, somehow, the FCC is managing to let people get all the benefits of being a common carrier without any of the obligations.
And, you know, just the reality is, Chris, if you think about it, you know, we now have competition, in most states, in electricity. But nobody's building another electric line to your house to have that competition. What they've got is, they've got different generators of power, who then all share that transmission line, that electric line to your house. And they can come in and offer, you know, their power over the same line. The incumbent power company is the guy who maintains that line. And he gets paid for letting other people use his line. But nobody was crazy enough, in electricity, to say, oh, gosh, we need another electric line strung to your house if you want to have electricity competition. Yet somehow, that's what the FCC has effectively done. They've said, rather than the way the statute was structured, where if the competitor decides he wants to build his own facility, he's got that right, the FCC turned around and said, oh, no, if you want to compete, you MUST build facilities. Well, that's why we don't have much competition today. It doesn't make any sense. All the cable networks, all the phone networks that reach every home and business in this country were built in a monopoly environment. So, to ask any competitor to come in and duplicate that -- it's just insane. It hasn't worked anywhere.
Chris: We're going to come back and -- Earl, we're going to talk again in the near future, and talk about things like network neutrality. And, I think, really how that's a symptom of a problem. And solving other problems will make network neutrality no longer a problem. And we'll talk a lot more about Title II. But is there anything else you say, in regard to this whole history lesson today?
Earl: Glad to have the opportunity to hopefully educate some folks, and, like I said, if people are interested, there's lots of information out there, if anybody cares to do some research on it.
Chris: Any place you'd recommend they look to start?
Earl: Go in and search for things by the National Research Council. You can look for the Office of Technology Assessment. The Government Accountability Office. But there is plenty of information out there to show that, in the period from, really, about -- late 1980s through mid 1990s, there was tremendous focus and discussion on the Internet. I mean, just go to Time's archives, or Newsweek's archives, and you'll see how much it was being discussed back then. So -- And not just the Internet but this whole idea of convergence -- the whole idea that there would be, you know, people -- They called them personal digital assistants -- PDAs -- back then, but, essentially, that was the iPad. You know, Apple had the Newton, back in those days, ...
Earl: ... which was the forerunner of the iPad. I mean, you know, everybody thought we were going to have these devices a lot sooner than we actually did. What it took was, it took processing power to become fast enough and cheap enough that you could -- and microelectronics to come along -- and battery power in particular -- to get powerful enough to be able to give us the devices that people were actually talking about, you know, literally, decades ago. The mistake in the '96 Act, leaving aside the FCC's misinterpretation, was simply that, I think, people would have thought we would have gotten to where we are today a lot sooner than we did.
Chris: Well, thank you so much for coming on this show. We'll talk again soon.
Earl: OK. My pleasure, Chris.
Lisa: Thank you, Earl, for sharing your unique knowledge and experience. Continue to check in with us to learn more, as the FCC considers the next steps it will take under Section 706 of the 1996 Telecommunications Act. Several communities have informed us that they've passed resolutions in support of the FCC's authority, and we will continue to follow developments.
We'd like to hear your ideas for the Community Broadband Bits Podcast. If there's a topic that interests you, or if you'd like to hear from a specific guest, please e-mail us. Write to firstname.lastname@example.org. You can also follow us on Twitter. Our handle is @communitynets. This show was released on March 11, 2014. We want to thank the group Valley Lodge for their song, "Sweet Elizabeth," licensed using Creative Commons. Thanks for listening, and have a great day.