Federalism in Transition: Recalibrating the Federal-State Regulatory Balance for the All-IP Era

Abstract

The United States is in the midst of a historic technological transition. Millions of Americans are rapidly replacing “plain old telephone service” (“POTS”) with more advanced alternatives, including wireless telephony, Voice over Internet Protocol (“VoIP”), videoenabled chatting, and non-voice services like texting and social media. Many of these services are delivered over borderless broadband networks via the Internet Protocol (“IP”). The flexibility and modularity inherent in these newer, lightly regulated digital networks stand in sharp contrast to the highly regulated analog public switched telephone network (“PSTN”), with its vast system of copper lines and switches that served as the nation’s only means of voice communication for more than a century. In recognition of this clear shift and the enormous economic opportunities enabled by broadband, and in an effort to hasten the completion of what by all accounts has been a consumer-driven transition, the Federal Communications Commission (“FCC”) has begun the important task of modernizing the policy infrastructure governing the nation’s communications sector. This essential endeavor recognizes that the modern communications marketplace requires a regulatory framework built around and informed by the competitive dynamics, consumer expectations, and business models evident in today’s marketplace. Such forthright federal leadership is critical, but it alone will not guarantee a successful transition. Indeed, the states, primarily through their public utility commissions (“PUCs”), have long played a central role in regulating intrastate aspects of POTS and the PSTN, positioning themselves as de facto (some argue de jure) partners in any effort to modernize the laws and policies impacting the U.S. communications infrastructure. This partnership, however, has not always operated smoothly. Technological innovation, shifts in consumer demand, and a variety of other factors have, on numerous occasions, resulted in protracted legal battles over the proper demarcation of regulatory authority between state PUCs and the FCC. These disagreements have become more acute in the broadband era as PUCs attempt to assert continued primacy in the regulation of communications services provided in their states. Continued legal combat between the states and the federal government—and the uncertainty that it engenders—is ultimately harmful because it serves only to impede the organic forces that are driving this transition. Efforts to © 2014 Charles M. Davidson & Michael J. Santorelli. † Director, Advanced Communications Law & Policy Institute at New York Law School. †† Director, Advanced Communications Law & Policy Institute at New York Law School. The authors would like to thank the Journal staff for excellent editorial assistance. All errors and views are those of the authors only. 1132 BERKELEY TECHNOLOGY LAW JOURNAL [Vol. 29:1131 complete the ongoing IP transition should thus address the equally complex task of recalibrating regulatory federalism for a world dominated by IP networks and services. This Article focuses on this particular aspect of the transition: how to apportion regulatory authority between the states and the federal government in a way that reflects the dynamic nature of the modern communications market while also assuring continued consumer protections.