New Models of Regulation and Inter-Agency Governance

Abstract

This symposium contribution explores how technological convergence and the shift towards access regulation are fundamentally transforming the basic tools and goals of telecommunications regulation. However, policy makers have largely ignored the manner in which access requirements can forestall the buildout of alternative transmission technologies. Simply put, compelling access discourages investment in new networks by rescuing firms that need network services from having to invest in alternative sources of supply. In addition, forcing incumbent carriers to share their networks cuts those who would like to construct alternative network facilities off from their natural strategic partners. As a result, access remedies can have the perverse effect of cementing existing monopolies into place. In addition, policy makers have largely overlooked how technological convergence and the shift towards access regulation have undercut the justification for employing cost-based methodologies when setting rates. The more appropriate step at this point would be to adopt the more economically sound approach of basing rates on market prices. Finally, the advent of convergence is also exerting pressure on the tendency under current law to regulate each communications technology as a universe unto itself. The impending shift to packet-switched architectures promises to cause all networks to become substitutes for one another. Indeed, it is possible to envision a world in which different network technologies act as complements rather than substitutes for one another, with different packets arriving in the house through the most efficient transmission media, a transformation that would pose its own share of regulatory challenges.