June 1, 2018 - 11:15 am
By Michael O'Rielly | Commissioner

As consequential as the FCC can be in communications policy, it is critical for those in leadership positions to acknowledge that its authority and reach is inherently limited. In fact, current law prevents the Commission from having any role or oversight over numerous modern technologies central to many Americans' communications habits. This universe is often called the app economy or gig environment, but we should also call it for what it really is: an FCC regulatory free arena.

These services are capturing Americans' attention, and thus the market share and advertising dollars of legacy providers, on an astronomically fast pace with no letup in sight. Consider that a 2017 report suggests that the global app economy will triple in value (from $1.3 trillion to $6.3 trillion) and app use will double (from to 1.6 trillion hours to 3.5 trillion) by 2021. Additionally, an Interactive Advertising Bureau sponsored report from earlier this month shows online advertising surpassing television as the number one advertising platform and swamping the rest of the field. As such, it should be impossible for policymakers to ignore their immense popularity, the substitutability of services with those offered by Commission regulatees, and the disruptive force non-regulated services are having with regards to the Commission's activities. That is, the need for the Commission's regulatory structures (and therefore its relevance and function) are fading like that of a snowman in springtime or, more on point, like the steep decline of the traditional switched access voice telephone service.

This rapid development and momentous shift of consumer preferences toward application-centric offerings, requires the Commission to evolve its overall approach. Entire subject areas — once proud mainstays of the agency's workload — need to be scrapped immediately. Why, for instance, should the Commission spend one more minute adjusting the wireline separations accounting rules? This is comparable to being located immediately adjacent to a thundering tornado and spending significant time debating which size umbrella to use.

Likewise, the Commission must rethink outdated terminology and market definitions. Continuing to label and regulate certain providers as "incumbents" based on legacy notions of competition instead of marketplace realities makes no sense. A big fish may seem dominant in a small reef until a shark swims by.

To put this discussion into stark perspective, the following provides a snapshot of several key communications services (and accompanying leading providers) that the Commission DOES NOT regulate. Maybe you've heard of these companies or used them once or twice recently?

  • All over-the-top video offerings, including:
    Netflix, YouTube, Amazon, Sling, DirecTV Now, HBO Now, CBS All Access, Hulu, MLB.com
  • All instant messaging and online chat offerings, including:
    WhatsApp, Messenger, WeChat, GroupMe, Snapchat, Google Hangouts, Slack, FaceTime
  • All social media offerings, including:
    Facebook, LinkdIn, Twitter, Instagram, Tumblr
  • All music streaming offerings, including:
    Spotify, Pandora, Apple Music
  • All non-PSTN voice/video offerings, including:
    Skype, Google Voice
  • All Internet Cloud offerings, including:
    Amazon Web Services, Microsoft Azure, Google Cloud, IBM Cloud, Adobe Creative Cloud, Oracle

Congress has provided powerful tools in the form of forbearance and mandatory, periodic reviews that Chairman Pai and this Commission have rightly seized upon, but there is capacity to do more if entities would do the work to make the proper showings. Specifically, if an existing FCC regulatee is in the voice, video, or data business, they should be knocking down our doors to demand fundamental and colossal relief. And this opinion is not just mine. Talk with any market analyst or investor group, as I try to do regularly, on whether they see new large-scale investment coming to any services regulated by the Commission and, except for certain opportunities in the wireless sector, they will look at you like you have two heads and speak Venusian.

Ultimately, the only logical take-away from this information is to either support greater deregulation of FCC regulatees that must compete with these services or advocate for new Congressional powers to regulate these services, which would seem futile and unnecessary. At a minimum, people should realize that the Commission's role is much narrower than they may have originally assumed.