Telecom reform is truly a ‘must do’ for Congress

On Congress’s “must do” list this session is reform of the Telecommunications Act. Last updated nearly two decades ago, policymakers are seeking to provide certainty to consumers and businesses that are increasingly dependent on wireless communication. To set the table for needed reforms, Rep. Greg Walden (R-Ore.), chairman of the House Energy and Commerce Telecommunications Subcommittee, has been asking questions of industry, sharing ideas through policy white papers and seeking input from stakeholders for well over a year.

Asking is the easy part. Responding to the answers with policy solutions is going to be harder than balancing an elephant on a pin. The issues are diverse, the pace of technological change is incredible and interested parties are digging their heels in at every turn. To say the task at hand is challenging is an understatement.

Take for example, spectrum.

Who uses it and how do they use it? The players are many, including big and not-so-big telecom providers and private network providers that serve utilities, energy companies and public safety entities. They rely on their intricate networks to deliver vast amounts of targeted data at critical moments and to keep that data secure.

{mosads}What are the policy hurdles? There are many. Spectrum is limited, the financial stakes are high, and everyone has a cellphone and home Wi-Fi network. It’s why policymakers are constantly meddling in spectrum allocation. Their proclivity to reengineer spectrum and the rules by which its use is governed is a drag on private-sector innovation. It also has an impact on consumers who want new products and better services.

As a former executive at a start-up in the smart grid telecom space, I witnessed firsthand how shifting regulatory policy can impact a company’s ability to maintain and expand its client base. It started when the company wanted to leased a slice of spectrum it owned to utilities and contract to operate a secure broadband network for substations, transformers and smart meters. Midway through the initial customer install, the Federal Communications Commission (FCC) rebanded its spectrum. Per the agreement, the company paid the cost associated with the rebanding out of its own pocket. While the expense was not insignificant, the transition was relatively painless as the client was rural and there were relatively few numbers of points. But it didn’t end there.

The specter of rebanding would eventually haunt the company as it marketed itself to new customers. After extensive technical testing, the company negotiated its next contract with a large metropolitan utility. Just days before closing, the company was told by its “new” customer that it could not assume rebanding risk even if the FCC ordered reimbursement for costs because the changing of hardware for hundreds of thousands of installations would be too disruptive to operations. Not surprisingly, the start-up closed its doors a short time later.

The fact is, not everyone has the resources to pay billions of dollars for spectrum. As well, there are many examples of a local need for a private network — electrical cooperatives, for instance — or of a cost simply being passed through to a consumer. Private networks offer flexibility, security and tailoring that cannot be found in a national network.

Today, other startups are in a similar predicament, caught between regulatory uncertainty and skittish customers who need innovative wireless solutions. It’s why Congress must create certainty around spectrum distribution. It’s good for industry, but more importantly, it’s good for their constituents.

The key challenge for legislators is to drive entities to improve use of spectrum or force migration. Moreover, when entities on their own fail to innovate and an auction process is deemed necessary, there must also be a balance through the auction process to allow innovators (new entrants) and not just the large carriers to participate.

To put all of this into context, a mere eight years have passed since the late Steve Jobs announced the iPhone. The PCS (Personal Communications Service) auctions in 1996 (now Sprint and T-Mobile) replaced microwave links. Analog TV was replaced by 700 MHz LTE (Long-Term Evolution).

Bottom line: The FCC does not have the capacity to juggle the many challenges it faces and strike the proper balance among competing commercial and societal interests. But Congress does. Walden is spot on when he says that Congress needs to act — sooner rather than later. At the end of the day, only Congress can create the certainty and direction the industry requires.

Maddox is a former senior official at the U.S. Department of Energy. He is a fellow at the American Action Forum and a consultant with the Livingston Group.