When President Bill Clinton signed into law the Telecommunications Act of 1996, 20 years ago today, those in Congress on both sides of the aisle breathed a palpable sigh of relief. For a dozen prior years, following the implementation of the AT&T divesture negotiated by the Department of Justice, much of our nation’s fundamental communications policy was controlled by neither Congress nor the Federal Communications Commission (FCC). Instead, it fell under the jurisdiction of the U.S. District Court in the District of Columbia. That court had inherited a much earlier case, which implemented a 1956 consent decree that prohibited AT&T from entering the computer and data processing fields.
{mosads}In effect, this meant that the presiding judge, Harold Greene, inherited the unadvertised job of U.S. telecommunications czar. Assisted by an administrative aide and two young law school graduates who were selected each year to serve as clerks, Greene was responsible for overseeing the largest restructuring of the telecommunications industry in American history, with billions of dollars at stake.
Ma Bell was separated from its offspring, known as the Baby Bells, in order to curtail the anticompetitive practices that were the focus of Justice Department inquiries that ran from the Eisenhower to the Reagan administrations.
All of these companies had to seek Greene’s permission regarding numerous aspects of their business operations. The strictest prohibitions were enforced against the Baby Bells. They were not allowed to engage in equipment manufacturing, long-distance service or information services, a category that encompassed data and content creation in any medium.
By the mid-1990s, it became obvious that the court was not the best venue for making detailed, often highly technical decisions about telecommunications competition.
Neither telecommunications companies nor the public at large were being well-served by a traffic-cop type approach that favored seeking permission over unbridled innovation. The Communications Act of 1934 remained in place, of course, but in many ways was diluted by Greene’s enormous legal powers and sometimes inexplicable decisions.
This backdrop set the stage for the crafting of the Telecommunications Act of 1996, when Congress reasserted its legislative authority. To emphasize just how strongly Congress felt, House Commerce Committee Chairman Thomas J. Bliley, Jr. (R-Va.) was invited to serve as the lead witness at the Senate Commerce Committee’s hearing on the telecommunications reform legislation — highly unusual, but symbolically effective. “It is imperative that the statutory guidelines be put in place so that companies can make business plans as we enter the information age,” he said in prepared remarks.
Rep. Jack Fields (R-Texas), chairman of the House Subcommittee on Telecommunications and Finance, echoed this sentiment in his own Senate Commerce Committee testimony. “I believe it is essential that all aspects of industry — broadcast, cable, satellite, local and long distance telephone, computer and cellular — have clear statutory guidance that provides them with the certainty necessary to make long-range business plans and to obtain financing necessary to make those plans a reality.”
In the intervening years following the law’s enactment, the primacy of the FCC in telecommunications regulation was in fact restored, but without such necessary statutory guidance. This has led to the FCC expanding its authority over time and facing increased challenges of its decisions in court — with resulting uncertainty for telecommunications company investment and expansion plans.
Having the FCC operate with more distinct legislative boundaries for when and how the agency should intervene in the dynamics of the telecommunications marketplace would be a beneficial spur. When the 115th Congress convenes next January, a comparable level of political will from the now ever-distant days of 1996 would be welcomed indeed.
Brotman is the inaugural Howard Distinguished Endowed Professor of Media Management and Law and Beaman Professor of Communication and Information at the University of Tennessee, Knoxville.