Some industries are regulated more heavily and strictly than others. For better or worse, the cryptocurrency market is practically free from regulations, while industries like cannabis-related products, are subject to much stricter laws and protocols.
The telecom industry is one that faces much stricter regulations, making it harder to enter and harder for large TSPs to innovate or try new things. So why is this the case, and is there any possibility for things to loosen up in the future?
Why telecom is regulated
There are two major, landmark acts that serve to regulate the telecom industry: the Communications Act of 1934 and the Telecommunications Act of 1996. The former created the governing body of the Federal Communications Commission (FCC), which has since gone on to introduce more rules and regulations. The latter was designed to allow anyone to start any type of communications business, and was followed by more than 10,000 new pages of rules and regulations.
Both regulatory acts emerged as an antitrust measure; telecom is an industry that relies on significant existing infrastructure to operate, which means it has an enormous barrier to entry. This is fairly intuitive; after all, you probably know someone who’s talked about starting their own restaurant or mobile app, but you haven’t met any entrepreneurs trying to start a new phone company. Regulations here prevent any single company from taking over and controlling the market (though the early days of telecommunications relied on government-controlled monopolies).
Regulations also exist to ensure no discriminatory practices are used to withhold telecom services from certain users, or unfairly prioritize one line of communication over another; this ensures all consumers have access to emergency communication, law enforcement, and similar necessities. Net neutrality was an extension of these common carrier rules to the realm of the internet, though the act has since been repealed.
The problems
If these regulations are designed to protect consumers, ensuring a fair, open, and competitive network of TSPs, why do so many TSPs take issue with the current state of regulation?
- First, take a look at the dates of the major regulations currently shaping the telecom industry—one is 84 years old, and the other is 22 years old. Phone and internet technology has changed so much in the past 10 years that these laws barely seem relevant anymore, and it’s neither prudent nor logical to apply the same logic that once applied to railroads and telegraph companies to modern ISPs and TSPs.
- Second, the list of rules and regulations is long and constantly growing longer. This makes it hard to take any action as a TSP without first consulting the massive rulebook with a team of lawyers. Laws and codes are constantly added, rather than replacing previous legislation to simplify things.
- Third, modern TSPs don’t like the fact that the FCC has unchecked control over the new rules and regulations for the industry. It’s an independent regulatory body meant solely to keep TSPs in order, which means the TSPs themselves have little to no say in how they operate in the future.
- There are also reports that modern forms of regulation are in part due to cronyism, with major tech companies and similar product developers fighting to keep regulations that ultimately benefit them. Laws and rules are sometimes passed based on political interest, rather than consumer interest.
The future
Nobody is satisfied with the current state of TSP regulation. Industry moguls claim that regulations are stifling innovation, while consumer protection organizations claim the FCC isn’t doing enough to keep TSPs from having a stranglehold
on internet access. In any case, it’s unlikely that the tangled mess of regulation keeping the telecom industry confusing and unapproachable will remain the same for long; we’re overdue for an overhaul, though there’s no clear consensus on how that overhaul could or should take shape.
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