FCC official: Chaos ahead for consumers, industry

By John Gallant
Network World, 6/7/98

San Jose, Calif. - In a keynote presentation at the ATM Year 98 conference here, a top official of the Federal Communications Commission said consumers and businesses are in for a chaotic time in the years ahead as the demands of data networking and the rapidity of technological change obsolete the current regulatory process and create new winners and losers in the communications industry.

L.S. "Stagg" Newman, director of technology analysis with the FCC's Office of Plans and Policy, said the rise of the Internet and IP and the growing number of new high-bandwidth communications options will spur the kind of fast growth enjoyed by the computer industry as a result of the rapid increases in microprocessor power in the past two decades. Newman, speaking on his own and not in an official policy speech for the agency, said: "There's a chaotic time coming ahead. But chaos is good. It leads to opportunity for the nimble."

Newman said the FCC's challenge is to figure out how and what to regulate in this new environment. The goal, once some basic competitive guidelines are in place, is for the agency to get out of the business of regulating broadband networks. "Ideally," Newman said, "one day we'll become the Former Communications Commission, if the will of Congress can be met," referring to the goals laid out in the landmark 1996 telecom reform act.

But simply deregulating everything now, as some analysts have urged, would be a mistake, Newman said. "If we deregulated the incumbent carriers now, would they change their nets at a faster pace? That's an open question. But I think companies respond better to competitive pressure than monopoly opportunities. For example, look at what pushed the telcos into building SONET [Synchronous Optical Network] rings, it was competition from the alternative access companies."

While Newman comes from inside the Beltway, which he dubbed the ultimate Fantasyland, in a nod to previous speakers from Walt Disney Feature Animation, he had high praise for the Internet and its effect on the network world order. "The Internet will always reach more customers than any other network. It will attract new services developers leading to more rapid evolution. The Internet is a deregulator's dream. You can deregulate when you believe that market forces will offset monopoly forces and benefit consumers."