19 July 1999
Source: http://www.usia.gov/cgi-bin/washfile/display.pl?p=/products/washfile/latest&f=99071904.glt&t=/products/washfile/newsitem.shtml


USIS Washington File
_________________________________

19 July 1999

FCC Analysis on Internet Regulation

(Study finds little regulation fosters expansion) (740)

A deregulated telecommunications environment has been a key factor in
the expansion of the Internet, according to a study released July 19
in Washington by the Office of Plans and Policy of the Federal
Communications Commission (FCC).

The paper is one in a series released by the agency since it opened an
inquiry into telecommunications expansion three years ago. The latest
analysis finds that FCC action to use caution in taking regulatory
steps has allowed innovation and experimentation to flourish.

Some of the important FCC actions that have fostered an environment
where Internet activity could flourish include decisions to provide
for virtual universal availability of service through the telephone
system, and deregulation of the equipment market to encourage the
widespread deployment of the modem.

Following is the text of the press release

(begin text)

July 19, 1999

INTERNET PROSPERS WITH "HANDS-OFF UNREGULATION" FCC PAPER REJECTS NEED
FOR PRECIPITOUS ACTION

The FCC Office of Plans and Policy (OPP) today released the latest in
its OPP Working Paper Series, entitled "The FCC and the Unregulation
of the Internet." Authored by Jason Oxman, Counsel for Advanced
Communications in the Office of Plans and Policy, the paper examines
the FCC's thirty-year history of not regulating the data services
market, and how that tradition of "unregulation" was a crucial factor
in the successful growth of the Internet. OPP periodically issues
working papers on emerging issues in communications; these papers
represent the individual views of their authors and are not official
statements by the FCC or any FCC commissioner.

Since opening an inquiry into the interrelationship of the
telecommunications network and computer-based services in 1966, the
FCC has taken numerous affirmative steps to ensure that the
marketplace, not regulation, allowed innovation and experimentation to
flourish. As a result, a vast majority of Americans have inexpensive
and reliable access to the Internet.

The typical American family gains an incredible amount of value from
its $20 per month Internet account, including such services as
investing, travel planning, homework research, email communications,
and shopping, among others. The Internet Economy generated over $300
billion in revenue in the U.S. last year and is rapidly changing the
way America does business. Nearly one third of the nation's households
are regular Internet users.

A summary of the working paper is attached. The full text is available
on the FCC web site at

http://www.fcc.gov/Bureaus/OPP/News_Releases/1999/nrop9004.html


Summary of "The FCC and the Unregulation of the Internet" by Jason
Oxman, Counsel for Advanced Communications Office of Plans and Policy

The success of the Internet has not been an accidental development.
Market forces have driven the Internet's growth, and the FCC has had a
role to play in creating a deregulatory environment in which the
Internet could flourish. The working paper examines the history of the
FCC's data policies and the ways in which those policies have
benefited the Internet. Key FCC policy decisions, the paper finds,
have included:

-- Fostering the development of an interconnected telecommunications
network that ensured near universal availability of a reliable and
affordable telephone system over which data services could be offered.

-- Determining through the Computer Inquiry proceedings that computer
applications offered over that network were not subject to regulation,
giving rise to the unregulated growth of the Internet.

-- Exempting enhanced service providers from the access charges paid
by interexchange carriers, helping drive the availability of
inexpensive dial-up Internet access.

-- Deregulating the telecommunications equipment market while
requiring carriers to allow users to connect their own terminal
equipment, helping to foster the widespread deployment of the modem
and other data equipment tools that can be easily attached to the
public switched network.

--Implementing flexible spectrum licensing policies that permit
innovative uses of wireless data services, leading to the development
of wireless Internet applications.

In the paper, Jason Oxman also concludes that the FCC, in plotting a
deregulatory course for the future, should take advantage of lessons
learned in three decades of "unregulation" of data networks:

-- Do not automatically impose legacy regulations on new technologies,
a) when Internet-based services replace traditional legacy services,
begin to deregulate the old instead of regulate the new; and b)
Maintain a watchful eye to ensure that anti-competitive behavior, such
as bottlenecks and tying, do not develop, and be careful that any
regulatory responses are the minimum necessary and outweigh the costs
of regulation.

(end text)