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)