Digital Crossroads: American Telecommunications Policy in the Internet Age.

Vol. 15 No.5 (May 2005), pp.362-365

DIGITAL CROSSROADS: AMERICAN TELECOMMUNICATIONS POLICY IN THE INTERNET AGE, by Jonathan E. Nuechterlein and Philip J. Weiser. Cambridge, MA: The MIT Press, 2005. 672pp. Cloth. $40.00 / £25.95. ISBN 0-262-14091-8.

Reviewed by Ann Bartow, University of South Carolina School of Law, University of South Carolina. E-mail: Bartow@law.sc.edu

Jonathan Nuechterlein and Philip Weiser open the Preface of this book by stating that they set out to write a book that both explains “telecommunications competition policy in the Internet era” clearly, and makes “substantive contributions to the major policy debates within the field.” By expostulating the shape and history of the telecommunications industry with substantial detail and precision, they have achieved their first goal, and are likely to attain the second as well. Their contribution to multilayered understandings of the economic complexities of specific sectors of the telecommunications industry is likely to be considerable. Whether or not the book facilitates adoption of actual policy recommendations, at least readers will have a good sense of which dominos are likely to fall when policy changes are engineered.

Chapter 1, entitled “The Big Picture,” lays out economic characteristics of the telecommunications industry, and then explains the changes to it wrought by “convergence,” which the authors define as “the competitive offering of familiar telecommunications services though unconventional technologies” (p.3). The chapter explains and illustrates concepts such as “network effects,” “creative destruction,” and “scale economies,” which are often invoked in telecommunications literature, and not always consistently. Throughout the book the authors continue this practice, highlighting and defining the inordinate number of buzzwords, catch phrases and acronyms that seem to colonize the telecommunications discourse.

The chapter also explicates the reasons that telephone companies are regulated differently than cable companies, even though they may provide the same services to consumers. Evidencing an overarching cynicism about regulation, and parallel optimistic about the virtues of competition, the chapter closes with an assertion that “the ultimate aspiration of telecommunications policy” is a world in which there are multiple “facilities based platforms” for each telecommunications-related service. This theme is returned to, and elaborated upon, throughout the book.

Chapter 2 provides an “Introduction to Wireline Telecommunications,” Chapter 3 discusses “the current rules governing competition among wireline carriers” under the Telecommunications Act of 1996, and Chapters 4-10 describe “issues raised by competition between wireline telecommunications carriers and their non-wireline rivals, such as cable companies and wireless carriers” (pp.31-31) [emphasis in original]. Chapter 11 shifts from “platforms that deliver voice [*363] and data traffic” from point to point, to “video distribution platforms,” local broadcasting, cable, and satellite dissemination of television programming. Chapter 12 discusses telecommunications standards, and uses digital television as a “case study.” All of these chapters contain enormous amounts of descriptive information. While virtually every paragraph, indeed almost sentence, is studiously clear and eminently comprehensible, the number of complex and important ideas in each chapter accumulates rapidly into a somewhat dense and Byzantine thicket of concepts. Luckily, the authors fairly regularly provide clear and straightforward summaries and conclusions. With a little patience, the reader comes away with a good grasp of the interconnected nature of the telecommunications industry, and the general lack of governing principles in the area that cohere across technologies.

A paragraph a few pages into Chapter 3 illuminates the importance of the wording and interpretation of statutory authority in the telecommunications context, by explaining:

The rules we are about to describe are default rules only. In theory, incumbents and competitors are free to negotiate whatever arrangements they like, so long as they do not discriminate against third parties. But, given the inability of incumbents and competitors to agree on very much, in part because no company has any incentive to agree to outcomes less favorable than what it could receive from regulators, these default rules end up governing the most important aspects of local competition. (p.79)

Thus the reader begins to understand that the government regulates relationships not only between private telecommunications companies and consumers, but between the companies themselves, and even within the companies themselves, to a very high degree, making the content and application of these regulations of critical importance. Property-like rights in telecommunications markets and infrastructures are extensively state defined and state allocated, and any changes in market conditions, or in the rules that govern them, can dramatically affect the opportunity sets of other actors.

The book does an excellent job of laying out, in seemingly exhaustive fashion, the economic and social policy considerations that underpin a wide variety of telecommunications laws, rules, court opinions and customs. The authors then identify inequities and inefficiencies that are inherent in certain regulatory regimes, or that emerge or are exacerbated as commercial circumstances or technologies change. Chapter 13, the final chapter, lays out what the authors term “four values for managing competition policy.” Those values include determinacy (development of rules that can be readily ascertained and predictably applied), expertise (decision-making institutions understand the technologies and the industry), neutrality (maintaining a primary focus on maximizing consumer welfare) and humility (an inclination to “respect the market’s ability to enhance consumer welfare” and “to give due regard to the unpredictable course of technological and economic change”). The authors do not, in this chapter, advance any grand normative recommendations about the proper distribution of wealth and power, nor any overarching affirmative theory about [*364] the role of telecommunications in a democracy. Instead, the authors sketch out pragmatic suggestions around which future policy decisions could be oriented, echoing the approach taken in the previous chapters.

The book’s descriptions and illustrations have a marked antiregulatory, pro-competition slant, despite the authors’ stated goal of “remaining objective and nonpartisan” (p.xvi). In fairness, there is so much to criticize about specific past and current regulatory regimes that perhaps even a dedicated Socialist would find cause for pessimism about the government’s ability to incentivize effectively private investment and innovation in communication technologies and protect the interests of consumers simultaneously. The authors certainly do not appear to advocate for the position of any particular telecommunications industry sector or player, and unquestionably achieve a tone of neutrality in that sense. Still, they may underestimate the desire and ability of many companies to dominate markets and avoid or suppress competition by any means available. They do not appear either to favor or expect increased government investment in, and ownership of, actual telecommunications infrastructure.

Given that one underlying premise of the book is that the telecommunications industry is unique, the clarity of the descriptions might have been improved with fewer analogies to non-telecommunication issues. Comparing telecommunications conflicts to antitrust disputes, for example, does little to simplify the underlying concepts to the reader. However, many of the historical anecdotes, such as those referencing Alexander Graham Bell (pp.115-116), Albert Einstein (p.227), or the personal experiences of the authors themselves, were interesting and often charming, and provided some much needed relief from the occasionally black hole-like density of the material.

The substantive text of the book runs for 429 pages. Appendix A, immediately following the text, explains in fairly detailed fashion the FCC’s pricing methodology in determining the price a competitive local exchange carrier must pay an incumbent local exchange carrier to lease its network elements. Appendix B briefly recounts the FCC’s enforcement mechanisms. This is followed by a “Statutory Addendum” that provides excerpts of the Communications Act of 1934 as amended by the Telecommunications Act of 1996 reprinted in a rather small font; a lengthy List of Notable Commentaries; a Table of Authorities, Notes (a.k.a end notes) chronologically by chapter; an Index, and finally, a Glossary of Acronyms.

A few mundane editorial comments: Too many words and phrases are italicized for no apparent reason (often there are several in a single page), and clichéd phrases like “to be sure” are, to be sure, somewhat overused. The “List of Notable Commentaries” at pages 491-512 would be more useful if the page numbers referencing these works were included, so that the reader could see the impact that each “notable” book or article mentioned had upon the text. The Index at pages 644-665 does not provide this function because, although some scholars’ names appear, many of the authors of the “Notable Commentaries,” (for example, Ed Baker, Jim Chen, John [*365] Duffy, Michael Froomkin, Mark Lemley, Neil Netanel, Howard Shelanski, Jim Speta and Jonathan Weinberg, to name just a few) are not referenced in the Index at all, so the reader has no way of knowing what impact, if any, said “Notable Commentaries” had upon the authors’ thinking, unless she is prepared to undertake an exhaustive search of the Notes section at the end of the tome.

Overall, this is an impressive work that will be useful to anyone desiring an advanced understanding of telecommunications laws and policies, particularly a highly motivated reader with an intense interest in this subject area. Given the reasonably detailed index and the impressive breadth of subject areas covered, it would also serve as a useful reference work for anyone desiring brief but sophisticated accounts of individual telecommunications issues. It serves as a practical “nuts and bolts” counterpoint to more deeply theoretical works of recent vintage, such as the excellent MEDIA, MARKETS AND DEMOCRACY by C. Edwin Baker.

REFERENCE:

Baker, C. Edwin. 2002. MEDIA, MARKETS AND DEMOCRACY. New York, NY: Cambridge University Press.

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