Regulation in the telecommunications, or telecom, sector is a mixed bag. Historically, telecommunications technology has been hoarded by the U.S. government for years before the release to general consumers. Government-protected monopolies dominate the landline phone business, and new regulations threaten innovation in the Internet communications industry.
Most federal communications laws have their roots in the 1912 and 1927 Radio Acts. The latter established a Federal Radio Commission and mandated radio stations only operate in accordance with "public interest, convenience, and necessity." This language was borrowed, almost verbatim, from the monopolistic railroad laws in the 1880s.
The Federal Communications Commission
The 1934 Communications Act created the Federal Communications Commission or FCC. The FCC was initially established to control the government monopolies in radio and telephone, such as AT&T, of that day. In the decades that followed, the FCC evolved as a special interests vehicle of entrenched telecom companies, much like the Interstate Commerce Commission before it.
1996 Telecommunications Act and Unintended Consequences
Key elements of the 1996 Telecommunications Act were meant to contain the FCC and establish fair deregulation of the telecom industry. Unfortunately, the Act did not establish the means or provide substantive legal authority to enforce its intentions of removing government-protected monopoly franchises in local phone services.
In the years that followed, the FCC created more than 10,000 new pages of rules and regulations. The market share of leading providers grew in major cities. By only repealing part of the 1934 Communications Act, the Telecommunications Act ended up creating a litigious and often contradictory regulatory environment.
Internet and Wireless Telecommunications
In 2014 and 2015, the Obama administration pushed to use the FCC as a weapon against major Internet providers. Under the title "net neutrality," the U.S. government proposed and eventually passed a rule to reclassify broadband Internet access as Title II or common carrier. This controversial decision means broadband providers are no longer able to provide different services or charge different fees to users or creators of Web content.