Industry Group, Internet Innovation Alliance, Warns Against Regulation

WASHINGTON, September 3, 2014 - Communications network consumers have more choices than ever today, and according to an Internet Innovation Alliance study, policymakers should be careful not to invoke broad regulation on a technology platform or service basis.

Less regulated wireless voice service is favored in eight times as many households as the most regulated landline option when a single service is relied upon, the 36-page study found.

“With the old network compact, regulators were in charge, but the new reality is that consumers are in control,” said Anna-Maria Kovacs, a policy scholar and communications industry analyst, who authored the study, released in late July by the pro-industry advocacy group.

Whereas 94 percent of households in 1996 subscribed to plain old telephone service (the most regulated voice service), only 5 percent still rely exclusively on it. Consumers today are subscribing to a variety of different internet platforms. A total of 62 percent subscribe to mobile, 22 percent to cable, 8 percent to wireline DSL, 7 percent to wireline fiber, and 1 percent to fixed wireless or satellite.

Consumers are also picking from many different kinds of video providers: wired cable (48 percent), broadcast (10 percent), telco (10 percent), satellite (31 percent) and broadband only (1 percent).

Given this multitude of options for consumers, Kovacs said, a new network compact has to be formed that only specifically regulates areas where consumer needs aren't met by the market.

“Because consumers today don’t have to purchase what regulators design and a monopolist provides, they can’t be treated as a homogeneous body without choices; a ‘one size fits all’ solution is no longer viable,” added Kovacs. “Amidst extensive and varied competition, providers survive only if they give consumers what consumers want. Otherwise, consumers move to competing providers and take their spending and the associated earnings with them. Cross-subsidies don’t work, because consumers can flee the subsidizing services. Regulators can limit providers’ earnings on the upside but can’t protect the downside.”

Rick Boucher, honorary chairman of the innovation alliance, said reiterated Kovac's claims: “The 21st century challenge of regulators in preserving and advancing the core values must take into consideration new platforms and the plethora of consumer choices.”