The Contrasting Policies of the FCC and FERC regarding the Importance of Open Transmission Networks in Downstream Competitive Markets

By Reiter, Harvey | Federal Communications Law Journal, March 2005 | Go to article overview

The Contrasting Policies of the FCC and FERC regarding the Importance of Open Transmission Networks in Downstream Competitive Markets


Reiter, Harvey, Federal Communications Law Journal


  I. BACKGROUND
     A. FERC's Historical Resistance to Competition and Court
        Mandates
     B. Origins and Evolution of FERC's Policies Regarding
        Access to Gas Pipelines and Electric Transmission
        1. The Convergence of Consumer and Supplier Interests
           in Opening Networks
           a. Gas Pipelines
                i. Minimum Commodity Bill Regulation
               ii. Special Marketing Programs
              iii. Order No. 436
               iv. Order No. 636
           b. Electric Utilities
                i. Market-Based Rate Authorizations
               ii. Merger Conditions
              iii. FERC's "Golden Rule"
               iv. Order No. 888
                v. Order No. 2000
     C. The FCC's Open Access Policies
        1. Carterfone
        2. MCI
        3. Computer I, II, and III
           a. Computer I
           b. Computer II
           c. Computer III
        4. Leased Access Rules for Cable
     D. Role Reversal
        1. "Hands Off the Internet" Policy: Conflating Regulation
            of Information Services and Broadband Platform
            a. Cable Modem NOI and Declaratory Ruling
            b. Wireline Broadband NPRM
 II. ANALYSIS
     A. Neither the Differing Natures of the Industries Regulated
        by FERC and the FCC nor the Regulatory Frameworks
        under which They Operate Explain Their Different Policy
        Approaches
        1. There Are Insufficient Differences in the Nature of
           Intermodal and Intramodal Competition between the
           Communications and Energy Industries to Explain the
           Different Approaches to the Issue of Open Network
           Access
           a. The Limits of Intermodal Competition between
              Broadband Platforms as a Guarantor of
              Competition in Information Services
           b. Broadband Delivery Markets, Like Gas Pipeline
              and Electric Transmission Networks, are Highly
              Concentrated
           c. Intramodal Competition between Broadband
              Providers Might Help, but It too Is Limited and
              Inadequately Encouraged
           d. Do Industry Differences between the
              Communications and Energy Industries Diminish
             the Importance of Downstream Competition?
        2. Differences in the Regulatory Regimes Administered
           by FERC and the FCC Do Not Explain Their Different
           Approaches to Network Access Issues
           a. Statutory Mechanisms for Encouraging
              Infrastructure Deployment and the FCC's Faith
              Based Reliance on Deregulation as an Incentive for
              Broadband Deployment
           b. The FCC's "Bundling" Rationale for Deregulation
III. CONCLUSION AND RECOMMENDATIONS

The Federal Energy Regulatory Commission ("FERC"), formerly the Federal Power Commission ("FPC"), and the Federal Communications Commission ("FCC"), charged, respectively, with regulating key segments of the energy and communications industries, have undergone a remarkable role reversal. After years of resistance to the very notion of competition in the electric and gas industries, FERC has, with considerable vigor and consistency spanning nearly two decades, promoted policies to open access both to gas pipeline and high voltage electric transmission networks to downstream competitors of the network owners, i.e., to those who compete with pipelines and utilities in the sale of natural gas or electric power. FERC has stated plainly and repeatedly that the underpinning of these policies is that open access is essential to the protection of competition in the sale of the largely deregulated services reliant upon those networks.

By contrast, the FCC has done an about-face, reversing nearly forty years of policymaking to pry open cable and telecom networks and substituting a near total reliance on unregulated intermodal competition (1) among a handful of broadband providers to protect the public. …

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