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. …