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We can’t regulate modern technologies the way we did Ma Bell

The ancient Greek thinker Heraclitus believed that “the only constant is change.” He obviously didn’t have modern telecommunications networks in mind, but his philosophy fully applies to those networks nonetheless.

Not too long ago, we lived in a world dominated by monopolies. To make a phone call, the only option was Ma Bell, which sent the call over its copper-wire network. Some telephone companies used old-fashioned switchboards to direct calls to the right destination. Others used massive machines called switches to do the job. The whole telephone network was designed to provide one thing: voice service.
Today? Plain old telephone service is going the way of the horse buggy and the icebox. Only one third of American households get voice service through the traditional copper network, and that number is dropping each year. About one third of households now use an Internet-based voice service (such as those offered by cable companies, Google, Skype, and Vonage), while another third have “cut the cord” altogether and only use wireless devices. A phone call is quickly becoming just another digital commodity, riding on broadband connections just like a Web video or email.

This cross-platform competition is leading companies—forcing them, one could argue—to make massive capital investments. Broadband network operators spent $66 billion in 2011 to bring faster, more reliable service to millions of Americans, such as by deploying optical fiber—basically, strands of glass of that can carry lightwaves containing communications signals. These investments spur economic growth and create jobs across the country. One estimate suggests that every billion dollars invested by the private sector on fiber deployment creates 15,000 to 20,000 new jobs.

In short, America is in the midst of a technological revolution, what some call the IP Transition (“IP” stands for the Internet Protocol, which is the technical foundation for all these changes). IP-based networks are different from the copper-based networks of yesteryear in a fundamental way: They were not designed for voice service alone. Instead, IP-based technologies break down every kind of communication (voice, video, e-mail and more) into digital bits and transport those bits more efficiently and cheaply than ever before.

Despite these vast changes in the communications marketplace, the Federal Communications Commission hasn’t caught up. We still view the world as if consumers were at Ma Bell’s mercy, relying on copper lines to get basic voice service. As a result, we have a lot of obsolete rules on our books. (Just two months ago, the FCC finally repealed a rule first adopted by its Telegraph Division during the Great Depression!) These old rules aren’t just harmlessly yellowing with age. They are affirmatively discouraging companies from investing in next-generation networks.

For example, one rule requires providers to keep investing in their voice-only networks, even if they would prefer to upgrade to consumer-friendly IP-based networks. That makes about as much sense as requiring Ford to keep making horse-drawn carriages, General Electric iceboxes, or Apple the IIe. Would consumers be better off if the government had done those things? Of course not. Every dollar a company has to spend maintaining its fading copper plant is one less dollar it can spend on newer, better, more resilient fiber that will make our economy more productive and improve our quality of life.

So when it comes to communications technology (or any other area for that matter), federal regulations shouldn’t discourage innovation. They have to keep up with the times.

How do we achieve this goal when it comes to IP networks? I believe that the time has come for the FCC to implement an All-IP Pilot Program. The concept is simple: allow telephone companies to turn off old networks and test the switch to IP in a few discrete locations. A pilot program would let companies iron out any technical wrinkles in the IP Transition. It would test the waters on consumer outreach and education. And it would give us insight on the approaches that work and those that don’t.

A successful pilot program should be guided by four overarching principles. No company or state should be forced to participate. The test sites should reflect the diversity of our nation. No one who has telephone service now should lose it. And we have to be able to evaluate the program in order to figure out how to make the nationwide transition work well.

Pilot programs aren’t anything new. Most successful technology companies conduct testing before launching a new product. In 2009, the FCC itself tested the switch from analog to digital television broadcasting in Wilmington, North Carolina before that transition happened across the nation.

And an All-IP Pilot Program is not a partisan or ideological issue. That’s why the concept has already received broad support, from the NAACP and League of United Latin American Citizens to the U.S. Chamber of Commerce and American Consumer Institute. The diverse roster of supporters makes clear that the IP Transition will benefit all Americans.

Make no mistake: The IP Transition is already well underway. Through millions of individual decisions in the marketplace, American consumers have sent a clear message about the superiority of IP networks and services. This leaves the FCC with a critical choice. Are we going to remain constant, standing in the way of progress? Or are we going to embrace change, helping to usher in the digital age? Our country will be better off if we chart the second course.


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Ajit Pai is a Commissioner at the Federal Communications Commission.