In satellite communications, when the clocks of two earth stations fall far enough out of synchronization, a slip error occurs and a chunk of information is discarded. Much like a slip error, when government institutions fall far enough behind private industry, a crisis occurs. This ‘de-synchronization effect,’ as Alvin Toffler calls it, has already been observed in financial and intelligence institutions of the United States government.
The Way We Communicate Has Changed
Communication is now mostly asynchronous, discontinuous and in bursts. Voice, video and data get intertwined into a single stream and yet pieces of the same content separate geographically only to meet at a final destination. The amount of information produced, transported and stored every year is beyond comprehension. Yet, the U.S. Federal Communications Commission (FCC) regulatory system is still based on a paradigm set out when the Communications Act of 1934 was enacted.
The Slip Errors of Modern Times
There is no shortage of examples in which government institutions failed to maintain pace. Twice in recent times the U.S. Securities and Exchange Commission (SEC) has failed to keep up with the complexities of the private sector it is supposed to regulate: First, during the Enron ordeal and other creative accounting scandals, and again during the subprime mortgage and hedge fund crises. Similarly, U.S. intelligence agencies failed to timely adjust from a Cold War focus to address terrorist threats. These illustrate the so-called ‘de-synchronization effect’ that often acts as a wake-up call for government institutions.
The current U.S. regulatory model is based on geographical boundaries. State utility commissions regulate telecommunications that stay within state boundaries (intrastate), while the FCC regulates telecommunications that cross state boundaries (interstate). This dual-federalism model is essentially an assortment of one federal code along with 50 different state codes, which made sense in 1934 when almost all telephone traffic was local.
Even after the breakup of AT&T, the divested regional operating companies managed local calls while AT&T provided long distance. The creation of the Local Access and Transport Areas (LATAs) perpetuated the dual-federalist models as they were drawn mostly along state lines. Long distance (interstate) traffic, through payments of local access charges, subsidized the local network and unlimited local calls were sold at a flat monthly rate. In 1996, an amendment to the 1934 Communications Act was passed that primarily unbundled the local network into elements. Yet, the dual-federalist model was maintained.