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Why Our Phones and Internet Are Being Threatened by a Big Telecom Privatization Scheme

Consumers stand to lose big-time if the FCC and its corporate friends get their way.

Photo Credit: Pavel Ignatov/


Regulatory capture is when private corporate interests take over an agency and instead of serving the “public” good, it serves the interests of private corporations. Such capture is playing out at both the state and federal levels throughout America, eroding the basic ethical standards in government. 

Nowhere is this more evident than at the Federal Communications Commission, one of the most influential agencies in which capture is part of the operating culture. 

The most scandalous recent example of the FCC’s cozy relationship with the companies it ostensibly regulates took place in January 2011. Just a few weeks after the agency approved Comcast’s acquisition of NBC-Universal, a deal worth $30 billion, Commissioner Meredith Attwell Baker left to take a senior position at Comcast. One unanswered question is whether Baker was negotiating her compensation package while the agency deliberated the acquisition.

But nowhere are the consequences of regulatory capture more troubling than the FCC’s ongoing effort to deregulate and privatize the nation’s telecommunications network, especially what has historically been known as the Public Switched Telephone Network (PSTN), the underlying telecom infrastructure. 

The rationale for the closing of the PSTN is to replace traditional voice service with “VoIP” (voice over the Internet), thus transforming an analog “communications service” to a digital “information service.” With this sleight-of-hand, a once regulated utility like electricity and water will be deregulated into a private service -- even though the signal goes over the same wire that was originally a phone line. 

In addition, the FCC’s efforts are intended to end telecom’s traditional “utility” requirement as the “carrier of last resort.” In this way, telcos will no longer have to provide phone service to those they deem “unprofitable,” especially in rural areas.

But capture at the FCC also functions on a more everyday, invisible manner. Ever hear of the FCC’s Technical Advisory Council (TAC)?  It’s supposedly a nonpartisan group that advises the FCC on technology issues that underpin the agency’s policy decisions. It’s playing a central role in restructuring our nation’s communications system. 

One of TAC’s goals involves killing off the PSTN. Today, AT&T and Verizon claim PSTN is a “private” network, even though it was funded directly by ratepayers. In addition, the telecom duopoly controls the mostly unregulated wireless system. Further, AT&T and Verizon have entered into deals with cable companies, including Comcast and Time Warner, that will strengthen their overall influence.

These companies make up what we call the Communications Trust and it wields enormous influence, especially at the FCC. No wonder why the U.S. ranks 17th in broadband. Today, regulatory capture is business as usual.

Breaking Down the Public Network

The FCC has repeatedly used advisory committees to legitimize the restructuring of the telecommunications sector. These special outside groups consist of industry “experts,” academics and representatives from trade associates and non-profits. They establish legitimacy and are required by the Federal Advisory Committee Act (FACA). It warns:

Because conflict-of-interest reviews are only required for federal or special government employees, agencies do not conduct conflict-of-interest reviews for members appointed as representatives.  As a result, the agencies cannot be assured that the real or perceived conflicts of interest of their committee members who provide advice on behalf of the government are identified and appropriately mitigated.

It adds a cautionary note: “Further, allegations that the members have conflicts of interest could call into question the independence of the committee and jeopardize the credibility of the committee’s work.” These words speak directly to TAC’s inherent flaws.

These ostensibly “independent” FCC bodies provide legitimacy to promote an unstated four-fold agenda: (i) to end the long-embraced belief that communications is a public “utility,” (ii) to raise consumer rates, (iii) to remove all remaining regulations and (iv) to increase industry consolidation. This strategy is clearly evident in the current TAC. 

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