A different decade: the shifting ground of IPTV regulation.

Although February 12, 2009, was designated as the official date of the nation's transition to digital television, there remains much work left to be done before that transition is complete. Only a relatively small percentage of U.S. television households currently rely exclusively on the reception of terrestrial off-air television signals to meet their video programming entertainment and information needs. That number can be expected to further dwindle as universal high-speed broadband deployment becomes a reality and prescheduled linear television programming schedules are displaced by consumer-empowering, on-demand television.

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The movement from an analog to a digital world has made possible technological convergence on a scale that may truly prove to be limited only by the human imagination. In the digital world, the technological distinction between video, voice and data communications will all but disappear as content is reduced to a stream of ones and zeros travelling over the same wire or airwaves to the customer.

The distinction between landline and mobile services has likewise diminished, and we now see mobile phones replacing landlines as the primary lines in many households, especially in younger households. We also see the delivery of multimedia content, including video, for display on devices originally developed in the analog world used exclusively for voice or data communications.

In the near future, content delivery will no longer be wedded to delivery platform. Consumers will demand the right to obtain and use the content of their choice, at the times and locations of their choice, and on the devices of their choice.

The profound changes in the way content is delivered and used demand that new regulatory approaches replace outdated legal classifications and strictures developed in an analog world. In the world of video program distribution, cable companies, satellite service providers and telephone companies all operate within their own regulatory confines, even though they may provide the same or very similar services to the public. As a result of these differences, competing providers are constantly engaging in regulatory arbitrage in which they selectively claim regulatory benefits while at the same time seeking to avoid regulatory burdens.

Large telephone companies have argued that their video programming services should not be subject to additional local cable franchise regulation because there is no distinguishable difference between video, voice or data traffic delivered in digital format over their existing platforms. They also claim that IP video services should not be classified as traditional cable service.

Ironically, cable operators that have historically fought to limit local cable regulation are very quick to argue that a level playing field requires the imposition of local franchise regulation on telephone companies providing video services. Similar arguments are raised in the context of pole attachment regulations, with cable interests seeking to retain the advantage of historically lower pole attachment rates applicable to cable services even after they begin to offer cable telephony (which arguably triggers the higher telecommunications rate). The cable operators argue that cable telephony should be classified as an information service rather than as a telecommunications service under the Communications Act.

Although the FCC has initiated proceedings to overhaul an outmoded intercarrier compensation system, engage in Universal Service Fund reform, define a new regulatory structure for IP-enabled services and update its regulatory scheme in many areas, it has been slow to act, and its ability to do so is constantly outpaced by technological change. However, inaction carries with it a number of costs. New entrants into the marketplace are delayed by regulatory uncertainty and by the barriers to entry caused by regulatory arbitrage. Consumers are unable to maximize the benefits of competition both in terms of cost savings and product innovation.

Congress and the FCC need to take action to replace an outmoded regulatory scheme with one that lowers barriers to entry, provides regulatory certainty and a level playing field, reduces opportunity for regulatory arbitrage and protects consumer interests.

Howard Shapiro is senior counsel with Bennet & Bennet PLLC. He can be reached at [e-mail].