Regulatory Disparity: The Constitutional Implications of Communications Regulations That Prevent Competitive Neutrality

Ryan K. Mullady

Abstract


In recent years, the communications industry has changed drastically as new technologies have created industry convergence. On its face, convergence is beneficial to the consumer because it provides more options when choosing services, which in turn should lead to decreased prices. However, convergence has also led to enormous problems in communications regulations. Traditionally, the FCC regulated the industry with regulations that focused on the type of service provider and the technology medium used to provide services. While this worked for many years, the recent onslaught of convergent technologies has led to an environment where companies selling essentially the same services to consumers face different regulations because they use different mediums of transmission. This leads to obvious competition problems because some companies have fewer restrictions and/or costs associated with their service offerings. At this point, the FCC has begun to update its regulations to conform with the newly converged industry, but it still has a long way to go. In the mean time, companies are using defective regulatory classifications to their benefit. This sort of a system is not only unfair, but it is unconstitutional.  The United States has long adopted the idea that corporations are “persons” under the constitution, and for that reason, the constitution bestows equal protection guarantees upon them. Corporations have rarely challenged the FCC’s regulations on constitutional grounds because they would probably be valid if examined under rational basis review. Until now, the FCC could hide behind technological distinctions and antitrust concepts to protect its regulations from equal protection claims. However, with the convergence of markets, a valid argument could be made challenging the government’s interest in its regulations. If a corporation makes that claim, the courts will have to decide whether these regulatory distinctions further a legitimate government interest. If the courts take a closer look, they may realize that the distinctions are arbitrary and capricious and mandate regulatory parity on equal protection grounds.


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DOI: http://dx.doi.org/10.5195/tlp.2007.27

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