FCC Chair Tom Wheeler Promises No “Utility Style Regulation” Of Broadband

(Steve)

Two weeks ago, a federal appeals court denied the telecom and cable industry’s request to prevent the FCC’s new Open Internet Order (aka net neutrality) from going into effect, but the legal challenge to neutrality continues, with opponents claiming it will quell investment and result in stifling regulations. Today, FCC Chair Tom Wheeler spoke out publicly on these concerns.

The recently enacted neutrality rules require broadband providers to treat all legal content equally — which means no blocking or throttling access to sites and online services that an ISP competes with or doesn’t like, and no prioritizing of access to sites and services that are willing to pay ISPs.

These are the same conditions required by the 2010 Open Internet Order, but Verizon successfully convinced a court in 2014 that, because of the way in which broadband was classified by the FCC, the Commission lacked authority to enforce these rules.

So in order to make the conditions stick, the 2015 version of the Open Internet Order reclassified broadband as a Title II common carrier — like landline phone service — giving itself the authority to enact the neutrality regulations.

Opponents of this reclassification have repeatedly stated that the increased regulatory oversight will be a burden that will reduce their ability to invest and innovate.

“Fortunately, there is a disconnect between what is said in Washington advocacy and what happens in the market,” said Wheeler in his prepared remarks for an audience at the Brookings Institution this morning. “While a few Big Dogs are threatening to starve investment, others are stepping up.”

The Chair points to recent public statements from CEOs at Internet and wireless biggies like Sprint, T-Mobile, Cablevision, Charter, that Title II reclassification will not harm investment. Execs from Comcast and Time Warner Cable have expressed similar sentiments.

Even AT&T, which is a plaintiff in one lawsuit to overturn neutrality, has continued to invest in spite of the new regulations. Of course, the company claims that it’s only doing so because it believes it will ultimately prevail in court.

Wheeler voices concern that ISPs think that the shift from sending information over analog phone lines to digital networks somehow absolves telecoms of their obligations to consumers.

“Here is a simple statement of fact. Broadband is the most powerful and pervasive network in the history of the planet,” says the Chair. “Suggestions that it be without fully effective oversight are unthinkable.”

Those against Title II reclassification have painted vivid tableaux of micromanaging bureaucrats, hampered innovators, and billions in taxes for consumers.

In his remarks, Wheeler likens his regulatory plan to a “referee on the field who can throw the flag,” noting that “the best referees do not make themselves part of the game unnecessarily… I believe the players should be allowed to play. Referees make sure the game is played fairly, they don’t call the plays.”

The FCC won’t be there to meddle in negotiations with competing companies, says Wheeler.

“Our job isn’t to substitute the FCC for what should be hard-fought negotiation and tough competition,” he explains. “It’s up to the players to compete hard against their opponents. But, make no mistake, if they violate the rules, we will blow the whistle.”

He describes the Commission as “arbiters of last resort… We will not micromanage networks as was done in the pre-broadband days. This means no retail rate regulation, no network unbundling, and no tariffs. In short, no ‘utility style regulation.’”

Wheeler stresses the crucial role of competition in getting companies to innovate.

“[A]t a time when consumers are demanding better broadband, why would a rational broadband provider not make the investment to give it to them?” he asks. “Only if competition is lacking, only if consumer demand is artificially limited. Companies invest to win the race of competition…if there is a race.”

While the FCC has recently worked to maintain the competitive playing field by defeating the Comcast/Time Warner Cable merger, and by expressing early skepticism about a possible Sprint/T-Mobile tie-up, Wheeler says that protecting competition is only half the equation.

“Our job is to promote competition as well,” he says, pointing to cities like Kansas City, Austin, Lafayette, Atlanta, and Chattanooga, where Google Fiber and other new high-speed broadband competitors have caused existing providers to increase speeds and roll out new technologies.

“[T]he job of the FCC is to exercise its authority with both discretion and determination so that technology, competition, investment and consumer empowerment are able to work together to reach our nation’s broadband goals,” said Wheeler.