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FCC Chairman Pushes Ahead on New Rules Despite Pressure From Many Directions

Thursday, May 15, 2014

By Bryce Baschuk  

May 13 — Federal Communications Commission Chairman Tom Wheeler is facing his biggest test yet as he attempts to force a partisan vote on three of the biggest items to face the FCC in years.

Agency observers commended Wheeler's decision to address some of the agency's thorniest and historically important proceedings in one fell swoop, something they said is characteristic of only the agency's most ambitious leaders.

Among the proceedings currently scheduled for consideration at the May 15 FCC meeting is a proposal to consider re-implementing the agency's 2010 open Internet rules (GN Docket No. 14-28), rules to govern the world's first spectrum incentive auctions (GN Docket No. 12-268) and new spectrum aggregation limits (WT Docket No. 12-269).

Though each issue has evoked tremendous interest from members of the telecommunications industry, Wheeler's proposal to bring back net neutrality rules has roiled members of Congress, technology companies, broadband providers and thousands of everyday Americans in recent weeks.

Wheeler previously told lawmakers at a March 27 Senate hearing that “if there is anything I hope folks will say at the end of my term, it's that at least we made decisions.”

Controversial Items Pending

Wheeler has struggled to re-implement the FCC's 2010 Open Internet rules, which were struck down in January when the U.S. Court of Appeals for the District of Columbia Circuit said the agency's no-blocking and non-discrimination rules too closely resembled common carrier regulations (Verizon Commc'ns Inc. v. FCC, D.C. Cir., No. 11-1355, 1/14/14).

"If there is anything I hope folks will say at the end of my term, it's that at least we made decisions."

- FCC Chairman Tom Wheeler

Wheeler repeatedly has told critics of his net neutrality proposal that Thursday's vote on a notice of proposed rulemaking (NPRM) merely opens the proposal to public comment rather than enacting a final rule. Nevertheless, a torrent of more than 35,000 public comments and pressure from the commission's own Democrats has forced Wheeler to pivot and revise his original net neutrality proposal in the waning days before the vote.

Meanwhile, the wireless industry continues to jockey over the details of a 400-plus page proposal to govern the FCC's mid-2015 broadcast spectrum incentive auctions as authorized by the Middle Class Tax Relief and Job Creation Act of 2012 (Pub. L. No. 112-96). Those efforts are compounded by proposed spectrum aggregation rules that would limit large carriers from acquiring the valuable low-band spectrum expected to be sold in the auction.

Hot Meeting

“I think Wheeler is handling a hot meeting with lots of controversial items as well as any of his predecessors,” said Public Knowledge Senior Vice President Harold Feld. “Commissioners remembered for getting things done like Reed Hundt or Michael Powell routinely faced pushback from the Hill and possible defections from their own party.”

“Even with the all resources at the chairman's disposal, managing these three huge items at the same time is a challenge,” said Paul Gallant, managing director and telecommunications policy analyst for Guggenheim Partners. “While it does create an opportunity for more horse-trading between the items, each item has fundamental policy significance. So working through the disagreements is a big challenge.”

Wheeler is “tackling the difficult issues, he is making the hard decisions, and he is doing so quickly,” said Scott Blake Harris, chairman of Harris, Wiltshire & Grannis LLP. “He is moving the process along faster than it has moved in many years, by being both decisive and being willing to listen to make the adjustment necessary to put together majorities.”

Democrats Feeling ‘Besieged.'

It was unclear May 15 whether the Democratic FCC Commissioners Jessica Rosenworcel and Mignon Clyburn would support Wheeler's revised open Internet NPRM. Sources told Bloomberg BNA that Clyburn and Rosenworcel were likely to approve the spectrum auction items at the commission's upcoming meeting. Aides to both commissioners declined to comment for this story.

Wheeler's decision to revise his proposal to include stronger language about whether the agency should seek Title II reclassification of broadband Internet services was aimed at alleviating Clyburn's concerns, sources told Bloomberg BNA. It remained uncertain if the changes had satisfied either Clyburn or Rosenworcel, they said.

Rosenworcel, in a May 7 speech, said she had “serious concerns” with Wheeler's approach to the issue and urged him to delay the commission's vote by a month. Separately, Clyburn said the FCC should have “prohibited pay-for-priority arrangements altogether” in its 2010 open Internet order.

“This is one of the biggest FCC meetings I've seen in a long, long time,” a former FCC official told Bloomberg BNA. “To the chairman's credit, he is bringing these issues up, but the other FCC commissioners are feeling besieged. He needs to talk to his colleagues more and think it through.”

“Remember that this is just proposed rules, not final rules,” said David Honig, president of the Minority Media and Telecommunications Council. “Commissioners rarely vote not to ask questions of the public, which is what an NPRM is all about.”

Partisan Votes Expected

The two Republicans on the five-person commission are planning to dissent on the net neutrality proceeding as well as the spectrum auction items, sources told Bloomberg BNA.

Republican Commissioner Ajit Pai previously said he views the net neutrality proposal as a “solution in search of a problem” and urged Wheeler to delay the vote in order to first seek congressional guidance on the matter. Republican Commissioner Michael O'Rielly previously said he disagreed with the D.C. Circuit decision to uphold the FCC authority to regulate the Web under Section 706 of the Telecommunications Act.

Pai and O'Rielly previously said they were concerned that Wheeler's proposed auction rules would restrict the ability of the nation's top two carriers––AT&T Inc. and Verizon Communications Inc.––to bid on the valuable 600 megahertz (MHz) spectrum. Aides to the two commissioners declined to comment for this story.

White House Watching.

The White House has yet to comment on the specifics of Wheeler's net neutrality proposal, but sources told Bloomberg BNA that administration officials have been less than enthusiastic about the plan in private conversations. The proposal will necessarily force the president to make the difficult choice between Internet service providers, with whom he has sought advice and counsel over the years, and his oft-stated position of supporting net neutrality.

President Barack Obama has met frequently with the chief executive officers of technology companies, including AT&T Chief Executive Officer Randall Stephenson and Comcast Corp. CEO Brian Roberts. Most recently, Stephenson was a guest at the state dinner in February honoring French President Francois Hollande. Last August, Roberts played golf with Obama and hosted the first family at his Martha's Vineyard, Mass. home.

“The FCC chairman has said that it is his goal to preserve an open Internet, and he has all the tools he needs to do it,” White House Press Secretary Jay Carney told reporters during a May 13 press briefing. “We have been clear from the start that we support that goal and we'll be closely following developments as the FCC launches its proceeding.”

Unease on Capitol Hill

Congressional Republicans said they are upset that the FCC net neutrality proposal now considers whether the agency should reclassify broadband networks under Title II of the Communications Act of 1934, according to separate letters that circulated May 13.

“Rather than attempting further legal contortions to encumber modern communications networks with last century's rules, the commission should work with Congress to develop clear statutory authority and direction for the agency so that it can be a productive regulator for the 21st century marketplace,” said a letter signed by Senate Minority Leader Mitch McConnell (R-Ky.) and Senate Minority Whip John Cornyn (R-Texas), among others.

“The commission needs to send a strong signal that it has no intention of harming today's thriving market and consumers by imposing expansive new Title II regulation on broadband service and micromanaging the Internet under rules designed for the legacy telephone network,” said a separate May 13 letter signed by the top Republican members of the House Energy and Commerce Committee.

Congressional Democrats have not been silent on the issue. One May 9 letter, led by Reps. Raul Grijalva (D-Ariz.) and Keith Ellison (D-Minn.) explicitly endorsed the idea of reclassifying broadband service providers as common carriers. A separate letter sent the same day by Sen. Ron Wyden (D-Ore.) and 10 Senate Democrats urged the commission to ensure that the NPRM includes specific questions about Title II.

Public Furor Continues

Advocacy groups continue to lead their charge to convince the FCC to reclassify broadband Internet services as common carriers under Title II. In addition to the thousands of FCC filings from Americans urging Title II reclassification, tens of thousands more have signed White House petitions urging the FCC to “maintain true net neutrality to protect the freedom of information in the U.S.” and “remove Tom Wheeler from his position as FCC chairman.”

The public-policy group Free Press is planning to hold a protest outside the FCC offices in Washington on the day of the commission's planned vote. “The nationwide drumbeat in support of Net Neutrality has gotten louder and louder––and on May 15th we'll bring the noise to the FCC's doorstep,” said a notice on the organization's website.

What makes this meeting unique is that in “most cases the pressure is coming from various industry groups, and in this case it is coming from the general public,” said Andrew Jay Schwartzman, a communications attorney in Washington working with Free Press. “Wheeler clearly underestimated the pushback he received. But he is not wrong in saying this is only a proposal, and that everyone will be able to participate in the rulemaking.”

Broadband Providers Upset

Nearly 30 CEOs and groups representing the nation's broadband companies called on Wheeler to reject calls to reclassify broadband service as a public utility in a letter that circulated May 13.

“Not only is it questionable that the commission could defensibly reclassify broadband service under Title II, such an action would greatly distort the future development of, and investment in, tomorrow's broadband networks and services,” said the letter organized by Broadband For America.

The list of CEOs at the bottom of the letter was a Who's Who of the nation's telecommunications firms including AT&T, Charter Communications Inc., Comcast, Time Warner Cable Inc. and Verizon Communications Inc., among others. The letter also was signed by the CEOs of CTIA - The Wireless Association, the National Cable and Telecommunications Association, the Telecommunications Industry Association and US Telecom.

“As demonstrated repeatedly, the future of the open Internet has nothing to do with Title II regulation, and Title II has nothing to do with the open Internet,” the letter said. “As it did in 2010, the commission should categorically reject efforts to equate the two once and for all.”

To contact the reporter on this story: Bryce Baschuk in Washington at bbaschuk@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com

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