FCC Chief: Competition, Public Interest Must Be Protected in Network Transitions

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By Bryce Baschuk  

Dec. 2 --Tom Wheeler, the chairman of the Federal Communications Commission, said the agency's goal is to ensure competition and protect the public interest as telecommunications companies seek to modernize their networks.

The FCC's goal should be to “ask how competition can best serve the public--and what, if any, action, including governmental action, is needed to preserve the future of network competition in wired or wireless networks,” Wheeler said in remarks prepared for delivery Dec. 2 at Ohio State University.

“I am a rabid believer in the power of the marketplace. But I have seen enough about how markets operate to know that they don't always, by themselves, solve every problem.”  
FCC Chairman Tom Wheeler

“Competition does not and will not produce adequate outcomes in the circumstance of significant, persisting market power or of significant negative externalities,” he said. “Where those occur, the Communications Act and the interests of our society--the public interest--compel us to act and we will.”

IP Transition 'Good Thing.'

Wheeler said regulating the Internet is “off limits” but the government has a responsibility to oversee the network connections that make up the Internet. “What the Internet does is an activity in which policy makers should be extremely circumspect,” he said. “Assuring that the Internet exists, however, as a collection of open, interconnected entities is an appropriate activity for the people's representatives.”

Wheeler said it's “a good thing” that telecommunications companies are seeking to retire traditional landline telephone services in favor of IP communications services. Carriers like Verizon Communications Inc. and AT&T Inc. have petitioned the FCC to allow them to replace their analog traditional telephone equipment based on time division multiplexing (TDM) with IP networks that efficiently transmit a broad array of digital information.

“There are some who suggest that new technology should essentially free the new networks from regulation; that market forces are enough to ensure that the public interest will be served,” Wheeler said. “I am a rabid believer in the power of the marketplace. But I have seen enough about how markets operate to know that they don't always, by themselves, solve every problem.”

In November Wheeler said the FCC's Technology Transitions Policy Task Force will present a status update Dec. 12 on the commission's May comment request related to AT&T's pending proposal to coordinate tests at wireline facilities that would replace the company's TDM facilities with IP-based alternatives. The commission will then consider “an order for immediate action” at its January open meeting.

'See-Saw' Regulation

Wheeler said he has “zero interest in imposing new regulations on a competitive market just because we can.” Instead he said he will abide by what he called the “see-saw” rule of regulation--when competition is high, regulation can be low. “The effect of the see-saw rule gives companies control over their regulatory fates based on the degree to which they embrace competition in their markets,” Wheeler said.

Wheeler did not explicitly say whether the commission plans to implement any spectrum caps or screens in the FCC's coming broadcast spectrum incentive auction. The wireless community continues to debate the need for spectrum aggregation limits as the FCC crafts its auction rules to permit TV broadcasters to give up their spectrum licenses to be subsequently auctioned to wireless telephone carriers.

“A key goal of our spectrum allocation efforts is ensuring that multiple carriers have access to airwaves needed to operate their networks,” Wheeler said. “The importance of such competition was reinforced by a filing with the Commission from the Antitrust Division of the Department of Justice last April.”

In April the Antitrust Division urged the FCC to consider “caps, weights, and other measures” to limit the nation's top two carriers--Verizon Communications Inc. and AT&T Inc.--from buying all the spectrum in the auction. The 600 MHz spectrum is prized by carriers because its frequencies are able to pass through walls with less attenuation, resulting in better in-building penetration.

Net Neutrality

Wheeler explicitly endorsed the FCC's Open Internet rules as a key component of what he called the network compact. “We stand for the open Internet,” he said. “The right of access also means the ability of users to access all lawful content on a network,” he said.

U.S. Court of Appeals for the District of Columbia Circuit is currently considering whether it will strike down all or part of the FCC's 2010 Open Internet order. If the D.C. Circuit court repeals net neutrality rules, Internet service providers like Verizon will be permitted to block or throttle certain services or favor certain web content over others. Wheeler could then face pressure to reclassify broadband Internet service under Title II of the Communications Act, which gives the FCC the express and expansive authority to regulate common carrier services.

Wheeler said the FCC wants to let the telecommunications marketplace make decisions about different pricing and service models. Verizon's attorney, Helgi Walker, told the D.C. Circuit court that if not for the net neutrality rules Verizon would explore commercial arrangements to offer increased broadband speed to entities that pay a premium for it.

“I think we are seeing the market evolve in such a way that there will be variations in pricing, there will be variations in service and I am a firm believer in the market,” Wheeler said. “I think we will also see a two-sided market where Netflix might say 'I will pay in order to ensure my subscribers receive the best possible transmission of a movie.' I think we want to let those kinds of things evolve, we want to observe what happens from that and we want to make our decisions accordingly.”

In-Flight Calling

Wheeler said he's not thrilled about the idea of airline passengers talking on their mobile phones but said it is an “issue that the airlines should take up. We shouldn't be hiding behind an outdated technology rule,” he said.

The Federal Communications Commission is considering a proposal that would permit airline passengers to use their mobile phones once their plane is above 10,000 feet. The commission currently prohibits in-flight use of mobile phones due to concerns that their use could interfere with terrestrial wireless networks. The FCC's forthcoming proposal, if approved, would permit airlines to install airborne access systems that connect passengers' wireless devices to commercial wireless networks similar to the way in-flight Wi-Fi service works on domestic flights.

Unlocking: 'It's Called Competition.'

Wheeler said mobile phone companies “must act voluntarily--and quickly--to adopt a policy to unlock phones” and said if their voluntary efforts fail the FCC will implement new phone unlocking rules. “I believe that once a consumer upholds his or her end of the deal to buy a phone, he or she should be able to switch that phone to another carrier's network--it's called competition,” Wheeler said.

On Nov. 14 Wheeler urged the wireless industry's top lobbyist to clarify the group's policy on mobile phone unlocking before the December holiday season. The White House and the FCC have asked the Librarian of Congress, James Billington, to restore an exemption to the anti-circumvention provisions of the Digital Millennium Copyright Act of 1998, 17 U.S.C. §1201(a) in order to permit consumers to legally unlock their mobile phones. Billington made the exemption in 2010 and withdrew it in 2012.

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