Mixed Fate for Wheeler’s Legacy Likely at Republican FCC

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By Kyle Daly

Outgoing FCC Chairman Tom Wheeler’s list of accomplishments is about to come under heavy fire, as GOP lawmakers and members of the Federal Communications Commission ready a broad deregulatory agenda. But it’s unclear whether Republicans will, in fact, roll back many of the agency’s high-profile actions under Wheeler.

Senior FCC Republican Commissioner Ajit Pai, widely expected to be named acting chairman by President-elect Donald Trump, has pledged to take a “weed whacker” to the agency’s “regulatory underbrush.” Wheeler pushed through dozens of new FCC regulations, often against the objections of Pai and his fellow Republican Commissioner Michael O’Rielly. The commission voted unanimously to approve the majority of Wheeler’s initiatives, but many of his big-ticket efforts passed 3-2 along party lines.

Despite partisan feuding at the agency under Wheeler, the Republican FCC will likely have no interest in reversing many of his lower-profile efforts, such as improving 911 outage reporting and enhancing emergency alerts for wireless users and sight-impaired TV viewers. Some of Wheeler’s controversial initiatives, such as major expansions of communications subsidy programs, are likely to stand against the administrative and political difficulty of unwinding them.

“You don’t just snap your fingers and have all of these regulations that are in place disappear just because an election was held,” John Beahn, counsel on communications and national security at Skadden, Arps, Slate, Meagher & Flom LLP in Washington, told Bloomberg BNA. “Pai and O’Rielly are very shrewd, and they know that.”

Regardless of the fate of his individual policies, Wheeler’s legacy also includes a shift in the terms of debate on controversial matters such as net neutrality rules and broadband provider privacy regulation. Even if the GOP succeeds in knocking out the regulatory underpinnings of those issues, broadband providers such as AT&T Inc. are still likely to have to abide by net neutrality rules that will be tougher than they might have been had Wheeler never moved the goalposts with his own stringent rules. Wheeler also was more willing to wade into such controversial areas than previous chairmen have been, and maintained an ambitious to-do list.

“No matter how you feel about his policies, the fact that he was so busy knocking these out left and right is really pretty remarkable,” said Doug Brake, a telecom policy analyst at the Information Technology and Innovation Foundation. “I’ve heard it described as his bias towards action. I think that will definitely be part of his legacy.”

Vote Count History

FCC and congressional Republicans face significant roadblocks to dismantling Wheeler-era policies. In order to survive a court challenge, any change the FCC makes to an existing regulation has to be rooted in the public record—which had been used to support Wheeler-led proposals and rules—and generally has to be justified by a demonstrated change in circumstances. That sets a high bar for any regulatory reversal. On Capitol Hill, Senate Democrats would be able to work procedural levers to slow or halt any Republican bill not to their liking.

“I expect the FCC leadership in a Trump Administration will be more concerned about scaling back the agency’s authority in the future than unwinding every decision of the past three years,” Kevin Werbach, a technology analyst and associate professor at the University of Pennsylvania’s Wharton School, told Bloomberg BNA. Agency Republicans and members of Trump’s FCC transition team are said to be mulling a restructuring plan that would slim down the agency and eliminate some of the FCC’s bureaus, multiple sources told Bloomberg BNA. That wouldn’t have a direct impact on Wheeler-instituted policies, however, and it remains unclear whether the plan will come to fruition.

To be sure, Republicans are expected to work quickly to reverse the Wheeler-led reclassification of broadband as a telecommunications service under communications law. That move underpinned the agency’s 2015 net neutrality rules. Scrapping the reclassification would also nullify the FCC’s broadband provider privacy rules, returning consumer privacy authority for broadband to the Federal Trade Commission.

But even if GOP policymakers are successful in undoing the 2015 reclassification and the net neutrality rules that depend on it, any replacement rules are expected to be stronger than they might have been had Wheeler never taken action. And while that replacement would also restore broadband privacy enforcement to the FTC, Wheeler’s break from precedent in subjecting certain user data to higher privacy standards has elevated the regulatory debate on internet service provider data handling practices.

Easier Said Than Done

The FCC under Wheeler’s leadership gained a reputation for being divided along partisan lines. Sen. John Thune (R-S.D.), chairman of the Senate Commerce Science and Transportation Committee, said in a September 2016 committee hearing that Wheeler had by then overseen 25 party-line votes—more than the agency had seen in the previous 20 years, according to Thune. Those votes often featured vigorous dissents from Pai and O’Rielly, who railed at at what they saw as partisanship and unfair exclusion from having a role in writing agency rules and regulations.

Those party-line votes occurred on a wide range of initiatives. In addition to the broadband reclassification and companion net neutrality rules, Wheeler pushed through new limits on sharing agreements under which broadcasters sell ads on each other’s behalf. Republican commissioners said the limits would deprive smaller stations of resources, harming business and ownership diversity. He also engineered multiple expansions of broadband subsidy programs that Republicans said were too open-ended and could lead to runaway spending and waste.

Wheeler acknowledged in a Jan. 13 speech at the Aspen Institute in Washington, D.C., that the next FCC could move aggressively to roll back regulations that he pushed through over GOP objections.

“We are at a fork in that road,” he said. “One path leads forward. The other leads back to re-litigating solutions that are demonstrably working.”

But reversing previous decisions may be easier said than done.

Regulators have to meet a higher bar when reversing existing policies than when writing new regulations. The FCC has to craft a legal rationale for any change in policy, and one that contradicts the rationale behind an earlier policy is vulnerable to being overturned in court, said Andrew Jay Schwartzman, senior counselor at Georgetown University’s law school in Washington. Public interest groups are likely to sue over any GOP attempt to undo a high-profile Wheeler policy.

The broadband reclassification is a prime example of the challenge in attempting to reverse Wheeler moves. The U.S. Court of Appeals for the District of Columbia Circuit affirmed the FCC’s legal rationale for reclassifying high-speed data services. Any new FCC rules would have to show why that legal rationale was wrong, or how circumstances have changed since 2015 to justify a policy reversal. That same challenge exists for any Wheeler policy that hasn’t been reversed in court.

To be sure, a number of Wheeler rules are still wending their way through the legal system, including expansion of the Lifeline phone subsidy program to include broadband; tighter restrictions on robocalls; and a decision to switch administrators of a database used to allow consumers and businesses to keep phone numbers when switching carriers. Even the net neutrality rules, affirmed by the majority of a three-judge panel, could still face full-court or Supreme Court review. If the courts do vacate or reverse any Wheeler rules still pending review, that would give the new Republican majority a chance to start over with a completely different approach or even drop the rule altogether. But it’s unclear whether any of the pending cases will lead to court rulings against Wheeler’s initiatives. So far, Wheeler’s FCC has seen mixed-to-favorable results on big-ticket items.

Judges upheld the net neutrality rules, as well as rules underpinning two major airwaves auctions. The D.C. Circuit has repeatedly granted stays halting FCC rate caps on prison phone calls but hasn’t thrown out the caps altogether. The U.S. Court of Appeals for the Third Circuit vacated a 2014 order limiting broadcast sharing agreements, but only did so because the FCC was many years overdue on a congressionally mandated quadrennial review of media ownership rules; the agency swiftly completed the review and reinstated the limit. Perhaps the one unambiguous loss Wheeler’s FCC has seen on a major item came when the U.S. Court of Appeals for the Sixth Circuit reversed an order preempting state rules that restrict municipal broadband network deployments.

The new FCC can’t be confident the courts will dismantle Wheeler’s other controversial policies. So it would have to navigate the lengthy rulemaking process to unwind Wheeler policies, knowing it may have a hard time justifying a total reversal—all while trying to launch its own initiatives.

Republican lawmakers can directly attack Wheeler’s policies by rewriting federal communications law. But, with Senate Democrats able to filibuster or hold any measure they find unpalatable, the GOP will need some Democratic buy-in on to move any bill.

“I think they’re sensing—now that they’re actually getting closer to having the power and maybe remembering 2008 through 2010—that it’s not like having the White House and the House and the Senate is a blank check,” Matt Wood, policy director at public interest group Free Press, told Bloomberg BNA.

Ambitious Agenda

Wheeler also will be remembered for his ambitious to-do list at the commission, efforts to expand broadband access to under-served Americans and shepherding the agency’s incentive spectrum auction.

Brake and Randolph May, president of free-market think tank the Free State Foundation, said the pace Wheeler set and his push to get items passed with or without GOP support could mean two things for Wheeler’s overall impact. It might set a new standard for an agency long criticized for its glacial pace, but it could also inspire the incoming Republican majority to institute process reforms to prevent FCC majorities from charging ahead with votes against minority-party wishes and without input from all five commissioners.

There are also specific initiatives a number of agency observers said they believe will be seen as defining features of Wheeler’s legacy. Under Wheeler, the FCC oversaw two spectrum auctions. The first auction, of AWS-3 spectrum, grossed $44.8 billion, well beyond analyst and industry expectations. The second, of spectrum held by broadcasters, is still wrapping up and appears likely to disappoint broadcasters hoping for a massive windfall, though multiple industry sources said this looks to be a demand issue and not a problem with the FCC’s auction process. Wheeler also moved to open or share high-frequency spectrum, set to be the foundation of the next generation of wireless networks. These efforts may secure Wheeler’s reputation for greatly expanding the pipeline of spectrum, the backbone of wireless broadband.

The FCC under Wheeler also expanded and enhanced the Lifeline subsidy program; the E-rate program to support broadband for schools and libraries; and the Connect America Fund to help bring rural areas online. Although Republicans voted against the E-rate and Lifeline expansions, they’re unlikely to take the politically unpopular step of shrinking the programs, though they may work to reform them in other ways.

To be sure, Wheeler became a nationally recognized figure during the fight over net neutrality, and broadband reclassification and Wheeler’s net neutrality rules seem the pieces of his legacy least likely to survive the new, GOP-led FCC and Congress. But strong public support for Wheeler’s net neutrality rules may mean Republicans replace them with a more rigorous regime than they may otherwise have established, multiple agency watchers said. Already, lawmakers such as Rep. Marsha Blackburn (R-Tenn.), incoming chairman of the House Energy and Commerce panel’s Communications and Technology Subcommittee, are committing to net neutrality legislation that reverses reclassification but contains similar protections to Wheeler’s rules.

“Five years ago, Republicans wouldn’t have said, ‘We like net neutrality, we just need to do it a different way,’” said Wood.

Unfinished Business

Wheeler is leaving the agency with some unfinished agenda items. He wasn’t able to round up support for proposals to open the TV set-top box market to more competition or bring new regulations to the business broadband market.

But, on balance, at least some of Wheeler’s imprint at the commission is likely to remain. One of the reasons may be Wheeler’s relatively aggressive pace at the agency.

“Tom left it all on the field,” said Blair Levin, former chief of staff to FCC Chairman Reed Hundt. “That’s true of his whole team. They’re not going to have regrets for what they didn’t do. That’s actually quite rare among chairs.”

To contact the reporter on this story: Kyle Daly in Washington at kdaly@bna.com

To contact the editor responsible for this story: Keith Perine at kperine@bna.com

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