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New regulatory environment signals the end of net neutrality in the US


via Flickr © haru__q (CC BY-SA 2.0)

  • Ideology trumps common sense
  • 'New' board of FCC Commissioners wants to dismantle achievements of retiring chairman
  • Aim is to strike down the Open Internet Order
  • But it will be easier said than done

On this coming Friday, whilst the eyes of all of the United States and most of the rest of the world will be on the portico of the Capitol building in Washington DC and the inauguration of Donald Trump as the 45th President of the Republic (or perhaps the 44th depending on whether Grover Cleveland, who was elected twice with a four-year gap between his presidencies, is counted as both the 22nd and 24th President - the debate trundles on), Tom Wheeler, the resigning Chairman of the US telecoms regulator, the Federal Communications Commission (FCC), and the man who is widely credited as the saviour of net neutrality in America will slip out of 445 West 12th St and out of office.

Mr. Wheeler, despite having a considerable period of time left to exercise his Chairmanship of the FCC, decided to go on the day that the new President is sworn-in. His early departure means that Donald Trump will have two vacancies to fill at the regulator - one of which must be a Republican and the other a Democrat. The change of administration means that the party political pendulum will swing to the right. The five Commissioners of the FCC are nominated by the President but only three members can be from the same political party. Thus, under the Trump administration the majority of the FCC board will be conservative Republicans.

During his tenure, Tom Wheeler was treated by the industry with considerable suspicion because, having been a telecoms lobbyist in two previous incarnations, and in light of his determination, once in the FCC job, to take issue with his former paymasters as and when the occasion demanded, he was roundly condemned as a traitor and 'a poacher turned gamekeeper'.

On the other hand, consumer organisations and advocacy groups applauded Wheeler for his determination to introduce new privacy regulations for ordinary subscribers, his backing of broadband subsidies for the poorest families in the US and his principled and continuing support of net neutrality in the face of concerted opposition from vested interests.

Commenting on Mr. Wheeler's imminent departure, Harold Feld, senior vice-president of Public Knowledge, the influential US digital rights advocacy organisation said, “When President Obama appointed Tom Wheeler chairman [of the FCC] many people voiced open suspicion of a man who had previously led two major industry trade associations. But rather than be the lapdog of the industry some had feared (or hoped for), Tom Wheeler proved himself to be the most ferocious watchdog for consumers and competition in nearly two decades.”

It is generally accepted that Mr's Wheeler's outstanding achievement (or act of treachery, depending on which side of the ideological divide one stands) as chairman of the FCC was shepherding through the regulatory maze eminently well-thought-out net neutrality rules.

The argument hinged on whether or not ISPs should be, could be, "common carriers". If ISPs were not common carriers then they were not subject to regulation by the FCC in the same way as had long pertained to so-called "traditional telcos". In the past the agency had endeavoured to prevent Internet service providers from giving certain apps, services and traffic preferential treatment by deliberately slowing or altogether blocking the transmission of others.

However, the FCC lost test case after test case when state courts sided with the ISPs -until public opinion changed and swung behind the regulator as subscribers began to realise what was going on. The result was the Open Internet Order and enforced net neutrality. It is not known how long this state of affairs will persist under the new administration, but most think it won't be for long.

The goal? A regulator that doesn't regulate

Indeed, indications are that the incoming administration has already decided to redefine the remit of the FCC to ensure that its workings chime with the right-wing political philosophies of Ajit Pai and Michael O'Reilly, the two Republican Commissioners on the FCC board. Henceforth, it seems, the purpose of the US regulator will be changed to that of a facilitator of deregulation.

The word is that senior members of the Trump team met with the FCC 'transition team' last  Friday and indicated that the agency will be restructured "the better to reflect the convergence of the digital age". In practice this will mean the dismantling and discontinuance of FCC functions deemed to be "duplicative" to responsibilities pertinent to other agencies such as competition and consumer protection. The intent is evident - to emasculate and sideline the FCC and boost the power of the Federal Trade Commission.

The Trump team claims that it does not intend to do away with the FCC altogether (that would be a very hot political potato and very difficult to achieve) and is saying that the functions that will remain the purview of "a more coherent and streamlined" FCC "will more effectively serve the goals of consumers, competitors, and Congress." In other words, its days as an independent and meaningful regulator are numbered.

Arch-conservative and highly-partizan Ajit Pai, a former lawyer at Verizon, voted against the FCC's Open Internet Order and is a man makes no secret of his anti-regulatory philosophy commented, “We need to fire up the weed whacker and remove those rules that are holding back investment, innovation, and job creation." His colleague, Michael O'Reilly, added, “President-elect Trump has repeatedly noted the detrimental impact of the current stifling regulatory environment on the American economy overall, and he has promised fast relief.”

Thus the incoming administration will seek to dismantle most, if not all, of the regulatory superstructure put in place by Tom Wheeler, although the new brooms may find it difficult to sweep away extant and popular privacy regulations, such as those requiring ISPs to obtain the explicit, opt-in permission of individual customers before they can collect personal data on sites visited, the better, it is claimed, to target personalised advertising.  

In a parthian shot fired from the dais at an Aspen Institute conference last week, Tom Wheeler said the FCC regulations are "rooted in reality, not ideology" and advocated that the regulatory environment should continue to "keep moving forward" and not "retreat and take things away”. He added, "We are at a fork in the road. One path leads forward. The other leads back to re-litigating solutions that are demonstrably working."

He also warned that what he calls "The Big Telco" has no interest in the average consumer other than to charge as much money as it can for uncompetitive services and inefficient technologies. He said, "Those who build and operate networks have both the incentive and the ability to use the power of the network to benefit themselves – even if doing so hurts their own customers and the greater public interest."

Tom Wheeler also warned, "Contrary to what you might have heard, reversing the open Internet rules is not a slam dunk. It will face the high hurdle, imposed by the Administrative Procedure Act, of a fact-based showing that so much has changed in just two short years that a reversal is justified."

The most likely outcome is that, in the short-term at least, the 'new' FCC will simply backpedal on enforcing regulations that the majority of the Commissioners don't like. However, in the longer term, Congress will have to grasp the nettle and draft a new Telecommunications Act to replace the current legislation that was passed in 1996. That will be an enormously complex and lengthy undertaking and unlikely to be completed under the Trump presidency, even if he does serve two terms.

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