With Donald Trump headed to the Oval Office in 2017, the FCC's network neutrality regulations could be in danger of getting the ax -- a move that might embolden internet service providers to hike prices for consumers and content companies.
The FCC's Open Internet Order, adopted in February 2015, bans internet providers from blocking or slowing down traffic as well as from engaging in "paid prioritization" schemes that give preference to content providers who pay for the privilege. The rules also reclassified broadband internet service as a common-carrier service under Title II of the Communications Act, giving the FCC much more latitude to regulate the industry.
Trump heretofore has not said much about the issue -- or about his technology policy in general -- while Hillary Clinton has been a strong supporter of network neutrality. But in a November 2014 tweet, he called President Obama's push for net neutrality "an attack on the internet" and called it a "top-down power grab."
"Net neutrality is the Fairness Doctrine," Trump said on Twitter, referring to the now-defunct FCC regulation that required TV stations giving free airtime to one candidate to offer the same opportunity to rival qualified candidates. He added, conspiratorially (and confusingly), that network neutrality "will target conservative media."
A Trump administration will mean a power shift at the FCC -- with Republicans poised to take a majority of the seats in the five-member commission. One name that has been floated as the next chairman is commissioner Ajit Pai, who has been a strident critic of current FCC Chairman Tom Wheeler, who's an Obama appointee.
Trump may already have a repeal of net neutrality on his agenda, according to BTIG Research analyst Rich Greenfield. Moving broadband back under Title I would be a clear win for cable and telco providers, Greenfield wrote in a research note. But it would be a negative for consumers as well as media and technology companies like Netflix, Google and Facebook and over-the-top video providers like Dish's Sling TV that are concerned about ISPs' control over last-mile broadband access.
"On the consumer front, if broadband is reclassified as a Title I service, ISPs would have substantially less concern over price regulation," Greenfield wrote. "In turn, we suspect ISP consumer pricing power would rise faster than investors have assumed under a Democratic administration." Moreover, ISPs could jack up the rates they charge content providers to interconnect to their networks -- an issue that Netflix has publicly complained about.
Trump's transition team has tapped Jeffrey Eisenach, a fellow at the conservative American Enterprise Institute and longtime fixture in policy circles, to head up telecom policy in the new administration, Politico reported last month. Eisenach has been an outspoken critic of Wheeler, and for years has urged the FCC to take a laissez-faire regulatory approach.
Eisenach, in an Oct. 25 appearance on C-SPAN's "The Communicators" policy series (as pointed out by Greenfield), said that Trump "has said clearly that he is opposed to net neutrality regulations."
"What I don't think a President Trump would do -- and what I hope he would not do -- is intervene to instruct an independent regulatory agency how to issue a particular regulation," Eisenach said. "I think in general, taking his broader views on regulation into account, you would expect him to appoint to the FCC someone who would be inclined to take a less regulatory position."
John Bergmayer, senior counsel at Public Knowledge, a public-interest group that supports network neutrality, cautioned that any action to rescind the rules would need to involve a public hearing. "The FCC has rules on the books, and it would need to conduct a proceeding, and any decision it made would have to be made based on the record," he said. "Congress could pass legislation of various kinds as well."
Opponents of net neutrality, meanwhile, have been encouraged by Trump's victory. The new administration presents "a new opportunity to end the divisive and distracting fight over net neutrality," said Berin Szoka, president of nonpartisan think tank TechFreedom.
Under President Trump, Szoka expects either Congress or the FCC to reverse the decision to reclassify broadband under Title II as well as specify that the agency does not have authority to broadly regulate the internet. "Even more important is undoing the Wheeler FCC's staggering assertion that the FCC may freely change its mind to regulate up or down without really justifying forbearance," he said in a statement.
In July, big ISPs represented by the National Cable & Telecommunications Assn., CTIA, USTelecom and the American Cable Assn. petitioned a federal appeals court to reconsider a decision upholding the Open Internet Order. That request is pending.
The NCTA, for its part, has said it is not challenging the principles of net neutrality. Rather, it objects to the reclassification of broadband as a Title II telecommunications service, which NCTA labeled an outdated regulatory framework. "Quite simply, as regulators for decades have acknowledged and consistently determined, dynamic internet networks do not resemble or deserve to be treated like archaic telephone systems," the trade group said in July.
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