Yesterday, President-elect Donald Trump announced the appointment of Jeff Eisenach and Mark Jamison to the agency landing team responsible for the Federal Communication Commission (FCC). Fortune called Eisenbach and Jamison staunch opponents of net neutrality, and Re/Code said these appointments may end net neutrality. In addition, Jamison asked, “Do we need the FCC?” in an October 2016 blog post.
The facts presented in these two articles and Jamison’s blogpost support thoughts that a dramatic shift in telecom policy is on the horizon.
+ Also on Network World: Will the Supreme Court settle network neutrality issue? +
The Open Internet Order protects an open internet, preventing ISPs from charging extra fees for connecting internet services such as Netflix or the next innovative startup to consumers. This would bring higher prices to Netflix customers or create a barrier to startups entering the market with an innovative new service, like all the voice, video and messaging communications consumers use for free. The FCC approved the Open Internet Order (pdf) in 2015 in a sharply divided, partisan vote. Democratic commissioners Jessica Rosenworcel and Mignon Clyburn voted for it, and Republican commissioners Ajit Pai and Michael O'Rielly voted against it. Chairman Thomas Wheeler cast the deciding vote.
The FCC chairman and commissioners are appointed by the President. Rosenworcel’s term ends in June of 2017, and based on the direction of Trump’s appointments, a Republican in favor of overturning the net neutrality order will be appointed. Pai’s term ends then, too, but it seems likely that he will be reappointed or a like-minded person will be appointed, shifting a vote on future rulemaking against net neutrality.
For the time being, Chairman Wheeler can moderate and perhaps slow any rulemaking to implement legislation passed by a Republican Congress. But when Wheeler's successor is appointed to replace him in June of 2018, the incoming chairman will be able to fast-track the direction of the FCC implementation of past and new legislation passed by a Republican majority.
How FCC regulations are created
Telecommunications policy making is a dry subject, boring enough to make watching paint dry seem exciting. In a nutshell:
- Each time Congress enacts a law affecting telecommunications, the FCC develops rules to implement the law.
- After that, a Notice of Inquiry (NOI) is issued by the FCC for fact gathering that will be summarized for public comment. The FCC’s website crashed after comedian John Oliver’s impassioned speech in favor of net neutrality when the NOI was opened for public comment.
- The FCC drafts the rule changes in a document called a Notice of Proposed Rulemaking (NPRM) and makes it available for public comment.
- After commentary and revision, the NPRM becomes a Report & Order (R&O) of the rule. Changes are finalized, and the commission votes on its adoption. That’s what happened with the divisive Open Internet Order.
- The well-funded telecommunications industry can appeal the R&O in court.
Paint dries much faster than congressional legislation become FCC rules.
The Open Internet Order is rooted in the 1996 Telecommunications Act, specifically §706, which was interpreted to mean that the FCC had the power to promote competitive broadband speeds throughout the country through a process of enquiry and investigation and apply remedies where it found that the deployment of advanced telecommunications capabilities to all Americans, in particular elementary and secondary schools and classrooms, were not reasonable and timely.
When the FCC found a disparity in reasonableness and timeliness of infrastructure deployment, under §706 it could create incentives with price caps or it could take measures that promote competition in the local telecommunications market—or other regulating methods that remove barriers to infrastructure investment.
To put this in perspective, after the FCC published its Sixth Broadband Deployment Report in 2010, the FCC adopted a new threshold for broadband speeds that it would measure ISPs’ deployment to be reasonable and timely. The prior threshold was a snail-slow 1Mbps download and 200Kbps upload speed. The FCC raised the threshold to 4Mbps download and 1Mbps upload speed. Today the threshold stands at 25Mbps/3Mbps.
Verizon challenged the FCC order
Verizon appealed to United States Circuit Court of Appeals for the District of Columbia. In Verizon v. the FCC, Verizon challenged the FCC’s order and opposed the FCC’s powers to regulate ISPs that did not comply with the new and snail-slow threshold. In 2014, the FCC won. The court confirmed that in the absence of compliance to the new thresholds, the FCC could regulate them. Comcast had failed to make a similar case before Verizon’s appeal.
When the FCC adopted the Open Internet Order, the United States Telecomm Association on behalf or much of the telecom industry challenged it. This summer, the D.C. U.S. Circuit Court of Appeals upheld the FCC’s order.
Broadband is considered a competitive measure of nations in which the United States is not leading in any category.
The Akamai Q2 2016 State of the Internet Report (pdf) is available free with registration and the data can be downloaded in spreadsheet format. The litigation history reveals that the ISPs and telecom companies will invest less and operate a slower internet without the oversight of the FCC. A newly minted FCC could simply hold the 25Mbps/3Mbps threshold. Consumers would suffer slower speeds as the rest of the world advances with internet platforms that support more innovation and leadership to incubate the next Google, Facebook or an emerging worldwide IoT leader.
Holding the threshold would reduce investment in infrastructure and increase ISP profits. ISPs could add fees for toll lanes across the internet, increasing consumers’ costs and smothering innovation. And the problem of limited broadband coverage where many American households have a single choice of broadband carrier will not be given a choice.