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Pai Ready to Slice Into FCC Regulations

New chair planning to take aim at Title II; broadband privacy framework to follow 1/30/2017 8:00 AM Eastern
TakeAway

Industry players now have a strong deregulatory ally atop the commission.

WASHINGTON — President Trump’s pick of Ajit Pai atop the Federal Communications Commission was getting high fives from the industry last week, signaling the new president is OK with a strongly deregulatory course for the agency.

 

That’s no huge surprise, given Trump’s pledge to get rid of two regulations for every one added. The new president also made the pledged moratorium on new executive-agency regulations — at the Environmental Protection Agency, for instance — one of his first official actions, though such orders do not apply to independent agencies such as the FCC. But the president has not made consistency a hallmark, and his naming of a network-neutrality fan to the transition team had raised some eyebrows in industry circles. Also a worry was Trump’s saber-rattling at AT&T’s merger with Time Warner Inc., and at Comcast.

 

But as Multichannel News first reported, the Trump administration has backed a deregulatory plan that could see the FCC’s powers reduced and moved to other agencies — consumer protection to the Federal Trade Commission and merger reviews to the Justice Department.

 

Pai, the FCC’s current senior Republican, was clearly the pick if a more-traditional deregulatory approach won the day over Trump’s populist mantra of upsetting the old order and his anti-business stance toward his media industry critics.

 

Given that the FCC does not have to take orders from the White House, as well as Pai’s strong criticism of what he and others saw as the Obama White House’s pressure on the agency during the net neutrality debate, Pai should run an independent ship. Nonetheless, he’s likely to steer it toward the pro-marketplace, pro-business agenda Trump has been touting as the route to America’s “return” to greatness.

 

In his inaugural address to FCC staffers — a tradition for a new chairman — Pai emphasized closing the digital divide, though emphasizing the role of the private sector in that effort. Still, that had the lawyer who successfully argued for the FCC’s Title II-based Open Internet rules in court hoping that, rather than reversing those rules, as Pai has pledged, would occupy the chairman’s time.

 

“The new chairman’s first message to the FCC struck the perfect tone of inclusiveness and articulated a substantive goal that everyone could and should rally around — closing the digital divide,” Pantelis Michalopoulos, a partner in Steptoe & Johnson, told Multichannel News. “On more divisive issues, such as the Open Internet, there is every reason to be optimistic that the chairman will be led by the facts, wherever they lead, and by his formidable intellect, rather than by dogma.”

 

Perhaps, but Pai has shown no signs of backing off his strong criticisms of classifying broadband as a common-carrier service under Title II of the Communications Act.

 

Certainly advocacy group Demand Progress, which fought for reclassification, was not looking for any kumbaya moment from Pai on net neutrality.

 

“Pai is a guy who said after Trump was elected that neutrality’s ‘days are numbered’ and that he would ‘fire up the weed whacker’ to gut protections like the Open Internet rule,” the group said in an email to supporters last week, even using the threat to try to raise money to renew the Open Internet fight, adding: “Will you chip in $5 to help us fight back against Trump’s anti-net neutrality FCC chairman?”

 

But it will take some time for the new chairman to come up with the legal argument for unclassifying ISPs as common carriers given that the court upheld the reclassification under Democratic chairman Tom Wheeler.

 

But it may be up to the FCC given that Sen. John Thune (R-S.D.), chairman of the Senate Commerce Committee, last week said he is “not there yet” on a bipartisan net neutrality bill.

 

In the short term, Pai can take various steps to blunt the Title II instrument, including not aggressively enforcing a general conduct standard he has criticized, and perhaps issuing new guidance on zero rating plans. He was highly critical of the 11th- hour signal to AT&T that its DirecTV Now over-the-top service appeared to be an anticompetitive violation of the Open Internet order under the general conduct standard.

 

Pai was also critical of the FCC’s broadband privacy framework, but that would be mooted if he can reverse Title II reclassification, since that was what deeded the FCC authority over broadband privacy.

 

The new chairman has already signaled some short-term goals, which likely include extending the small business exemption from the FCC’s enhanced Open Internet reporting requirements to cable operators and telecoms of 250,000 subscribers or fewer, rather than the current 100,000 cut-off. That is, unless Congress beats him to it. A bill that would do essentially that has been reintroduced.

 

Pai has also been asked by top House Republicans to officially close the set-top box docket — he strongly opposed Wheeler’s “unlock the box” effort, and was said to be considering the request at press time.

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