Given the developments of the past week, said FCC Commissioner Ajit Pai Friday, "now is the time for all of us to think long and hard about what imposing public utility regulation on the Internet would really mean." He signaled that could mean driving some smaller wireless ISPs and cable operators out of business.
That came in a speech to the Free State Foundation at a net neutrality policy seminar Friday (Nov. 14) at the National Press Club in Washington, according to a copy of the prepared text.
The "developments" were primarily the announcement by the President (and reaction to it) that he wanted the FCC to impose Title II regulations on Internet access service, coming as close as chief executives usually come to giving a mandate to an independent agency.
Pai conceded that the President's call had changed the political climate, but not "the law or the facts."
FCC Chairman Tom wheeler's response to the President was that he would take the comments into consideration, agreed with their underlying goals, but clearly still had questions about how to apply Title II--how to cover mobile, how to forbear the parts it did not want to apply--and pointed out, as the President had conceded, that the FCC is an independent agency.
Pai was in agreement with Wheeler that the FCC needed to take the time to get the job done right.
"We are not confronted by an immediate crisis that demands immediate action," he said. "We shouldn’t be pressured into making precipitous changes that could endanger the future of the Internet. The stakes are enormous, and it is far more important for us to get this right than to get this done right now."
Wheeler aide Gigi Sohn indicated earlier this week that a decision on new Open Internet rules was unlikely before the end of the year. Before the President's announcement, some inside the FCC were looking for a vote on new rules by the end of the year, though staffers vetting a new Title II/Sec. 706 approach indicated that would be a tough deadline to meet.
For Pai, getting network neutrality wrong would be Title II, and he outlined why.
Pai said Title II reclassification would mean rejecting the successful premise that the Internet thrives, and has thrived, under minimal regulation, and would lead to less competition and choice for consumers. He cited Google Fiber, which he said does not offer voice service over its broadband network because voice is a heavily regulated Title II service. "They have the network in place and it would cost virtually nothing to supply voice service, but they consciously decided not to do so because of Title II regulation," he said, pointing out that Google has the market cap of Comcast, Verizon and T-Mobile combined.
The Title II route means less deployment, less innovation, less competition, he said. AT&T Chairman Randall Stephenson warned at a Wells Fargo Securities analyst conference earlier this week that its plans to deploy fiber to 100 cities would be threatened by Title II and could be put on hold.
Pai referenced the announcement in his speech, but signaled it is not just the majors whose business could suffer. "we’re already seeing that [less innovation, deployment and competition], as one of our nation’s largest broadband providers just announced that they are hitting the pause button on fiber deployment," he said. "And small companies like wireless ISPs, rural phone companies, and small cable companies might have to exit the business altogether under a Title II regime.
And Pai was not done. He said Title II would mean higher prices thanks to Universal Service Fund contributions as well as state and local taxes.
Then there is the signal to foreign governments. "“Do as I say and not as I do” isn’t a compelling message on the world stage," he said.
And Title II does not ban the paid prioritization that has become the key talking point on the other side of the argument. . "Testifying in front of the House of Representatives in May, Chairman [Tom] Wheeler stated that '[t]here is nothing in Title II that prohibits paid prioritization.' And he’s right, said Pai.
In opening his remarks, Pai took a good natured jab at the chairman's office for cancelling on the FSF event (FSF said that Wheeler chief of staff, Ruth Milkman, cancelled Nov. 7 and FSF was told no other senior staffers were available).
"I wasn’t Free State’s first choice to deliver remarks this morning. I’m only here because Chairman Wheeler’s Chief of Staff unexpectedly cancelled and the Chairman’s Office was unable to provide a replacement. I’ll admit that my ego was a bit bruised," Pai said.
"But then my thoughts turned to none other than Frank Sinatra. You see, when filming The Manchurian Candidate, Ol’ Blue Eyes broke his wrist and had to pull out of his next film because he couldn’t hold a gun properly. The movie’s producers tried to find a replacement but were turned down by John Wayne, Robert Mitchum, and Burt Lancaster. Eventually, they offered the part to someone best known for his work in westerns. The actor was Clint Eastwood. The role was Dirty Harry. And the rest, as they say, is history. So when Randy asked me to come and deliver some brief introductory remarks this morning, I asked myself one question: Did I feel lucky? I did—and here I am.
"Speaking of Clint Eastwood, I thought about following his example and delivering my presentation in the form of an imaginary conversation with someone from the Chairman’s Office—represented, of course, by an empty chair. But given that Clint’s performance at the 2012 Republican National Convention received somewhat mixed reviews, I’ve decided to stick to a more traditional format."