Wheeler Not Afraid to Regulate

FCC CHAIRMAN VOWS TO ENSURE COMPETITION, OPEN INTERNET
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WASHINGTON — In his first major policy speech as chairman of the Federal Communications Commission, Tom Wheeler last week signaled he would not be afraid to regulate to ensure competitive markets or an open Internet.

He also suggested he might be willing to structure the spectrum incentive auction so that it limited the amount of bandwidth any one company could own in a market and that, like his predecessor, Julius Genachowski, he was not opposed to usage-based-pricing, but would be monitoring it.

Wheeler drew a distinction between regulating the Internet, which he said was off the table, and regulation to ensure the Internet remained the open, interconnected, accessible vehicle for what he has called the fourth network revolution.

He said the FCC’s role was to be the public’s representative in that revolution.

“The Internet is not a law-free zone,” Wheeler said. “It depends upon standards of conduct. And it depends upon the ability of the government to intervene in the event of aggravated circumstances.”

But he said that was not a call to regulate the Internet. “Let me be clear: ‘Regulating the Internet’ is a nonstarter,” he said. “What the Internet does is an activity in which policymakers should be extremely circumspect. The United States’ policy strongly favors Internet freedom, limiting government involvement to overriding purposes such as the completion of 911 calls or the ban on child pornography.”

Or ensuring access. “Assuring that the Internet exists, however, as a collection of open, interconnected entities is an appropriate activity for the people’s representatives,” the chairman added.

Wheeler said his time in the private sector — he is a former venture capitalist as well as an association head — had taught him the value of competition. That means protecting it, but also promoting it.

“When competition does not produce adequate outcomes in the circumstance of significant, persisting market power ... I will not hesitate to invoke the full authority granted to us by Congress to protect competition,” he said.

Paul Gallant, an analyst with Guggenheim Partners, found those last comments “vaguely ominous” and offered a couple of possible interpretations in a memo to investors:

(1) “Title II for wireline broadband. Wireline broadband is clearly less competitive than wireless, and Mr. Wheeler stressed that less competitive markets are at greater risk of regulation.

(2) “Content companies — channel bundling and/or retransmission consent. Again, Mr. Wheeler’s reference was not specific. But given the relative power of content over distribution and Mr. Wheeler’s concern with ‘significant, persistent market power,’ we would not rule out an FCC interest in examining whether content’s leverage can/should be limited in some way.”

Wheeler also outlined his view of the impact of broadband as the new network du jour in an eBook he released last week, Net Effects: The Past, Present, and Future Impact of Our Networks.

TAKEAWAY

New FCC chair Tom Wheeler demonstrated in his first major policy speech his willingness to invoke the agency’s authority as needed to protect competition and drew a line between an open Internet and regulation.

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