2017 Telecom Priorities for Congress and the FCC

With Chairman Pai taking the helm of the Federal Communications Commission (FCC), this is a time of transition for the agency. Many expect either the new FCC or Congress to undo former Chairman Wheeler’s signature policy shift: classifying Broadband Internet Access Services as a telecommunications service under Title II of the Communications Act, ostensibly for the purposes of grounding network neutrality rules. However, the exact path of how that undoing will be achieved remains unclear. With the legal framework for regulating broadband potentially being revisited, important policy initiatives hang in the balance such as broadband privacy rules and universal service contributions. If that wasn’t enough, there is serious consideration as to how broadband should be incorporated into a potential infrastructure package. ITIF hosted an expert panel discussion to examine the issues facing the FCC and Congress in the year ahead.

Doug Brake, senior telecom policy analyst at ITIF, opened the discussion, framing the conversation in relation to our recent report, “How Broadband Populists are Pushing for Government-Run Internet One Step at a Time,” and then turned the floor over to the speakers for opening remarks.

Jeffrey Campbell, Cisco’s vice president of global government affairs, discussed three general areas where to expect changes under the new administration: FCC process reform, revising or eliminating misguided or outdated rules, and defining the future docus of telecommunications policy. Campbell predicted revisions to the processes by which the FCC formulates and adopts new rules (soon after the event concluded, Chairman Pai announced steps to make rulemakings more transparent). He also observed that new leadership in Congress and the Federal Communications Commission are interested in changing existing rules on a wide range of issues, most notably net neutrality. Finally, Campbell noted that a major focus in the coming years will be how to achieve high-quality rural broadband deployment.

Mark Jamison, a professor at the University of Florida and a member of the Trump transition team, argued that politics has affected the decision-making and analytical process of the FCC, even though the structure of the FCC as an independent agency is intended to prevent ideological and political swings within the body. Jamison suggested reforming the FCC to restore the influence of more rigorous analytic work, especially in the area of economics, and to focus the agency on key issues, including antitrust and subsidies for rural broadband deployment.

Kathleen Abernathy, senior advisor for Frontier Communications and a former FCC commissioner, emphasized that many of the laws guiding the FCC were written assuming a monopoly environment, and the Communications Act has not been updated to reflect changes in the telecommunications environment. Abernathy suggested that the FCC has created distortions and adverse outcomes by attempting to manage what are now competitive markets. She called on regulators to embrace competition and exercise regulatory humility. Regulators should identify the social policy goals that a competitive market can’t deliver and engage to address those objectives. Echoing Campbell, Abernathy argued that the market is unable to adequately deliver broadband services to rural markets and advocated for government action in that area.

Robert McDowell, partner at Cooley LLP and a former FCC commissioner, noted that Internet ecosystems cannot be built when each new administration can make drastic policy changes to the fundamental regulatory structure. Paralleling Jamison, McDowell suggested that regulatory agencies should be insulated from shifting politics. He also observed that consumer demands are driving market convergence. In response, the FCC should be reformed and restructured.

During the Q&A portion, two key themes emerged. First, the panelists agreed that a comprehensive update to the Communications Act presents significant challenges and is not likely to be as clean or easy as many hope. Abernathy urged regulators to work within the existing regulatory framework, arguing that the FCC wields many underutilized tools, such as the forbearance mechanism. McDowell suggested that, while a comprehensive update is unlikely, narrower legislation may well be possible. He pointed to the discussion draft put forward by Sen. Thune (R-SD) and Rep. Walden (R-OR).

Second, panelists identified the cost of capital expenditures as the primary impediment to rural broadband deployment. Jamison noted that international best practices for serving rural markets should guide U.S. regulators and policymakers—in areas that cannot support competition and rely on subsidies for a single operator, there should at least be competition for the market, pointing to a reverse auction mechanism to reward subsidies. Finally, while the FCC, as an independent agency, is not bound by President Trump’s executive order requiring the elimination of two existing regulations for every new regulation, it would be beneficial and relatively easy for the FCC to adopt a similar practice. Decades-old regulations, which may have made perfectly good sense when adopted, should be revisited and eliminated if they no longer serve a purpose.