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INTX 2015: FCC's Pai--Broadband Competition Underplayed - Broadcasting & Cable

INTX 2015: FCC's Pai--Broadband Competition Underplayed

Takes issue with commission's view of market
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Republican FCC commissioner Ajit Pai took issue with chairman Tom Wheeler's remarks at Wednesday's opening general session that the broadband landscape was essentially devoid of competition.

Having already gotten an earful on Washington's view of their industry from Wheeler, attendees at INTX 2015 in Chicago Wednesday got four more "views from the top" in a panel featuring the other four members for the FCC — Democrats Jessica Rosenworcel and Mignon Clyburn and Republicans Pai and Michael O'Rielly.

Pai said he thought the chairman's remarks "illustrate the problem with how the FCC approached the broadband marketplace to begin with." Talking about the FCC's decision to make 25 mbps a benchmark for advanced telecommunications, and in another context making it 10 mbps, and in another any connection, he said: "we ratchet the broadband threshold up or down to meet whatever regulatory purpose is at hand."

Pai said broadband competition was more "robust" than it was given credit for, pointing to mobile broadband, for example, and the Google announcement that searches on mobile devices for the first time outnumbered searches on PCs.

He said the FCC "still has a backward looking view of what broadband is."

O'Rielly weighed in as well on Wheeler's tough talk about insufficient competition. "I think what we learned this morning is that cable's good work in building out broadband to consumer demand is now a right to be punished.

Pai declined to comment on a question from the audience on whether the takeaway from the chairman's remarks was that it would be tough for any combination of broadband providers to pass FCC muster and in that case, under what conditions he thought a merger in the sector could be approved. The other commissioners followed suit with nonanswers.

All the commissioner agreed that the upshot of the FCC's Title II shot across the bow would be litigation. Rosenworcel stood by her support of Title II, but conceded that lawyers and litigators would be busy. There were only four commissioners, so if there had been a vote to reverse Title II, it would have ended in a deadlock. Clyburn said Title II was the most sound legal footing for protecting Internet openness for everyond, regardless of who or where they were.

Pai said he hoped he was wrong, but that he feared it would mean innovation would have to be filtered through a regulatory bottleneck to the disservice of consumers and providers.

Moderator and NCTA executive VP James Assey asked what Title II and its general conduct standard's impact might have on innovations like usage-based pricing.

Clyburn said that, for her part, the reason she was against bright-line rules on things like sponsored data plans, for example, was that she believed that the marketplace and individuals should be able to pick the winners and losers among differentiated services.

One potential hot button Title II issue is how the FCC deals with its new authority over broadband privacy. The FCC has overseen cable privacy issues related to traditional cable service customer information — like VOD records — but now gets authority over broadband privacy, authority that once belonged to the Federal Trade Commission.

Clyburn conceded the jurisdictional push and pull, but said the FCC and FTC would work it out. Rosenworcel signaled there were a number of areas where the FCC needed to be looking, including monetization of customer data and ad analytics. She said it would be important to align those obligations with the FCC's traditional cable privacy oversight.

The FCC applied Sec. 222 telecom privacy authority in its Title II order, but it said it would not simply apply the telecom version of rules, but would instead issue new rules.

The FCC held a workshop last week on how it might do that, which Assey referred to.

O'Rielly suggested that even having that workshop was "prehistoric," given that the FTC had held a similar one a decade ago. He referred to Rosenworcel's monetization of data remark, saying that monetizing data is how online information remains free. He said he was troubled by the FCC regulating in that space, while Clyburn insisted the public demanded a regulatory backstop.

In what was good news for cable ops, the panelists were in general agreement that the FCC would find a way to free up upper 5 GHz spectrum for WiFi. O'Rielly and Rosenworcel said they had been working together to push that initiative along. Auto manufacturers have been pushing back over interference concerns, but Rosenworcel said a lot of intelligent car systems don't use that spectrum, and there are improved interference protections for those that do.

Looking ahead, Rosenworcel said it looked like a busy next few months, citing mandates in the STELAR legislation. Those include looking at the effective competition test — the FCC has proposed reversing the presumption in cable operator's favor — working on downloadable security — as a successor to the CableCARD regime — revisiting the definition of good faith retrans negotiations, and quantifying in an FCC report what MVPDs are spending on retrans.

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