The telecom industry rang in the new year to the tune of "Good Times Roll" – and by "good times" they mean more mergers, less competition, and no more pesky net neutrality and data privacy regulations.
The outgoing FCC -- one of the most consumer-friendly in history -- was tough on telecom morale. In a memorable "look, the emperor has no clothes" moment, Chairman Tom Wheeler pointed to the lack of competition in the U.S. broadband market and vowed to do better.
Under Wheeler's tenure, the agency raised the definition of broadband to 25Mbps, from the previous snail's pace 4Mbps; passed net neutrality rules that banned traffic discrimination and throttling; issued basic broadband privacy protection rules that prohibited ISPs from selling users' personal data to third parties without users' consent; adopted truth-in-billing guidelines to cut down on "cramming" of unauthorized charges; opened investigations into the use of data caps and zero-rating schemes; and tried to fight (ultimately unsuccessfully) the spread of telecom-written state laws that protect monopolies from competition.
Get ready to kiss most of that good-bye.
The team of telecom cronies running President-elect Trump's FCC transition are all outspoken critics of Wheeler's initiatives. Advisers Jeff Eisenach, a former consultant for Verizon, and Mark Jamison, a former lobbyist for Sprint, both see little justification for the FCC's existence. Rep. Marsha Blackburn, an avid supporter of AT&T and protectionist state laws, is also on the advisory team. All are strong opponents of regulating the industry.
But as TechDirt writes, "in telecom, 'deregulation' doesn't actually mean straight deregulation. What it means in practice is pay-to-play regulation, where the biggest and most politically powerful companies get to literally write the law .... 'Deregulation' is all-too-frequently code for 'let's let AT&T and Comcast decide what's best.'"
In anticipation of the coming sea change in Washington, telecom companies have hit the ground running. A petition filed with the FCC this week asks that privacy protections be dismantled, calling them "unnecessary, unjustified, unmoored from a cost-benefit assessment, and unlikely to advance the Commission's stated goal of enhancing consumer privacy."
They likely won't have to wait too long for action. After Wheeler steps down on Jan. 20, Republican Commissioners Ajit Pai (a former lawyer for Verizon) and Michael O'Reilly will enjoy a 2-1 majority at the FCC, as the Senate closed out 2016 without confirming Democratic Commissioner Jessica Rosenworcel to a second term.
Some had hoped Wheeler would stay on and finish his term as a commissioner -- if only to slow the gutting of his legacy until after Trump names a new chairman to break a 2-2 deadlock. But with a 2-1 majority, Republicans at the FCC can begin repealing regulations almost as soon as Trump is sworn in.
Pai and O'Reilly sent a letter last month to five lobby groups for wireless carriers and ISPs, reassuring them that current rules would be on the chopping block "as soon as possible."
In a speech to a conservative think tank, Pai said the agency "need[s] to remove outdated and unnecessary regulations.... We need to fire up the weed whacker and remove those rules that are holding back investment, innovation, and job creation."
Chief among the "weeds" to be wacked is net neutrality. Pai voted against the rules, saying they could provide cover to leaders in North Korea, Iran, and other repressive states. (He also nonsensically claimed Netflix -- not Comcast or Verizon -- was violating net neutrality.)
Transition team advisers Jamison and Eisenach are also vocal opponents of net neutrality rules. Eisenach denounced the concept as "crony capitalism pure and simple," and in an editorial called net neutrality a radical scheme for "the transfer of wealth from one group to another by means of government regulation."
Net neutrality, an idea with strong bipartisan support, was intended to protect small-business innovators from telecom monopolies. Even Comcast has admitted the rules have not hurt jobs, stifled investment, or resulted in any of the other calamities predicted before their passage.
But in the brave new FCC, rules that prevent telecom giants from using last-mile monopolies and zero-rating schemes to gain unfair competitive advantages are deemed "radical." Apparently the massive transfer of wealth to broadband bullies is the mark of economic efficiency.
Also expect the new FCC to deep-six the very idea that broadband monopolies are a problem. Jamison has called mergers "necessary and potentially good for consumers," when in fact they lead to higher prices and poorer service. And he argued in a blog for TechPolicyDaily that "most of the original motivations for having an FCC have gone away [since] telecommunications network providers and ISPs are rarely, if ever, monopolies."
What are the odds he was able to type that with a straight face? (Have your own doubts about the state of broadband competition in the United States? Check out this map.)
Telecom execs are licking their chops at the thought of the mega mergers they might push through in the next four years -- despite then-candidate Trump having spoken out against the proposed AT&T/Time Warner merger.
"It's hard to imagine that there's not going to be more openness to consolidation," T-Mobile CFO Braxton Carter said at the Global Media and Communications Conference in December. "Given the changes that are coming, I really do think you're going to see a lot of evolution and a lot of excitement."
Carter appears to have conveniently forgotten "it was the FCC and DOJ that blocked AT&T's attempted acquisition of T-Mobile, which ultimately resulted in T-Mobile being a more innovative, fierce competitor than ever before," writes Karl Bode.
In another sign that telecoms are feeling emboldened, AT&T is already walking back promises it made in defending its planned merger with Time-Warner. The company had said the merger wouldn't raise prices and put forward a $35 DirecTV streaming offer as proof. The company now calls that only a limited-time promotion; as of Jan. 9, the price will be jacked up to $60. "AT&T has a long history of bogus promises to get big deals approved," TechDirt writes, "but it's rare to see the company already falling short on its promises before the ink is even dry."
In an FCC run by and for the telecom industry, the accomplishments of the Wheeler years -- as limited as they were in making a dent in the monopolistic nature of the industry -- will likely seem mythic.
"Gutting most regulatory oversight, demolishing net neutrality, and dismantling the FCC's new privacy rules won't somehow magically result in telecom utopia," TechDirt warns. "This is a line of fantasy the incumbent ISPs (and their various, well-funded policy tendrils) have been mainlining into the public discourse for the better part of the last twenty years despite a parade of evidence to the contrary."
Advocacy groups are gearing up for a new fight, particularly around net neutrality. The proposed rules generated about 4 million public comments to the FCC, the vast majority voicing in support. "We'll have the evidence and the law on our side to fight even a new majority of the FCC commissioners if we need to," said Matt Wood, policy director at digital rights group Free Press. "Net neutrality is a wildly popular safeguard, grounded not just in common sense but in the law as well."
Hopefully the Republican Congress will be too busy to change those laws any time soon. With its full agenda to repeal the ACA, rewrite tax laws, shrink government spending, and confirm conservative judges, perhaps rewriting the Communications Act, repealing the classification of the internet as a utility under Title II of the Act, and passing a defanged net neutrality law will have to wait.