A Chance to Improve the FCC
The new Chairman of the Federal Communications Commission (FCC), Ajit Pai, has his work cut out for him. He must move the FCC’s approach to technology and telecom policies from the heavy-handedness that characterized the Obama era, as with the public utility regulation of broadband providers, to a lighter touch focused on advancing Internet freedom, fostering innovation, and promoting access to new technologies.
This transformation is critical for consumers, given that the FCC regulates Americans’ abilities to access and use many technologies that younger generations now take for granted. From our mobile devices and GPS to cable television, government regulators at the FCC dictate what communications-related innovations and infrastructure is available to you and, indirectly, at what cost.
Chairman Pai has already signaled his willingness to revise and improve FCC regulations, which grew increasingly harmful and obsolete during the Obama era. One such rule is already off the books due to a recent vote in Congress, which used the Congressional Review Act to eliminate the FCC’s broadband privacy rule in early April. That rule distorted the Internet marketplace, treating telecom companies such as Comcast and Verizon differently than Internet content providers such as Amazon and Netflix. Instead of fostering competition for individualized advertising, the privacy rule undermined it, depriving consumers of discounted Internet access thanks to advertisers subsidizing their broadband provider.
But the most harmful FCC regulations issued during the Obama administration have been in place long enough that they cannot be undone through the Congressional Review Act. Undoing these rules, therefore, is now the responsibility of the FCC.
The agency’s top priority should be undoing net neutrality by reversing the so-called “Open Internet Order.” This 2015 rule classified broadband providers as “common carriers” under Title II of the Communications Act of 1934. The upshot of this decision was to place broadband companies under the same regulatory structure originally crafted over eighty years ago to oversee the long-defunct Ma Bell telephone monopoly. The Open Internet Order, inspired by the net neutrality movement, has thwarted broadband providers’ efforts to give consumers better Internet plans at lower prices. Chairman Pai is reportedly finalizing his plans to roll back the 2015 order, while defenders of Internet regulation are gearing up for a fierce battle.
Lifting rigid regulations on Internet providers would help create a freer, more consumer-friendly, telecom sector. But that will not be enough. Decades of legacy regulations — from media ownership restrictions that originated in the 1940s to telephone fees that are really just corporate welfare — should be on the chopping block as well. Revisiting these longstanding rules may provoke special interests, but this is no excuse for letting harmful mandates remain on the books.
Beyond Internet regulation, the FCC should also revisit the television marketplace. During the Obama administration, the agency proposed bringing many online streaming platforms into the regulatory framework governing cable and satellite providers — despite the fact that Netflix is hardly an old-school cable company. More recently, the FCC sought to issue extensive rules dictating how set-top boxes are designed. Chairman Pai has already announced the FCC will abandon the set-top box proposal. He could go further by sun-setting existing regulations that apply to these boxes.
Making these changes will take some time, especially if the FCC’s new leadership is to stay on the right side of the Administrative Procedure Act, the federal law governing how agencies issue and revise regulations. As the FCC works to achieve broader reforms, it should follow the precedent set by the Obama administration in 2009, which declined to defend in court controversial regulations such as the net neutrality rule. (The legality of that rule remains a live issue, currently at the en banc stage in the U.S. Court of Appeals for the D.C. Circuit.)
Ultimately, Congress, not the FCC, needs to rein in the agency’s years of regulatory excesses. Otherwise, every four years, three unelected individuals will acquire immense power to shape the future of the Internet — checked only by the willingness of highly deferential federal judges to reverse the actions of the federal agency. Thus imposing clear limits on the FCC’s role — or even abolishing large chunks of the agency’s authority — is necessary if the Internet is to remain open and free. In the meantime, with Chairman Pai at the helm, the FCC has an opportunity to change its course on significant regulations.
Ryan Radia is research fellow and regulatory counsel at the Competitive Enterprise Institute, where he focuses on adapting law and public policy to the unique challenges of the information age.