Leaving Title II Docket Open Creates Lingering Uncertainty for Telcos, McDowell Says
FCC Chairman Julius Genachowski needs to close the 2010 docket on whether the agency should reclassify broadband as a Title II common carrier service, because leaving the docket open is causing economic harm, FCC Commissioner Robert McDowell said Thursday at a Phoenix Center regulatory conference. Meanwhile, Rep. Marsha Blackburn, R-Tenn., questioned whether some FCC staff are overpaid.
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McDowell said he is concerned about how the FCC would react if the U.S. Court of Appeals for the D.C. Circuit vacates the 2010 net neutrality order. “We have the Title II docket still open and I've made no secret of my concern regarding that,” he said. “Having that Title II docket open is harmful. It’s not the direction we want to go in.”
McDowell told us he has heard directly from Wall Street that leaving the docket open is causing real economic concerns about the telecom sector. “Having the Title II docket open implies the commission will act to classify broadband as a telephone utility,” he said. “The potential of such a dramatic change in U.S. policy governing the Internet has created tremendous uncertainty among market players. I hear this every time I talk to a Wall Street analyst, for instance."
Even if the commission moved a few steps toward more regulation of broadband through a “so-called skinny Title II” order, “that would unfortunately dovetail all too well with what’s going on internationally at the ITU and continue to fuel those types of efforts,” McDowell said. He cited the revised International Telecommunication Regulations adopted in December at the World Conference on International Telecommunications (CD Dec 14 p1) OR (WID Dec 14 p1). “It would be a very short period of time before … information services, the Internet in particular, would be regulated like a utility."
McDowell also said he’s concerned the FCC may look at imposing additional economic regulations on wireless. “I'm concerned that there might be some needless regulation … which could dampen investment and start to curb innovation,” he said. More will be known once it becomes clear what changes will occur at the top at the commission, he said. Chairman Julius Genachowski is widely expected to leave the agency this year, but has kept his plans close to his chest. “A lot of this depends on who’s running the show over the next four years and the personalities and their background and philosophy,” McDowell said.
The top priority of the commission in 2013 must be teeing up a successful incentive auction of broadcast TV spectrum, McDowell said. “Not only is it a good idea for us to be focused on it, but it’s the law,” he said. “I want to make sure we get it right and we get it done as quickly as possible.” But recent auctions show “there will be surprises and this will probably take longer than expected,” he said. “Be prepared for the unexpected and be prepared for it to take longer than you think."
Blackburn noted that the FCC has seen an 11-fold increase in the number of employees making more than $150,000 a year. “That should worry each and every one of you,” she said. “Because probably [time] they're working, they're trying to figure out what they're going to do to give you more paperwork to send to them so that they've got a stack on their desk and they look busy. We've got to stop this.”
Blackburn called for a “fundamental telecom overhaul” that reflects the fact that different telecom services “deserve like rules.” Blackburn wants reforms to reflect “regulatory humility” -- a principle she said the FCC violated when it used an “outcome-driven” process to arrive at its net neutrality rules. “You can’t pre-determine the outcome, and allow innovators to go create what individuals in the marketplace, and businesses in the marketplace, are wanting to create. It’s a bad, bad, bad precedent,” Blackburn said. “Just imagine if the government told a newspaper what articles to publish and where they were going to put them in that paper. And I think that’s a pretty good analogy of what has transpired with the FCC’s net neutrality order -- pretty much trying to tell you what you're going to do and where you're going to put it."
Hal Singer, managing director at Navigant Economics, criticized visiting Harvard Law School Prof. Susan Crawford’s position that broadband Internet is a natural cable monopoly that doesn’t compete with wireless services. Since 86 percent of U.S. households had a choice of two or more wireline broadband providers as of June 2011 that could offer 3 Mbps download speeds, and average 4G speeds are comparable with average cable broadband speeds, the “notion of natural monopoly evaporates,” he said. Singer recommended the FCC take a case-by-case adjudication approach toward improper ISP behavior.