Disagreements Likely, But Commissioners Say They Generally Back IP Transition Trials

Chairman Tom Wheeler Thursday circulated an item for the commission’s Jan. 30 meeting that would move the FCC a big step forward to trials examining the next effect of the IP transition (see separate report below in this issue), the topic of an earlier panel at the show (CD Jan 8 p2). In a one-on-one interview with CEA President Gary Shapiro, Wheeler said the FCC would look more closely at AT&T’s sponsored data agreement (CD Jan 9 p8), unveiled earlier this week at the show. Wheeler also spoke about the plan in Silicon Valley. (See separate report below in this issue.)

"My attitude is, ‘Let’s take a look at what this is, let’s take a look at how it operates,” Wheeler said at CES. “And be sure, that if it interferes with the operation of the Internet, that if it develops into an anticompetitive practice, that if it does have some kind of preferential treatment given somewhere, then that is cause for us to intervene.”

Wheeler also noted that the next two years will offer the first big spectrum auction in many years. “We haven’t had a spectrum auction since 2008,” Wheeler said. “There is a pent-up demand for spectrum.” He said that there will be three auctions in the next 18 months, starting with the H block auction this month and ending with the incentive auction in mid-2015. In the middle comes the AWS-3 auction. He said the planned auction of 1755-1780 MHz and 2155-2180 MHz is a “great model” of industry and government users working together to solve the spectrum crunch. “NTIA working with [the Department of Defense], working with industry, to get the spectrum to pair was very significant,” he said.

"I'm thrilled at the way things have developed, especially under Chairman Wheeler’s leadership,” said Commissioner Ajit Pai. The order “is a great step,” he said. “We might ultimately disagree on precisely which regulations should stay and which should go, which need to be adopted in an IP world,” he said. “We are now establishing a process, hopefully on a bipartisan basis, by which we can gain the relative facts that will be necessary to make those fundamental decisions.”

"Software developers code sandboxes into their programs, and in doing that they create a space for safe experimentation,” said Commissioner Jessica Rosenworcel. “That’s an idea that’s fairly popular in Silicon Valley right now, but I think we need to put it to work in Washington and the IP transition is a terrific place to start. We are looking at some very big changes in our network. … I am enthusiastic that our chairman has decided to make this a priority early in his tenure.” Pai and Rosenworcel conceded some disagreements are likely along the way among commissioners on rules for the transition.

Draft Details Awaited

Commissioner Mignon Clyburn looks forward to reviewing the draft after it’s circulated, she said. “I'm excited about the prospects of what any trials will bring,” she said. Commissioner Mike O'Rielly said he also supports trials but like Clyburn still needs to see the details.

The commissioners disagreed sharply on what the D.C. Circuit should do on the net neutrality order, one of the most anticipated decisions on a communications issue in several years. “What I am hopeful of is that the court will recognize all of the innovation and investment, tens of billions of dollars … over a relatively short period of time” since the order was approved, Clyburn said. “When I first got here in this space, I heard a lot of you talk about certainty, that what you wanted was regulatory certainty,” she said, noting that the order has meant certainty. “Despite this being Las Vegas, I am not going to take a guess where the court of appeals comes out,” Rosenworcel said. “The prudent thing to do is to wait and see the decision and weigh our options then."

"I would hope that the court would strike it down on the authority side of the equation,” said O'Rielly. “We had people suggest in recent panels that they were there when the ‘96 act” was written, he said. “I was actually there. I was in every single meeting” when he worked as an aide on Capitol Hill. O'Rielly said he knows what Congress intended on Section 706 of the Telecom Act. “Many people would like it to be other things. It was intended for what it’s been used” by the commission, he said. “The commission, I believe, went in a direction that was not intended by Congress.” Pai agreed with O'Rielly, calling the order “a solution in search of a problem.”

The commissioners said a rewrite of the Telecom Act appears possible, “If you work in Washington, you are required to be an optimist,” Rosenworcel said. “Congress can still do big things."

"I share Commissioner Rosenworcel’s optimism,” Pai said. “These issues don’t necessarily lend themselves to the easy partisan divisions that other issues might. … These issues are too important to be settled along partisan lines.”

H-Block Concerns

Rosenworcel still thinks the FCC would have been better off selling the H-block with other spectrum rather than holding the one-off auction slated to start Jan. 22, she said. Dish Network has committed to bid at least $1.56 billion, the reserve price set by the FCC. The satellite-TV company, seen by some as a possible next big player in wireless, is the only company that qualified with the FCC to make a nationwide bid for the band.

O'Rielly, not on the commission when the auction was scheduled under then-acting Chairwoman Clyburn, indicated he shared Rosenworcel’s concerns. “I worry that when the commission makes decisions for one particular outcome that it can have multiple effects down the road,” he said. “We don’t know what it may mean to … future auctions.” Rosenworcel said: “I think my colleague, Commissioner O'Rielly, makes some very good points."

The commissioners were hopeful that the TV incentive auction will be a big success. Wheeler indicated early in his chairmanship the auction will take place in 2015, not this year as planned by then-Chairman Julius Genachowski. As acting chairwoman, Clyburn had been trying to move the agency toward a 2014 auction. “I would say that we have had dozens upon dozens of ex parte meetings,” she said. “When I was acting chair, we had two updates. There has been a lot of engagement going on. Can it get better, can we do more? Of course we will. The added time will enable more opportunity.”

"It is a voluntary auction,” O'Rielly said. “To the extent that broadcasters need more information or would seek more information, I think we should provide it. We need their participation. If it’s information that would help the auction process work more effectively, then I would be supportive of that."

Pai said he has met with broadcasters large and small. “One of the things that they have said is that they don’t really think about the incentive auction because there’s no deadline that’s imminent,” he said. “There’s no reason for them … to think about it immediately.” When the rules are in place, the FCC needs to “do much more aggressive outreach to individual broadcasters,” Pai said. He'd support a series of regional workshops so that broadcasters better know what their options are, said Pai. “This is not the case of the FCC forcing them out of the business."

"These auctions are big,” Rosenworcel said. “The world is watching. They're an incredible opportunity to look at new and novel ways of incentivizing the redistribution of spectrum. I think the way to make it work is to first put” it on the calendar, she said. The FCC should set up a “series of milestones” so broadcasters better understand the timing of the auction, she said.

Meanwhile on AT&T’s new plans, Public Knowledge Thursday sent Wheeler a letter encouraging him to be ready to intervene on behalf of consumers. “I urge you to turn your attitude into action and open a proceeding into AT&T’s sponsored data scheme” the letter said. “Gather the information required to evaluate if the scheme interferes with the operation of the internet, if it is or has the potential to be an anticompetitive practice, or creates an opportunity for preferential treatment. If you find that the scheme does any of these things intervene on behalf of the public interest.”