Reclassification Expected to Take Longer Than Rest of Obama Administration

"There's no question that on its current course, the net neutrality issue will spill into the 2016 presidential campaign and be left for the next FCC chair to deal with in 2017 and beyond,” said former Commissioner Robert McDowell, now at Wiley Rein. McDowell voted against the 2010 order.

Industry officials said FCC officials called around during the middle of last week, scheduling industry briefings on the order starting Monday. By Friday, FCC officials were aware the Obama remarks were coming and called around a second time to say this week’s industry meetings would be merely “listening sessions” for the agency. Wheeler conceded as part of those meetings it may be difficult to shove wireless under the wireline-oriented common carrier definition, said industry officials at the meetings. Wheeler met with almost a dozen wireless carriers Wednesday as the sessions continued, industry and agency officials said. He made clear that given that 55 percent of Internet data is from mobile devices, the rules will cover wireless, officials said.

AT&T CEO Randall Stephenson said at a Wells Fargo conference Wednesday it will likely take two to three years before the kind of rules proposed by Obama would fundamentally alter how ISPs are regulated. He noted that Wheeler had been reaching out, trying to work with industry on a compromise. “We were all working this rather diligently,” he said.

Stephenson warned that the kind of reclassification proposed by the president could chill investment in infrastructure. "We can't go out and just invest that kind of money deploying fiber to 100 cities … not knowing under what rules those investments will be governed," he said. “We have to pause and we have to just put a stop” on those kinds of capital expenditure investments, he said.

'Nuanced Solution'

Some are saying Wheeler may take a different tack than what Obama sought. Jennifer Fritzsche, analyst at Wells Fargo Securities, said in a research note Wednesday that reports are starting to emerge that Wheeler favors a “more nuanced solution” than what was laid out by Obama.

Gigi Sohn, a senior adviser to Wheeler, said on NPR’s Diane Rehm Show Wednesday that the FCC is looking closely at the White House’s statement. Sohn disputed a Washington Postreport that suggested Wheeler was at odds with Obama. “The chairman and FCC will look at the president's comments like it will look at the other 4 million comments and will come to a conclusion,” Sohn said. “But nobody should draw the conclusion that the chairman will either follow the president or diverge from the president. All options are on the table.”

Wheeler has said he needs more time to pursue Title II classification and the simultaneous massive forbearance, McDowell said. “But the record does not have enough evidence to protect such a complex order on appeal, so the FCC needs to issue a public notice to gather more data to support its predetermined conclusion,” he said. “Adhering to proper process consumes time and, ultimately, the agency's ability to work on other important matters. Then, once the net neutrality order is issued, the commission will have to deal with the avalanche of clarifications and reconsiderations that will be needed to implement its new policies with any clarity.”

Wheeler is studying the issues “very, very closely,” trying to figure out the approach the agency should take, said former Commissioner Michael Copps after meeting with the chairman Wednesday. A hybrid approach still appeared to be a possibility, Copps said. “I did my best” to persuade Wheeler a strict Title II classification would be the best course and that the issue "would define the legacy of his tenure,” Copps said.

Courts Hard to Predict

Even when an order is released, it will take much longer for the courts to weigh in, experts said. TechFreedom President Berin Szoka said it seems unlikely FCC will release an order before the middle of next year, and it will take effect later. “The administration does want to be in the position to control the litigation,” Szoka said. How long it might take for a case to wind its way through the courts isn’t under the FCC's control, he said. “They’re sort of between a rock and a hard place,” Szoka said of the commission. “If they rush to get the order out they risk screwing up, as they have before, and they make it more likely that they’ll lose in court. On the other hand, the longer they wait the more likely it is there won’t be a Democratic chairman who is in charge of whatever they do in response to a decision” from an appellate court, he said.

Larry Downes, who argued in the Post Tuesday that the Obama plan to save the Internet could ruin it instead, told us any court challenge could take a year or more. “The D.C. Circuit runs on its own schedule,” said Downes, with the Georgetown Center for Business and Public Policy. “Much of the timing is unpredictable and out of the control of the government,” he said. “Eventually, of course, another president, perhaps of another party, will be appointing commissioners and chairmen.”

The FCC “dragged its feet” in releasing the 2010 rules, said Free Press Policy Director Matt Wood. “In stark contrast to all of the [Section] 706, sender-side hybrid, and earlier so-called creative theories out there in 2010 and 2005, Title II is rock-solid legal authority,” he said. “It will withstand the test in court, and it provides the best foundation for FCC rules on the open Internet and other broadband competition issues too.” Wood said he believes the FCC has the record it needs to issue an order. “The obstacles to the chairman acting now are mostly of his own creation,” Wood said. “The answers in the record are there, and they are clear for those who care to look.”

Wheeler seems to know he “has a mess” on his hands, said Randolph May, president of the Free State Foundation. “Chairman Wheeler has made a mistake by continuing to insist that the Title II option, in any of its variations, is still on the table,” May said. “That option is fraught with legal difficulties, not to mention the very troublesome policy implications. He needs to call a time-out, use the time-out as an opportunity for rethinking, and then come out prepared to defend a properly implemented Section 706 'commercial reasonableness' approach that is the only opportunity for resolving the issue in a way that is not harmful to the Internet."