ISPs Could Find Plenty to Hate in Obama Administration's Final Two Years

Industry observers say they expect other initiatives out of the White House between now and the November 2016 election. With the House and now the Senate in Republican hands, Obama is likely to influence policy in other areas where the administration doesn't need help from Congress, with carriers unlikely to welcome most of these initiatives, industry officials said. Obama urged the FCC to reclassify fixed and mobile broadband under Title II of the Communications Act, while forbearing from most parts of the title, a step the agency is expected to take in February (see 1501080019).

Observers say additional regulation appears likely in areas including the elimination of zero-rating in wireless service offerings (see 1411140046). Other areas for potential new rules include cybersecurity, over-the-top video, media ownership, political advertising and the usage tiers utilized by ISPs, industry officials said.

The question of what regulation looms came up at a Wednesday forum hosted by the American Enterprise Institute’s Center for Internet, Communications, and Technology Policy. The move to Title II will encourage petitions to the FCC focusing on the need to regulate interconnection markets, Daniel Lyons, associate professor at Boston College Law School, said. “There are a number of people who are already stirring the pot in regard to sponsored data, zero rating traffic and other more innovative alternatives to the traditional Internet access model.” Babette Boliek, associate professor at the Pepperdine University School of Law, said there's a clear danger that “regulatory arbitrage or mission creep” will distract the FCC from work it needs to get done in other areas. “That’s problematic,” she said.

A senior telecom executive said Obama’s net neutrality remarks appeared to come together quickly the week before the net neutrality speech and grew out of the political shop in the White House, which saw the stance as appealing to various constituencies important to Obama. The executive expects other similar policy pushes over the next year and a half. Other executives said their understanding is Obama himself wanted to send a clear message on net neutrality. The White House didn't have any comment, and the FCC declined to comment.

Activist White House

Some Republicans expect an activist White House on communications issues for the rest of Obama's second term, which would be a good thing in Democrats' minds.

Former FCC Commissioner Robert McDowell, now at Wiley Rein, said he expects to see an aggressive White House between now and the end of 2016. "It looks as though it will accelerate its efforts to push through its core initiatives in response to the change in power in the Senate,” McDowell said.​ “History teaches us that Republican administrations tend to deregulate faster in the final two years while Democratic administrations tend to rush to regulate.” McDowell predicted, based on discussions with “objective observers,” that the Obama administration will be more aggressive in seeking new regulations than was the Clinton administration its final two years in office.

Michael Copps, ex-longtime FCC commissioner and current adviser to Common Cause, said the White House involvement is a good thing. "I welcome strong presidential leadership, particularly in this time of congressional deadlock,” Copps said. “It has clearly made a difference on the open Internet debate. I also welcome strong agency decision-making. Agencies need to use the authority they have to protect consumers and citizens. On net neutrality, the FCC has both the authority and the record on which to act. I hope its leadership will match the president's."

Hal Singer, economist and senior fellow at the Progressive Policy Institute, said it’s no mystery why carriers are concerned about the policies being pursued by the Obama administration. The White House has largely embraced the view of the world espoused by Harvard Law School Visiting Professor Susan Crawford, an early adviser to the administration, he said. “She views the Internet as a public good that should be provided by the government because it’s so important it can’t be entrusted to the private sector,” Singer said. “In the end, nothing good is going to come out of this White House for the private ISPs.”

Crawford responded that “Internet access” is “unquestionably” a public good. “Access can certainly be sold by private providers and the U.S. has traditionally relied on private companies to sell this kind of facility,” she said. “But those private actors need to be subject to public obligations, as they always have been historically.” Mayors should be able to make the same choice on offering their constituents broadband as they do water and electricity, Crawford said. “None of this is unexpected," she said. "This is just common sense.”

Paul Gallant, analyst at Guggenheim Partners, sees the muni broadband push as more of a surprise than Obama's advocacy of net neutrality. “I think the president’s Title II statement had some unique political drivers,” he said. “But muni broadband didn’t fit that mold.” The implication is “the administration is more willing to talk publicly about telecom going forward,” he said.

'Playing Politics'

Those critical of the White House's communications policy goals said they amount to political positions, while defenders of those goals said other administrations have been equally active in this area.

Obama does seem intent on “playing politics” with the Internet and that’s something he “wisely avoided” during his first six years in office, said Larry Downes, project director at the Georgetown Center for Business and Public Policy. “One can see the potential for cheap sound bites here, but even in the short term, it’s dangerous and disappointing to play politics with the one sector of the economy that has continued growing rapidly for the last twenty years."

Georgetown Law Institute for Public Representation Senior Counselor Andrew Schwartzman supports the moves made by Obama. “This is an instance where good policy is also good politics,” he said. “Expanding broadband deployment and creating competition which improves broadband speed and reduces prices are extremely popular initiatives. More than a few Republicans will be uneasy about being aligned in the public's mind with AT&T, Verizon and Comcast.”

Obama’s statements help shore up support for net neutrality among congressional Democrats and reassure a federal agency that it has the White House's blessing, Harold Feld, senior vice president at Public Knowledge, said. “The White House has always worked to influence the telecommunications agenda, although Obama has been more active than George [W.] Bush, who was much less active than Bill Clinton,” Feld said. “I don't see how this is that different from the 2011 State of the Union shout out to wireless and push from the incentive auction legislation.” Clinton promoted a range of issues from free air time for political candidates to the Gore Commission on public interest obligations for digital broadcasters, he noted.

"Because I disagree with the substance of his positions, about the only positive thing I can say about Obama's two recent interjections of his views is that they have focused attention on the need for FCC institutional reform,” countered Free State Foundation President Randolph May. The FCC is the most political it has been since the Clinton administration, where Vice President Al Gore played a big role in communications policy, May said. “I can actually make a case for placing certain communications policy matters in the executive branch, where the president would be accountable,” he said. “But since that is not the model we have today, I'm concerned that the FCC will just become more and more politically driven without sufficient accountability."