Trump, GOP Victory Complicates FCC BDS Plans, Threatens Net Neutrality, Title II

On net neutrality and broadband reclassification, Republicans and other critics are seen as now having, in the wake of the election, three different paths to undoing much of what FCC Democrats have done: in Congress, the courts and at the commission.

Most agency officials and outsiders we talked to expect the FCC to finish work on the BDS order and Further NPRM, despite the new political complexities. "I doubt it," one FCC official said when asked if Chairman Tom Wheeler seemed likely to back off of planned BDS action, as some speculated Wednesday (see 1611090034). The official questioned why Wheeler and the FCC would "do all this work" and quit now.

Another FCC official said there's always a threat that Capitol Hill Republicans will demand the Democrat-run commission halt action on contentious items due to the election outcome, but that will be up to the agency. As of now, it looks like the FCC is moving ahead on BDS, the official said: "Discussions between the offices have begun" on whether to make changes to a draft order/FNPRM (see 1610070052). The item is seen as likely needing a 3-2 party-line vote, with Republicans dissenting (see 1610140035). An FCC spokesman had no comment.

Others also think the agency will move ahead on BDS. "I don't think so," an industry representative said when asked about the speculation the BDS item could be shelved. "I think he jams it [through]. What's the big deal? [Wheeler] can say, 'I scaled it back,'" the industry representative said, referring to his draft order's proposal not to subject packetized Ethernet services to price-cap regulation.

‘Stay the Course’

“I would expect the FCC to continue to stay the course and get things done," including on BDS, emailed Harold Feld, Public Knowledge senior vice president. "If a future FCC wishes to reverse, that is their prerogative. But what constitutes good policy has not changed, and the problems that prompted Wheeler to circulate the existing BDS Order are still there." An industry official asked by email, "Why would they back off now? Isn't it now about cementing his competitive legacy, even if [expected] acting [Chairman Ajit] Pai undoes it on recon?”

Even if commissioners vote for an order Thursday, it would still be at risk due to procedural obligations and potential opposition from the Trump administration, FCC and industry contacts said. TechFreedom President Berin Szoka said he expects the BDS order/FNPRM will need Office of Management and Budget approval under the Paperwork Reduction Act (PRA), and possibly under the Regulatory Flexibility Act. That raises serious questions about whether the BDS item will be approved by the OMB, which has a 60-day comment period, and be published in the Federal Register (giving the item legal effect) before Trump takes office Jan. 20. An FCC official acknowledged that likely PRA obligations do create a timing hurdle.

If the BDS item were to get through the process before Trump takes over or in the early days of his administration, the new FCC could reconsider and reverse it, Szoka said. If the order were to be challenged in court, the new FCC could decline to defend it, the industry representative said. The latter possibly creates added litigation risk for any BDS actions that raise any serious legal issues. Incumbent telcos have criticized Wheeler's BDS draft regulation of legacy TDM-based DS1 and DS3 services as being too broad, particularly in its application to interoffice transport (see 1611080032).

Net Competition Chairman Scott Cleland said FCC orders approved 3-2 are very vulnerable when Republicans take control: "The most dramatic changes at the FCC flowed from the premise that Congress was unnecessary -- only three FCC votes were necessary and the courts would back the FCC. That premise has now been overturned. Anything done in that way is at profound risk and won’t survive the next two years. So it’s a matter of how it will be accomplished, not if.”

Net Neutrality Endangered?

Cleland said the order on net neutrality and broadband reclassification under Title II of the Communications Act is at the top of the endangered list. "The strength of net neutrality is now its weakness," he said. "It was accomplished via acclamation and not through constitutional processes. Net neutrality is not found in law. It was discussed in Congress but never legislated. It is purely a creature of the FCC. Title II was completely a creature of opportunity from the [2014] Verizon court decision [by the U.S. Court of Appeals for the D.C. Circuit]. Title II was pushed over the goal line by [comedian] John Oliver’s call for mob comments at the FCC. The Title II decision is at high risk because it could be overturned in court, which it hasn’t been so far, overturned by a presidential election, which has now occurred, or overturned in Congress, which now could occur because of the election.”

The industry representative said ideally Congress will sort out the main issues surrounding net neutrality policy and agency jurisdiction. But GOP control of the White House and the FCC gives Republicans leverage to force Democrats, internet edge companies and other net neutrality advocates to negotiate, because if they don't, the Republican-run commission can impose a solution. Trump's victory also creates more litigation risk for net neutrality advocates, as he is expected to appoint a new justice to the Supreme Court, which could hear industry appeals currently before the D.C. Circuit, the industry representative said.

Not so fast, say net neutrality advocates. "Speculating this early is not a worthwhile endeavor," said Andrew Schwartzman, Georgetown Law Institute for Public Representation senior counselor. "I can say this much: absent legislation, I’m pretty sure it would take a while to reverse the Title II decision administratively, and that it would require findings of fact that would be subject to judicial review.”

Net neutrality has "a great deal of grassroots support, including among Trump voters," Feld emailed. "It's hard to cast doing favors for the big telecoms as 'draining the swamp' and fighting 'crony capitalism.' I will point out that we are now more than 10 years into the effort to get rid of the media ownership rules. That doesn't mean that folks inside the beltway won't try. But just as getting rid of broadcast ownership rules turned out to be a lot harder than folks expected, I suspect that getting rid of net neutrality will also be harder than expected. There is no doubt that the new Administration has the tools to reverse net neutrality and Title II. There is also no doubt that the grassroots will fight to preserve it. We will see who wins.”

Szoka said he expects Congress will pass legislation that says broadband isn't a Title II telecom service, and Telecom Act Section 706 isn't an independent source of broadband authority. He said the best solution on net neutrality policy would be for lawmakers to negotiate actual duties that telco and cable broadband providers and others could live under, with the FCC's 2010 rules a good template. At the other end of the spectrum, he said, would be legislation repealing the FCC's authority and simply leaving net neutrality enforcement to the FTC. In between would be FCC or FTC rulemakings that could write more targeted rules, he said.