Chairman Tom Wheeler is leaving the FCC on Inauguration Day, Jan. 20, he confirmed Thursday morning before the commissioners' meeting. That would leave the commission with one Democratic member, Mignon Clyburn, who earlier this week told us that she will stay during her term, and two Republicans, Mike O'Rielly and Ajit Pai. That is assuming that Jessica Rosenworcel is not reconfirmed; she is not expected to be.

“Serving as F.C.C. Chairman during this period of historic technological change has been the greatest honor of my professional life," Wheeler said in a statement. "It has been a privilege to work with my fellow Commissioners to help protect consumers, strengthen public safety and cybersecurity, and ensure fast, fair and open networks for all Americans.”

In the minutes after the statement, reactions began pouring in, many praising Wheeler. Wednesday evening, the commission pulled most items to have been considered at the members' meeting Thursday, leaving only one on real-time texting and yanking a controversial one on the emergency alert system. Some of those pulled items had been approved on circulation.

Rep. Greg Walden, R-Ore., beat out opponents and will chair the House Commerce Committee next Congress. The current head of the Communications Subcommittee, though junior in seniority in the leadership derby to succeed outgoing full committee Chairman Fred Upton, R-Mich., won his quest to get the nod from a group of GOP leaders over the more-senior Rep. John Shimkus, R-Ill.

The House leadership steering committee voted Thursday night. Industry officials said Rep. Joe Barton, R-Texas, who also was a contender like Shimkus, wasn't being picked. Walden later confirmed he won the nod.

A federal court sided with AT&T in overturning an FCC VoIP symmetry ruling that had allowed local competitors to collect higher switching charges for routing over-the-top long-distance calls to local phone customers. A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit unanimously reversed the commission's February 2015 ruling that CLECs in partnership with over-the-top VoIP providers were providing the "functional equivalent" of end-office switching and thus could collect associated access charges, instead of the lower charges associated with tandem switching.

"The Declaratory Ruling does not disclose the Commission’s reasoning with the requisite clarity to enable us to sustain its conclusion," said Judge Stephen Williams in the court's opinion in AT&T v. FCC, No. 15-1059. "We therefore vacate and remand the order to the Commission for further explanation." Williams was the most aggressive questioner of the FCC's attorney at oral argument, Communications Daily previously reported. Other judges in the case were Raymond Randolph and Judith Rogers.

The FCC declined to comment. AT&T had no immediate comment.

The FCC on Wednesday deleted all four major agenda items from Thursday's commissioner meeting. Those items were an order and Further NPRM on business data services, an order on a mobile fund Phase II, an NPRM on mobile roaming obligations and the regulatory classification of Voice over LTE, and a video description order. Also deleted was an Enforcement Bureau consent agenda item. All the items remain on circulation, said a commission notice. A Freedom of Information Act item from the general counsel apparently remains on the agenda.

Republican congressional leaders had asked the FCC to stop action on controversial items, and Commissioner Ajit Pai had said those included all four major agenda items for Thursday's meeting. Others have told us the same, too. The commission didn't immediately comment further.

Republicans may run the table on telecom policy over the coming years after emerging triumphant in Tuesday’s elections, scoring an unexpectedly strong showing that will yield control of the White House under GOP President-elect Donald Trump and a GOP majority in the Senate. And Trump already has his eyes on telecom. The Associated Press declared Trump the victor around 2:30 a.m. Wednesday and Democratic nominee Hillary Clinton privately conceded in a call to Trump. Some congressional races are still too close to call. The House, as expected, retained its Republican majority.

"I've just received a call from Secretary [of State] Clinton," Trump told supporters at 2:50 a.m. "She congratulated us ... on our victory." He called for unity. Clinton didn't speak Tuesday night. “They’re still counting votes, and every vote should count,” John Podesta, chairman of Clinton's campaign, told backers after 2 a.m. Wednesday, urging them to go home. “We’re not going to have anything more to say tonight.”

The Trump campaign website now newly says that telecom should be included as part of his $1 trillion infrastructure funding package, which he wants to advance before Congress in the first 100 days of his administration. Trump never mentioned telecom last month when describing the proposal nor did his campaign comment when asked. The campaign now clarifies the plan would “create thousands of new jobs” to build infrastructure including telecom. The website was undergoing major changes Tuesday night, preventing access to news releases and certain past campaign documents.

"We're going to rebuild our infrastructure," with "millions of people" going to work and making it "second to none," Trump said in his election victory speech.

The shift in presidential power means a potential mandate for Republicans if the Capitol Hill majority and the White House can unite behind telecom policy objectives. GOP control of the Senate makes it likely that Sen. John Thune, R-S.D., who handily won his own re-election bid, will continue to chair the Commerce Committee next Congress. Thune, who sponsored bipartisan measures on spectrum and FCC reauthorization this Congress, repeatedly mentioned this summer wanting to take on an overhaul of the 1996 Telecom Act, a shared goal among all known House Republicans, including Communications Subcommittee Chairman Greg Walden, R-Ore., and Rep. John Shimkus, R-Ill., who will be competing to lead the House Commerce Committee next Congress.

Trump has outlined little on telecom and tech policy, unlike Clinton, as previously reported in this publication. Industry observers have long struggled to imagine what exactly his FCC and administration policy in these areas would be. He has stressed cutting federal regulations, including a temporary moratorium on most new ones, and opposed AT&T’s proposed purchase of Time Warner (see our bulletin on Oct. 26). His campaign website offered views on cybersecurity and this fall's Internet Assigned Numbers Authority transition. Hill Republicans including Sen. Marco Rubio, R-Fla., and Shimkus told us this fall that Trump should look to Congress to fill in gaps.

Republican Senate Commerce members won most and perhaps will win all toss-up bids they faced this cycle. No candidate had conceded in the race between Sen. Kelly Ayotte, R-N.H., and Democratic Gov. Maggie Hassan by morning. Ayotte had an slim lead of three tenths of a percentage point, with 94 percent reporting. Rubio, an ally to the wireless industry with a focus on spectrum reallocation and wireless siting, beat Rep. Patrick Murphy, D-Fla., 52.1 to 44.2 percent. Sen. Ron Johnson, R-Wis., a critic of the FCC net neutrality rulemaking process and a prominent voice on cybersecurity as chairman of the Homeland Security Committee, won by about three points against former Sen. Russ Feingold. Sen. Roy Blunt, R-Mo., a frequent broadcaster ally, won a tough contest (see report in the Nov. 3 issue) against Jason Kander, the Missouri secretary of state who conceded in the early a.m. hours, by about three points.

Other Commerce Committee members up on Tuesday faced little struggle. They included Sens. Jerry Moran, R-Kan., Brian Schatz, D-Hawaii, and Richard Blumenthal, D-Conn., and all the members of the House Commerce’s Communications Subcommittee up for re-election. Senate Judiciary Committee Chairman Chuck Grassley, R-Iowa, and ranking member Patrick Leahy, D-Vt., both won their re-election bids, as expected, as did Sen. Ron Wyden, D-Ore., a progressive on telecom, and Sen. Rand Paul, R-Ky., active on surveillance and privacy issues. Sen. John Boozman, R-Ark., a key appropriator overseeing the FCC, won his bid by more than 20 points. Senate Homeland Security Permanent Subcommittee on Investigations Chairman Rob Portman, R-Ohio, once seen as vulnerable, beat his opponent Ted Strickland by nearly 20 points. Portman has backed the subcommittee investigation into pay-TV issues. Senate Intelligence Committee Chairman Richard Burr, R-N.C., bested Deborah Ross, a former American Civil Liberties Union attorney, 51 to 45 percent. Burr was a leader this Congress in the encryption debate and legislatively examined how companies must comply with government orders to decrypt data.

Next year will showcase some Hill newcomers with telecom expertise. The incoming Senate will include Chris Van Hollen, the Democratic Disclose Act House sponsor who easily won the open Maryland seat, and Kamala Harris, California’s tech-focused attorney general who won that state’s open seat. Former FCC aide Josh Gottheimer, who worked under then-Chairman Julius Genachowski, eked out a House victory, unseating Rep. Scott Garrett, R-N.J., in New Jersey’s 5th District 51 to 47 percent.

Among other races, Rep. Kevin Yoder, R-Kan., the sponsor of the Kelsey Smith Act and active on email privacy, held onto his 3rd District seat. Rep. Darrell Issa, R-Calif., had a slight lead over Democrat Doug Applegate in the 49th District of California. Trump had backed Issa. There was no clear winner yet declared in that Tuesday contest. Law professor Zephyr Teachout, who touted broadband policy goals and opposed AT&T/Time Warner, lost by close to 10 points in her bid to take out Rep. John Faso, R-N.Y. Challenger Ro Khanna, a Democrat, bested Rep. Mike Honda, D-Calif., for the 17th District seat by 20 points. California allows candidates of the same party to compete against one another in the general election if they receive the most votes in the primary.

Less than a week since AT&T announced its $108.7 billion purchase of Time Warner, Congress scheduled its first oversight hearing on the deal. The Senate Judiciary Antitrust Subcommittee will hold an AT&T/Time Warner oversight hearing at 2 p.m. Dec. 7, a Republican aide told us Wednesday. Subcommittee leaders announced the desire to hold a hearing before the weekend was over, seen as especially rare speed during a recess period, Communications Daily reported Monday (see here).

AT&T CEO Randall Stephenson and Time Warner CEO Jeff Bewkes have now agreed to testify, the aide said. Subcommittee Chairman Mike Lee, R-Utah, and ranking member Amy Klobuchar, D-Minn., originally said Sunday that they wanted to hold the hearing in November. Spokesmen for the companies had no immediate comment.

No similar House Judiciary Committee hearing has been announced. An aide has said a hearing is possible.

Sens. Elizabeth Warren, D-Mass. and Bernie Sanders, I-Vt., meanwhile offered further caution about the acquisition. Warren wrote a Facebook post and Sanders issued a statement. Free Press is rallying support for a petition aimed at Congress urging for a block of the deal. AT&T has defended the deal, which it says isn't consolidation.

Opposition to and criticism of AT&T's buying Time Warner have begun, including from some influential Democrats and Republicans, among them GOP presidential nominee Donald Trump on the campaign trail. That was even before any deal was announced. Confirmation came from the companies around 8 p.m. EDT Saturday, saying the transaction is worth $108.7 billion.

"The new company will deliver what customers want -- enhanced access to premium content on all their devices, new choices for mobile and streaming video services and a stronger competitive alternative to cable TV companies," the companies said. Cable lawyers had told Communications Daily (see here) Friday that such a deal would face DOJ and possibly FCC review. The experts said AT&T/TW would raise a number of regulatory concerns.

“In the telecommunications market, we need more competition, not more consolidation," said Sen. Ed Markey, D-Mass. "Less competition has historically resulted in fewer choices and higher prices for consumers, and this deal should be assessed with consumers, competition and choice in mind," Markey said, adding he plans "to carefully review" whether any AT&T/TW would be in the public interest. He said such a deal would reinforce the need for the FCC to adopt broadband privacy rules at Thursday's commissioner meeting, saying a combination "could increase AT&T's opportunity to collect and use personal and sensitive information about American consumers. With strong broadband privacy rules in place, ISPs like AT&T and others would be required to receive consumers consent before sharing their personal information with advertisers and other third-parties."

"As an example of the power structure I'm fighting, AT&T is buying Time Warner and thus CNN," Trump said in a speech Saturday, reported CNN. It's "a deal we will not approve in my administration because it's too much concentration of power in the hands of too few," he reportedly said. Trump also said if elected, his administration would look at breaking up Comcast/NBCUniversal. The campaign didn't comment.

"As the FCC has found in past mergers, combining valuable content with pay-TV distribution causes harm to consumers and competition in the pay-TV market," said American Cable Association CEO Matt Polka in a statement. He said AT&T/TW should get particular regulator scrutiny of vertical integration issues. AT&T and Time Warner didn't comment Saturday evening on deal concerns. DOJ didn't reply to a query and an FCC spokesman declined to comment.

Free Press Policy Director Matt Wood in a statement said "big mergers like this inevitably mean higher prices for real people to pay down the money borrowed to finance these deals and compensate top executives. Just as AT&T's recent purchase of DirecTV was quickly followed by price hikes, there's every reason to expect this proposed tie-up would cost internet users and TV viewers dearly, too." Free Press also applauded current net neutrality rules "even though companies like AT&T continue to test those rules in the market, threaten them in Congress and challenge them in the courts." It said minus antitrust and nondiscrimination rules, AT&T would "deny programming to other distributors and favor their own content -- slashing their own costs but without passing any of those savings along."

Not all opposed the deal before it was announced. "Any deal of that size deserves close scrutiny by the Department of Justice and the FCC and I am in favor of such scrutiny, but I think it's wrong to reflexively oppose any merger like this," said Free State Foundation President Randolph May. "I remember very well when AOL and Time Warner proposed to merge," he said of that deal, consummated more than a decade ago, when Time Warner then also owned Time Warner Cable, now part of Charter Communications. "Immediately, that merger was opposed by some of the very same groups or people that I am sure are now coming out against this merger; we all know how that merger turned out." AOL now is a part of Verizon. "It's likely that this merger will likely end up being pro-competitive," said May in a phone interview.

Analysts continue to be uncertain if DOJ and the FCC would OK AT&T/Time Warner. It's "incredibly difficult" to say if regulatory approval would occur, BTIG's Richard Greenfield wrote investors Saturday, noting it's unclear who would run the agencies post-election. Greenfield said DOJ and FCC concerns led to Comcast abandoning its plan to buy TWC, before Charter bought it. "In our view, regulators will fear that AT&T will use its distribution footprint to favor Time Warner content vs. third-parties. Not to mention, Time Warner just invested in Hulu, which is one of the lightning rods that regulators have focused on as an example of Comcast’s bad behavior with NBC," wrote Greenfield. "Looked at through the Comcast/NBC lens, it is easy to see how the government could block the transaction, with AT&T now the largest MVPD (more video subs than Comcast), in addition to being the second largest wireless broadband provider," he wrote of multichannel video programming distributors. "Regretting the approval of Comcast/NBC does not mean there is a clear legal basis for blocking that transaction. ... AT&T’s wired broadband market share using the 25 Mbps FCC standard is insignificant on a nationwide basis, and in wireless broadband it faces robust competition from three other providers across the entire country. ... In that light, we can see how an AT&T Time Warner transaction could easily be approved."

New Street Research analyst Jonathan Chaplin said a transaction likely will get regulators' nod -- "it will be tough for the DOJ to convince a judge that [Comcast/NBCUniversal] harms could be cured with conditions but [AT&T/TW] harms cannot" -- and that it very well could avoid FCC review, "which limits the remedies available to negotiators." Chaplin said AT&T/TW likely would preclude the telco ISP from getting any kind of regulatory approval to buy Dish Network anytime soon, taking pressure off Verizon to have to move quickly on any plans it might have for Dish.

FCC Chairman Tom Wheeler circulated a business data service draft order Thursday to take "overdue steps to reform a long-broken regulatory regime" for BDS, the commission said Friday. "The Order strikes a balance between targeted regulation for legacy TDM (DS1 and DS3) services, where evidence of market power is strongest, and lighter-touch regulation of packet-based services, where there has been new entry and competition may be emerging," said an agency fact sheet. Communications Daily had reported that such an order was going to circulate Thursday, which would allow it to be possibly added to the agenda for the Oct. 27 meeting.

The lower-speed TDM services would be covered by price-cap regulation, and subjected to a one-time rate cut of 11 percent phased in over three years, starting in July 2017 (3 percent in year one, 4 percent in year two and 4 percent in year three), the FCC said. Going forward, also starting in July 2017, price caps would be reduced by an "X-factor" of 3 percent, offset by inflation, to account for productivity gains. "Phase I" pricing-flexibility rules would be applied to all price-cap LECs, allowing for negotiated contracts that can set rates below tariffs filed at the commission. Consistent with an earlier tariff investigation order, new "all-or-nothing" BDS plans would be prohibited and "excessive" penalties for early termination or failure to meet volume commitments would be "reined in."

BDS services above DS3 level services (45 Mbps) appear to face emerging competition that is driving down prices, said the three-page summary. "Recognizing these trends, the Order applies a light-touch regulatory approach that promotes continued investment while ensuring just and reasonable prices and other terms." The FCC said elements of that higher-speed framework would include reaffirming that packet-based BDS is largely a telecom service, as is TDM-based service, meaning that providers offering those services, "with rare exceptions," would be common carriers subject to related requirements such as dealing with others on "reasonable and nondiscriminatory terms." There wouldn't be any "network unbundling or wholesale rate discounts," nor would there be "price caps, benchmarking or other forms of ex ante pricing regulation" of the higher-speed services, the agency said. There would be a "robust complaint process," however, with wholesale rates presumptively unreasonable if they exceed retail rates, among numerous other considerations.

A new Further NPRM would seek comment on how best to collect data, continuing market developments, and any further "administratable means" to deal with any concerns that emerge regarding packet-based BDS, the FCC said. The draft would also "level the playing field" for all packet-based and circuit-based BDS services with speeds above 45 Mbps by "granting uniform forbearance to certain portions of Title II" of the Communications Act, including dominant-carrier and tariffing obligations, it said.

FCC Chairman Tom Wheeler shifted gears on ISP privacy, refocusing proposed rules on protecting only “sensitive” information, he confirmed in a blog post Thursday. The change was expected, and along the lines of what we had reported this week. Under his proposal, circulated for an Oct. 27 commissioner vote, ISPs would have to obtain opt-in consent before using or sharing sensitive information. The agency also issued a fact sheet.

Information to be considered “sensitive” includes “geo-location information, children’s information, health information, financial information, social security numbers, web browsing history, app usage history, and the content of communications such as the text of emails,” Wheeler said. “All other individually identifiable information would be considered non-sensitive, and the use and sharing of that information would be subject to opt-out consent.”

Wheeler stressed that the FCC-revised approach “aligns with consumer expectations and is in harmony with other key privacy frameworks and principles -- including those outlined by the FTC and the Administration’s Consumer Privacy Bill of Rights. The proposed rules are designed to evolve with changing technologies, and would provide consumers with ways to easily adjust their privacy preferences over time.” The FTC had raised major concerns about Wheeler's initial proposal, which would have required opt-in consent for ISPs to use or share most of the data they collect from subscribers.

Early reaction from pro-privacy stakeholders was positive, including from Sen. Ed Markey, D-Mass., and from Public Knowledge. USTelecom said it couldn't comment right away, and NCTA didn't have an immediate comment.

Even as FCC commissioners began their monthly meeting sans the unlock-the-box order, the item remains on circulation and some parties tell us they're hopeful a version of an apps-based proposal ultimately will be adopted. After a flurry of lobbying by all affected parties as the sunshine period began last week, agency officials told us revisions to the order were in the works. All FCC Democratic members announced just before their meeting began at 10:30 a.m. Thursday they're working toward a resolution.

“It’s time for consumers to say goodbye to costly set-top boxes," said a statement from Chairman Tom Wheeler and Commissioners Mignon Clyburn and Jessica Rosenworcel. "It’s time for more ways to watch and more lower-cost options. That’s why we have been working to update our policies under Section 629 of the Communications Act in order to foster a competitive market for these devices. We have made tremendous progress -- and we share the goal of creating a more innovative and inexpensive market for these consumer devices. We are still working to resolve the remaining technical and legal issues and we are committed to unlocking the set-top box for consumers across this country.”

Though he said it's disappointing that the item wasn't voted on Thursday, Public Knowledge Senior Vice President Harold Feld said he's encouraged that the three Democratic commissioners issued a statement pledging to move forward with the item. A cable attorney who opposed the set-top item said the item's withdrawal likely means Wheeler's office was unable to satisfy the programmers and Rosenworcel in the lead-up to the meeting. Rosenworcel is "a very technically oriented commissioner " who won't vote an item that isn't ready, Feld said.

"The item remains on circulation and the sunshine period prohibition" remains "in effect until further notice," said a meeting agenda update.

NCTA is "pleased that the FCC has chosen to delay consideration of its set-top box item, and hope that additional time will lead to meaningful public review and comment on any newly-crafted proposal under consideration," it said. The American Cable Association didn't comment.

"This appears to be a short-term delay," said John Bergmayer, senior counsel at Public Knowledge, in a news release. "We will continue to push the FCC to act as soon as possible to end the set-top box ripoff."

A federal court reversed FCC preemption of state limits on municipal broadband efforts to extend their systems to surrounding communities. The FCC 2015 order "essentially serves to re-allocate decision-making power between the states and their municipalities," said the ruling (in Pacer) Wednesday by a panel of the 6th U.S. Circuit Court of Appeals (State of Tennessee; State of North Carolina v. FCC, Nos. 15-3291/3555). "This preemption by the FCC of the allocation of power between a state and its subdivisions requires at least a clear statement in the authorizing federal legislation. The FCC relies upon § 706 of the Telecommunications Act of 1996 for the authority to preempt in this case, but that statute falls far short of such a clear statement. The preemption order must accordingly be reversed," said the opinion by Judge John Rogers, who was joined by Judge Joseph Hood, with Judge Helene White concurring in part and dissenting in part.

The FCC had faced particularly tough questioning from Judge Rogers at oral argument (see 1603170031). The commission had no immediate comment.

Federal judges denied petitions for review of the FCC net neutrality order "in accordance with the opinion of the court," in a per curiam judgment (in Pacer) Tuesday (USTelecom v. FCC, No. 15-1063). The lengthy opinion (in Pacer) of the panel of the U.S. Court of Appeals for the D.C. Circuit was also released this morning. This opinion will be the subject of a forthcoming Communications Daily Bulletin this morning. The FCC order had reclassified broadband under Title II of the Communications Act. Officials at the FCC and USTelecom had no immediate comment.

A split panel of federal judges has upheld the FCC net neutrality order that reclassified broadband service under Title II of the Communications Act. In a 184-page document of the U.S. Court of Appeals for the D.C. Circuit, Judges David Tatel and Sri Srinivasan wrote the majority opinion finding FCC arguments reasonable and denying all petitions for review of its order, while judge Stephen Williams dissented in part and concurred in part (USTelecom v. FCC, No. 15-1063). FCC Chairman Tom Wheeler cheered the ruling, which Commissioner Ajit Pai said it disappointed him, and USTelecom had no immediate comment.

Tatel and Srinivasan cited the Supreme Court's 2005 ruling on Brand X, which found that it was consistent with the statute for the FCC to take into account the end user's perspective in classifying a service as an "information" or "telecommunications" service. In its 2015 order reclassifying broadband Internet access service as a Title II telecom service, "the Commission concluded that consumers perceive broadband service both as a standalone offering and as providing telecommunications," the two judges wrote in their 109-page opinion. "These conclusions about consumer perception find extensive support in the record and together justify the Commission’s decision to reclassify broadband as a telecommunications service."

"Petitioners assert numerous challenges to the Commission’s decision to reclassify broadband," Tatel and Srinivasan wrote. "Finding that none has merit, we uphold the classification. Significantly, although our colleague believes that the Commission acted arbitrarily and capriciously when it reclassified broadband, he agrees that the Commission has statutory authority to classify broadband as a telecommunications service."

Tatel and Srinivasan upheld FCC reclassification of mobile broadband as a commercial mobile service against separate arguments by CTIA and AT&T. "In their view, mobile broadband is, and must be treated as, a private mobile service, and therefore cannot be subject to common carrier regulation," the judges wrote. "We reject mobile petitioners’ arguments and find that the Commission’s reclassification of mobile broadband as a commercial mobile service is reasonable and supported by the record."

The two judges upheld the FCC assertion of Title II authority over interconnection. The commission overcame problems from a 2014 Verizon v. FCC ruling "by reclassifying broadband service -- and the interconnection arrangements necessary to provide it -- as a telecommunications service," they wrote. They also denied: petitioner challenges to particular net neutrality rules, including barring paid prioritization, and its general conduct rule; Alamo Broadband and Daniel Berninger's challenge to the rules on First Amendment free-speech grounds; and Full Service Network's challenge to the FCC's decision to forbear from applying many Title II provisions to broadband service.

Williams said he agreed with much of the majority opinion but felt obligated to dissent and argue the FCC order should be vacated. "The ultimate irony of the Commission’s unreasoned patchwork is that, refusing to inquire into competitive conditions, it shunts broadband service onto the legal track suited to natural monopolies," he wrote in his 69-page opinion. "Because that track provides little economic space for new firms seeking market entry or relatively small firms seeking expansion through innovations in business models or in technology, the Commission’s decision has a decent chance of bringing about the conditions under which some (but by no means all) of its actions could be grounded -- the prevalence of incurable monopoly."

The ruling is "a victory for consumers and innovators who deserve unfettered access to the entire web," Wheeler said in a written statement. "It ensures the internet remains a platform for unparalleled innovation, free expression and economic growth." Pai was "deeply disappointed" by the ruling, he said. "For many of the reasons set forth in Judge Williams’ compelling dissent, I continue to believe that these regulations are unlawful, and I hope that the parties challenging them will continue the legal fight."

AT&T suggested an appeal is coming. “We have always expected this issue to be decided by the Supreme Court, and we look forward to participating in that appeal,” said David McAtee, AT&T senior executive vice president and general counsel in a one-sentence blog post.

The FCC lost a media ownership court case in which broadcasters appealed an order limiting TV joint sales agreements in some circumstances and public interest groups appealed on a lack of further regulation and on concerns the commission didn't fully address diversity issues. The 3rd Circuit Court of Appeals also ordered mediation. It vacated and remanded to the commission the TV JSA agreement rule, in a brief order Wednesday.

Likewise remanded to the agency was "the diversity eligible entity matter," said the court. "The Commission and Citizen Petitioners shall engage in mediation, conducted by Chief Circuit Mediator Joseph Torregrossa, to set a timetable for reaching final agency action on the eligible entity definition. Within sixty days from the date of this judgment, the parties shall notify the Court whether they were able to reach a mutually agreeable resolution, and if so, what that resolution is. If, after sixty days, the parties are unable to reach an agreement, the panel will promulgate a schedule it deems appropriate."

The outcome comported with expectations, according to a Communications Daily report from oral argument in Philadelphia last month in the case at http://bit.ly/25h1lmA. The ruling is at http://1.usa.gov/20BfW9o.

Parties allied with or sympathetic to both sides, broadcasters and public interest groups, reacted to the ruling with criticism of the commission. Shortly after the decision was released, Commissioner Ajit Pai issued a statement at http://fcc.us/1YZkplN saying he is "pleased" the 3rd Circuit "struck down the FCC’s unlawful attempt to sharply restrict television stations’ ability to enter into joint sales agreements." Andrew Schwartzman, senior counselor at Georgetown University's Institute for Public Representation, which represents challenger Prometheus Radio Project, said he feels sorry for FCC Chairman Tom Wheeler. "The actions and inactions of three former Chairmen have undermined diversity of ownership," emailed Schwartzman about the ruling, in the case known as Prometheus III. "The failure to adhere to Congressional deadlines has now made things worse by temporarily eliminating the television JSA rule. The Commission should pay particular attention to the Court's admonition that it consider the effect of its actions on minority and female ownership."

“NAB could not be more pleased with the Third Circuit decision," emailed a spokesman. "At long last, this opinion directs the FCC to do its job and adopt broadcast ownership rules that reflect the modern world." The FCC said it had no immediate comment.

The FCC Friday announced a 126 megahertz initial spectrum clearing target for the TV incentive auction, a figure on the high end of possible targets. As a result, 100 megahertz, or 10 paired blocks, of 600 MHz spectrum will be offered in the forward auction on a “near-nationwide” basis, the FCC said Friday in a public notice. The FCC also said the reverse clock auction will start May 31.

The 126 megahertz target was the highest possible of the nine proposed by the FCC. Chairman Tom Wheeler had hinted in recent remarks to the NAB Show that a high target figure was likely, and Communications Daily reported earlier this week that the target's release was expected and that the number was expected to be high. Supply was determined by the amount of spectrum offered by broadcasters. Of the blocks to be made available, 99 percent will have no impairments, a senior FCC official said.

“That is indeed a ‘Spectrum Extravaganza’ -- 126 MHz far exceeds early estimates of likely broadcaster participation,” emailed Preston Padden, former executive director of the Expanding Opportunities For Broadcasters Coalition.

LAS VEGAS -- ATSC “likely” will recommend adoption of Dolby AC-4 as the ATSC 3.0 audio codec for the U.S. “and perhaps North America,” by year-end, ATSC President Mark Richer told us exclusively Monday at the opening of the ATSC 3.0 Consumer Experience exhibit at the NAB Show. Dolby Labs executives were at the exhibit to showcase AC-4's immersive audio qualities through an off-the-shelf soundbar mounted next to an LG Ultra HD TV. It was there that Mathias Bendull, Dolby vice president-broadcast consumer audio, told us ATSC would announce AC-4 as its recommended ATSC 3.0 audio codec for North America by the end of 2016.

“What we’ve said so far is that there’ll be two codecs in the standard,” AC-4 and the MPEG-H system promoted by Fraunhofer, Qualcomm and Technicolor, Richer said. It’s recommended “that only one be used in a given region, and it’s likely that it will say that for the United States, the recommendation is to use the Dolby system,” Richer said. That recommendation isn't contained in ATSC’s A/342 candidate standard document now out for balloting among ATSC members, Richer said. His disclosure potentially puts to rest questions about how ATSC's decision to kick the can down the road and letting the market decide might bring clarity to choosing an ATSC 3.0 audio codec, at least for North America.

MPEG-H consortium representatives didn’t comment on Richer’s disclosure Monday. But a consortium spokesman emailed us last week to say MPEG audio codecs “provide half the world's television audio delivery today,” even though “a number of worldwide standards allow for inclusion of more than one audio codec,” and the consortium expects “a similar level of deployment” of MPEG-H for ATSC 3.0.

The recommendation that AC-4 be adopted for ATSC 3.0 in North America will be contained in the A/300 “master document” that won’t go out for a ballot until later in 2016, Richer told us. “But it’s also true that Korean broadcasters have indicated they prefer MPEG-H,” he said. “So we’re going to see both codecs out there, I would expect. Part of the standard is flexibility, and that’s just one of the many areas where there’s flexibility.”

At ATSC, “we always identified the possibility of one or more audio codecs” being documented in the ATSC 3.0 suite of standards, Richer said. “Anything we do is because there’s a consensus of our members, and ultimate approval by two-thirds of the membership. So it’s what industry wants to do, it’s not what ATSC as an organization wants to do. So if the Dolby system, if that’s what’s desirable to the industry, and they want it in the United States and perhaps North America, then that will get specified that way. Same thing in Korea, they’ll specify what they want. We can’t say this is cast in concrete, because we’re not that far into the work yet.”

A/300, which will contain the AC-4 recommendation, will be “the mother of all standards” because it “points to all the other documents” in the ATSC 3.0 suite of standards, Richer said. “It’s always subject to change until we’re done. I’m giving you kind of a snapshot of where we are, and I can’t absolutely say that’s how it will turn out.” A/300, like all the other ATSC 3.0 standards documents, also will be put to a four-week ballot among the ATSC membership, Richer said. He hopes that ballot will be ready to go out by the end of 2016, he said. “It’s definitely toward the end of the work.”

Adopting AC-4 as the recommended North American audio codec for ATSC 3.0 ultimately will go “to a vote of our membership, and it takes two-thirds of the members voting to approve anything,” Richer said. “To go to candidate standard, it’s only at the technology group level, but once it goes to ballot for final standardization, that’s a vote of the entire membership. It’s basically the same process we’ve had for 33 years.” The likelihood that AC-4 will be adopted for North America is based on a “snapshot that this is what the current thinking of the groups that are working on it feel,” he said. “But that’s not been approved at any level, so I can’t say it’s an absolute decision.”

Richer also emphasized that the AC-4 and MPEG-H codecs “both work.” They "both do many of the same things.” They might differ in their “ecosystem ramifications,” he said. “There’s other issues about backward compatibility with the current audio system, and how signals are routed around networks and plants, so it’s pretty complicated. It isn’t just about the audio codec itself. So rather than choose one and make a lot of people unhappy, we can do both, we can define both, and different regions can use different audio systems.”

For those not familiar with ATSC 3.0, “it’s quite simply the platform for the future of terrestrial broadcasting," Richer said Monday at the ribbon-cutting for the opening of the ATSC 3.0 Consumer Experience exhibit on the upper-floor entrance to the Las Vegas Convention Center’s South Hall. ATSC 3.0 “will enable all kinds of services and new products,” and the exhibit, sponsored by ATSC, CTA and NAB, is designed to give visitors “a glimpse of some of those,” Richer said. “As you walk through here, I think you will see that ATSC 3.0 is an Internet-centric, powerful and flexible and extensible standard that will really be the basis of broadcasting moving forward.”

The White House now backs FCC Chairman Tom Wheeler in a goal to unlock the cable set-top box market, senior officials said Friday. NCTA CEO Michael Powell expressed disappointment with the message of the administration, which said the look at set-tops is part of a broader initiative looking at competition. Powell slammed "bad government." Supporters of the Wheeler-backed NPRM approved 3-2 by commissioners applauded the White House support. DOJ previously backed the NPRM (see Communications Daily Bulletin Feb. 3).

The set-top market shows symptoms that it’s “cordoned off from competition,” said Council of Economic Advisers Chairman Jason Furman and National Economic Council Director Jeff Zients in a joint blog post Friday. “That’s why today the President announced that his Administration is calling on the FCC to open up set-top cable boxes to competition. This will allow for companies to create new, innovative, higher-quality, lower-cost products. Instead of spending nearly $1,000 over four years to lease a set of behind-the-times boxes, American families will have options to own a device for much less money that will integrate everything they want -- including their cable or satellite content, as well as online streaming apps -- in one, easier-to-use gadget. But we’re not stopping there. In many ways, the set-top box is the mascot for a new initiative we’re launching today. That box is a stand-in for what happens when you don’t have the choice to go elsewhere -- for all the parts of our economy where competition could do more.”

President Barack Obama is issuing an executive order Friday “that calls on departments and agencies to make further progress through specific, pro-competition executive actions that empower and inform consumers, workers, and entrepreneurs,” wrote Furman and Zients. “In 60 days, agencies will report back on specific areas where we can make additional progress.”

“We are disappointed that White House political advisers are choosing to inject politics and inflammatory rhetoric into a regulatory proceeding by what is supposed to be an independent agency,” NCTA’s Powell said in a blog post. “To see the White House take political credit for the actions of the 'independent' agency and direct it to reach a specific conclusion even before the record has been assembled, shatters that faith and undermines the Commission’s credibility. A wide and significant number of industries, members of Congress, civil rights groups, content creators and artists have raised serious and genuine concerns about the FCC’s proposed set-top box mandate; including copyright harms, damage to minority programmers, consumer loss of privacy protections and unnecessary costs to re-engineer networks. Rather than fairly address these legitimate concerns and seek a proposal that balances these issues, we are left with a proceeding whose objective is now more political than substantive and flies in the face of tremendous marketplace progress.” NCTA is a member of the Future of TV Coalition, which has lobbied against the FCC’s set-top NPRM. “One would hope the FCC Commissioners would resist being annexed by the executive branch,” Powell added. “But that hope is sadly faint.”

Obama’s “support for set-top box competition virtually ensures that consumers will finally see a $15 billion per year rip-off exploded by new electronic devices streaming innovative video services that challenge cable monopolies,” Public Knowledge President Gene Kimmelman said.

“Like the rest of us, President Obama must be tired of having to switch remote controls every time he watches House of Cards or other streaming content,” Incompas CEO Chip Pickering said. “New boxes from new companies will create a competition ecosphere that benefits consumers, innovators and content creators. A bi-partisan Congress directed the FCC to bring competition to the set top box market two decades ago. Today’s action by the White House is in line with that law. Unlocking the set top box and ending monopoly policy is change consumers and free market conservatives can all believe in.”

The Council of Economic Advisers released a 17-page brief outlining administration goals. It underscored the importance of antitrust authorities in the federal government in addition to government agencies helping to promote competition, such as in the FCC’s design of the broadcast TV incentive auction. “Other recent examples include government actions on cell phone unlocking, net neutrality, standards-essential patents, and defense acquisition and procurement,” the brief said. But more must be done, it argued: "Recent indicators suggest that many industries may be becoming more concentrated, that new firm entry is declining, and that some firms are generating returns that are greatly in excess of historical standards."

Chairman Tom Wheeler proposed the FCC replace its special access regime with a new "technology-neutral framework," in a draft Further NPRM and tariff order he circulated Thursday for consideration at the agency's April 28 meeting. That was as first reported by Communications Daily, and a longer article in the regular issue being emailed to subscribers tonight will report on the coming order and FNPRM in more detail. Wheeler disclosed the items in a Friday blog post headlined "Out with the Old, In with the New."

Wheeler wrote that the proposed new framework would cover "business data services," which would be the FCC's new term for special access services. "All BDS services should be governed by the same overarching legal principles," he said, proposing the principles also include promoting competition, incentivizing technology transitions and recognizing marketplace "realities," including by eliminating tariffs. Thursday, the Incompas group of smaller telcos and tech companies and Verizon agreed on some ground rules for special access. The American Cable Association and NCTA last night criticized the agreement.

The tariff order would bar incumbent telco contractual practices that slow the shift from legacy TDM to newer IP-based services. FCC officials said the order would bar all-or-nothing provisions that force special access business customers to buy all their service from a provider's plan, thus limiting their flexibility to pick and choose. They said it would also restrict "shortfall" and "early termination" penalties for customers that don't meet their volume or term commitments. The penalties would be permitted but couldn't be "excessive" -- for instance by being more than the total amount the customer would have paid under the life of the contract.

The draft item wouldn't make a "market power" finding or propose a specific new test for what constitutes a competitive versus a noncompetitive market, and it asks more questions than it makes proposals, said an FCC official, speaking on condition of not being identified by name. But the official said the item would seek comment on looking at the market by product, geography, and customer needs -- for instance, "multilocation customers" needing service in different areas. It would also suggest the business market for lower-bandwidth services below 50 Mbps (legacy DS1s and DS3s) is less competitive than the market for higher-bandwidth fiber services, the official said.

Chairman Tom Wheeler is circulating an order for the FCC March 31 meeting opening a rulemaking on privacy rules for ISPs, agency officials said. The move was expected and first reported by Communications Daily. A fight is expected at what promises to be a contentious open meeting. FCC Republicans Ajit Pai and Mike O’Rielly have expressed concerns about whether the agency is well positioned to oversee privacy.

An FCC fact sheet, released Thursday, questions ISP complaints that they can see a decreasingly small amount of data, especially compared to edge providers like Facebook and Google. A recent report (b.gatech.edu/1T4mm0C), supported by ISPs, argued they have only limited access to consumer data, and the data they have isn't unique.

“Every day, consumers hand over very personal information simply by using the residential or mobile broadband services they’ve paid for,” the fact sheet said (fcc.us/1piAMy4). “Why? Because by carrying Internet traffic, ISPs can collect their customers’ personal and private information to create detailed profiles about their lives.”

An ISP handles all its customers’ network traffic, “which means it has an unobstructed view of all of their unencrypted online activity -- the websites they visit, the applications they use,” the FCC said. “If customers have a mobile device, their provider can track their physical and online activities throughout the day in real time.” Encryption doesn’t mean that data is less visible to ISPs, the FCC said. “Even when data is encrypted, broadband providers can still see the websites that a customer visits, how often they visit them, and the amount of time they spend on each website,” the fact sheet said. “Using this information, ISPs can piece together enormous amounts of information about their customers -- including private information such as a chronic medical condition or financial problems.”

ISPs also have a unique relationship with their customers, the fact sheet said. “A consumer’s relationship with her ISP is very different than the one she has with a website or app,” it said. “Consumers can move instantaneously to a different website, search engine or application. But once they sign up for broadband service, consumers can scarcely avoid the network for which they are paying a monthly fee.”

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The FCC circulated a draft order that would extend Lifeline USF support to broadband coverage and to streamline administration of the program that subsidizes low-income telecom service, as expected. The draft is expected to be considered at the agency's March 31 meeting, as Communications Daily first reported. The order would allow Lifeline support to be used for stand-alone broadband or bundled broadband/voice packages in addition to current voice service. The order would phase out the support for stand-alone mobile voice service and phase in broadband minimum standards over the next few years, said an FCC fact sheet.

The draft would keep monthly Lifeline support capped at $9.25 per household and set a budget of $2.25 billion (current funding is about $1.5 billion), indexed to inflation. The Wireline Bureau would notify the FCC when spending reaches 90 percent of that figure, with the commission to act within six months. The fact sheet did not suggest what action the FCC might take.

"Internet access has become a pre-requisite for full participation in our economy and our society, but nearly one in five Americans is still not benefiting from the opportunities made possible by the most powerful and pervasive platform in history," said FCC Chairman Tom Wheeler and Commissioner Mignon Clyburn in a blog post. "We can do better. We must do better. Indeed, Congress told us to do better. By modernizing the FCC’s Lifeline program, we will do better."

The draft would move verification of consumer eligibility from providers to a national verifier, which would be run by Universal Service Administrative Co., said senior FCC officials speaking to reporters Tuesday on condition the officials not be identified. It would also refine the "list of federal programs that may be used to validate Lifeline eligibility to those that support electronic validation, are most accountable, and best identify people needing support," including the Supplemental Nutrition Assistance Program, Supplemental Security Income, Medicaid, veteran's pensions, and tribal programs, while allowing consumers to still make their own showing of low-income eligibility, said the fact sheet.

Providers would be given the option of seeking nationwide entry into the program from the FCC as Lifeline broadband providers, the agency said. The new path would remain within the Communications Act's structure of designating eligible telecom carriers but would be more streamlined than the current process, said the senior officials. They hope it would encourage new entry, more competition and expanded consumer choice. Providers would also still have the option of seeking Lifeline ETC status from state regulators, said commission officials.

Swedish Post and Telecom Authority Director-General Göran Marby will be ICANN’s next permanent president-CEO, ICANN said Monday. CEO Fadi Chehadé is to leave ICANN in mid-March, with Marby set to take the helm in May. ICANN President-Global Domains Division Akram Atallah will be acting CEO until Marby can move from Sweden to Los Angeles, ICANN said. Friday night, Communications Daily reported that the nonprofit was nearing a pick, with one likely to come from Europe (see 1602050065).

There has been growing congressional and stakeholder scrutiny of Chehadé’s plan to co-chair a high-level advisory committee to the controversial Chinese government-led World Internet Conference after his planned departure from ICANN. Heightened scrutiny in the form of a letter last week from GOP presidential contender Sen. Ted Cruz, R-Texas, (see 1602040061) and two other senators led to growing speculation about the search for Chehadé’s replacement.

Marby’s current role as the head of Sweden’s Post and Telecom Authority, which regulates that country’s postal and telecom sectors, makes him a “bit of a dark-horse candidate” and “better situated to leading the ITU,” an industry lobbyist told us Monday. Marby was CEO at security software firm AppGate Network Security from 2002-2009 and was CEO at network services company Cygate and Unisource Business Networks. He was also previously Cisco’s country manager for Sweden. Although ICANN had reportedly been looking for its next CEO to have executive experience in the private sector, Marby’s lack of specific experience in the domain names industry makes his selection “unusual,” an industry executive told us.

A top antitrust official weighed in on the FCC's side on controversial draft proposed rules on untying set-top boxes from the multichannel video programming distributors that often provide the boxes to MVPD customers (see 1601270064). An emailed statement from Assistant Attorney General Bill Baer of the Justice Department’s Antitrust Division came on a day in which AT&T slammed the set-top rule changes backed by Google and others and being explored by the commission. The FCC in turn defended its approach. (See the next regular issue of Communications Daily for a related report.)

DOJ welcomes the FCC's "inquiry into whether new set-top box rules may better unlock the ‎power of consumer choice,” Baer said Wednesday. “The set-top box rules that are currently in place were designed for a marketplace of old technologies and traditional business models. The FCC is right to examine the issue and we look forward to participating in the effort to ensure that the benefits of competition and innovation reach American consumers.”

The European Commission and the U.S. announced an updated safe harbor agreement Tuesday, with a new trans-Atlantic data transfer mechanism that would protect the personal information of EU citizens and give them a way to legally challenge U.S. government agencies that mishandle such data. The EC announced the deal in a news release and the Commerce Secretary Penny Pritzker was scheduled to brief reporters about the new agreement that's now called the EU-US Privacy Shield. The deal was welcome news for the 4,400 U.S. companies that were formerly certified under the old safe harbor deal nullified in October by the European Union's highest court.

"For the first time ever, the United States has given the EU binding assurances that the access of public authorities for national security purposes will be subject to clear limitations, safeguards and oversight mechanisms," said European Justice Commissioner Vĕra Jourová in the release. Monday night, she told members of the Civil Liberties, Justice and Home Affairs (LIBE) Committee that a deal hadn't been reached. (see 1602010051) "Also for the first time, EU citizens will benefit from redress mechanisms in this area," she said. "In the context of the negotiations for this agreement, the US has assured that it does not conduct mass or indiscriminate surveillance of Europeans. We have established an annual joint review in order to closely monitor the implementation of these commitments."

U.S. tech groups welcomed the deal, in their own statements Tuesday. It "will provide strong privacy safeguards for consumers and legal certainty for the thousands of companies that depend on transatlantic data flows," said Computer & Communications Industry Association International Policy Director Christian Borggreen. BSA | The Software Alliance, DigitalEurope and the Information Technology Industry Council also welcomed the deal. "Cross-border data flows play a critical role in the modern economy, including the half-trillion dollar transatlantic trade relationship, which has grown since the Safe Harbor Framework was agreed upon in 2000," they said.

The FCC said it will move forward with an NPRM on a downloadable security replacement for CableCARD, on the same day a group of multichannel video programming distributors, consumer electronics companies and content providers and some of their associations announced the formation of a coalition opposing such a move. Chairman Tom Wheeler will circulate an NPRM to eighth-floor FCC offices that he said is intended for a vote Feb. 18. Communications Daily had first reported, in December, that such an NPRM was in the works and likely to come soon (see 1512150072).

The new proposal identifies what information should pass from MVPD services to competitive devices, proposes creating a standards body to ensure those information streams are passed through, and "will not interfere with business relationships between MVPDs and their content providers" or customers, the FCC said in a news release/fact sheet Tuesday.

The proposals seem largely based around the Consumer Video Choice Coalition-backed proposals that came out of the FCC Downloadable Security Technology Advisory Committee, as was expected. Many tech companies back such proposals, and coalition members, according to its website, include Google, Public Knowledge and TiVo.

Such proposals "force" MVPDs and programmers to "dismantle" their services for third parties to use, said the newly minted Future of TV Coalition. It includes AT&T, the American Cable Association, Dish Network, MPAA, NCTA, NTCA, and about 40 others. But Sen. Ed Markey, D-Mass., as the FCC was making the announcement, "hails" it, according to his office.

A group of some 40 public interest groups is sending a letter to FCC Chairman Tom Wheeler asking the commission to begin a privacy rulemaking. Industry observers said Tuesday that the letter is likely a prelude to an expected FCC NPRM on privacy (see 1601110065).

“The undersigned … privacy and consumer organizations urge you to commence a rulemaking as soon as possible to protect the privacy of broadband consumers,” the letter says. It cites recent comments by FTC Commissioner Julie Brill. The FCC’s reclassification of broadband as a Communications Act Title II common carrier service “adds [the FCC] as ‘a brawnier cop on the beat’ on privacy issues,” the groups said, quoting Brill.

The FCC can play a role in overseeing privacy rules for ISPs, the groups said, noting the FCC and FTC recently signed a memorandum of understanding on consumer protection outlining continuing interagency cooperation on privacy. “Providers of broadband Internet access service, including fixed and mobile telephone, cable, and satellite television providers, have a unique role in the online ecosystem,” the groups said. “Their position as Internet gatekeepers gives them a comprehensive view of consumer behavior and until now privacy protections for consumers using those services have been unclear. Nor is there any way for consumers to avoid data collection by the entities that provide Internet access service.”

The rules the FCC approves should require ISPs to get affirmative consent from consumers for the collection and sharing of their data for any purposes other than providing broadband service, the groups said. The rules should also require the issuance of notices when data is breached “and hold broadband providers accountable for any failure to take suitable precautions to protect personal data collected from users,” the letter said. “In addition, the rules should require broadband providers to clearly disclose their data collection practices to subscribers, and allow subscribers to ascertain to whom their data is disclosed.”

The American Civil Liberties Union, the Benton Foundation, the Center for Democracy & Technology, the Center for Digital Democracy, Consumer Federation of America, Electronic Frontier Foundation, Free Press, the National Association of Consumer Advocates, the Open Technology Institute at New America, Public Citizen, Public Knowledge, U.S. PIRG, the United Church of Christ and the World Privacy Forum were among the groups that signed the letter.

Berin Szoka, president of TechFreedom, said the FCC probably asked for the letter as the commission moves forward on privacy rules. It’s an “open secret” Wheeler’s office asked cities to file petitions seeking redress before the agency acted on municipal broadband last February (see 1502260030), Szoka told us. “They seem to be using the playbook here to stir up outside pressure to ask the agency to so something the chairman wants to do anyway,” he said. “It’s a political game.”

A privacy NPRM seems inevitable in the next few months, said Doug Brake, a policy analyst with the Information Technology and Innovation Foundation. “It’s frustrating to hear the continued reliance on the ‘cop on the beat’ metaphor,” Brake said. “Like Wheeler’s favorite defense of the open Internet order, likening the broad powers the FCC conferred on itself to simply putting a ‘referee on the field,’ these metaphors confuse up-front, precautionary-style rules with an unobjectionable enforcement process. Of course there should be a cop on the beat. The question is what kind of rules that cop should be enforcing.”

Letters like the one from the public interest groups rarely happen by accident, said Roger Entner, analyst at Recon Analytics. “It conveniently gives the FCC further impetus to finalize the privacy rules, when instead we need a broader, more rigorous debate about privacy,” Entner told us. “These type of narrow rules do not protect consumers and are full of unintended consequences. We don't need brawnier cops, we need brainier cops.”

Jeff Chester, executive director of the Center for Digital Democracy, said the letter was the public interest group's idea and wasn't prompted by the FCC.

Fred Campbell, director of the Center for Boundless Innovation in Technology, said the privacy rules are good for edge providers but not for consumers. “This was always part of edge advocates’ Title II end-game,” Campbell said. “Though they once claimed reclassification would provide a more solid legal foundation for net neutrality, that notion was dispelled by the parade of entirely new legal issues debated during oral argument before the [U.S. Court of Appeals for the] D.C. Circuit. Now that the reclassification smoke has cleared, it seems obvious that a prime motive for Title II was to ensure [Communications Act] Section 222 applies to ISPs so it could be used to prevent them from competing against the edge monopolies that control Internet advertising, search, and mobile apps.”

Network architect Richard Bennett said that "the privacy battle pits Internet edge services such as Google and Facebook, which are totally dependent on advertising revenue, against firms with business models that combine subscription fees with advertising, such as the carriers and video streaming services. The Wheeler FCC is on the side of the advertising-based services, as we saw in the open Internet order. So Wheeler’s goal will be to limit the ability of carriers to supplement revenue with advertising and to maintain the status quo for the edge companies.”

There’s little doubt Wheeler won't “let any grass grow under the request for a rulemaking,” said Randolph May, president of the Free State Foundation. “Even without it, it looks like he’s prepared to use the Title II classification of Internet providers to move ahead with new privacy rules. That’s not what I prefer, but that’s the way he’s going.”