Year One of the Trump FCC

Robbie McBeath
McBeath

You’re reading the Benton Foundation’s Weekly Round-up, a recap of the biggest (or most overlooked) telecommunications stories of the week. The round-up is delivered via e-mail each Friday.

Round-Up for the Week of January 8-12, 2018

January 20 marks the one-year anniversary of Donald Trump’s inauguration. With little indication of what his communications policy plans were before the election, now seems a good time to reflect on what his Administration’s priorities have been over the past 12 months. Here’s a look at what Trump's Federal Communications Commission decided to tackle first in 2017.

Appointees

A New Deregulatory FCC Chairman

Ajit Pai was designated Chairman of the FCC on January 23, 2017. Just a couple of months before the 2016 election, Pai unveiled his “Digital Empowerment Agenda” (see Setting the (Post-Election) Broadband Agenda). Pai’s Agenda had four main components:

  1. Gigabit Opportunity Zones: Provide financial incentives for Internet service providers to deploy gigabit broadband services in low-income neighborhoods. Incentivize local governments to make it easy for ISPs to deploy these networks. And offer tax incentives for startups of all kinds in order to take advantage of these networks and create jobs in these areas:

    • Zones could be of any size—from a single neighborhood block up to an entire town or county—so long as the average household income for residents of the zone was at or below 75% of the national median.

    • To qualify as a Gigabit Opportunity Zone, state and local governments must adopt deployment-friendly policies. Once they do, they would submit an application to the U.S. Department of Commerce for review. The Department in turn would maintain a publicly accessible list of all Gigabit Opportunity Zones in the country, along with a copy of their qualifying broadband deployment processes.

    • The federal government would provide meaningful tax incentives for ISPs to build out gigabit services in these zones. Specifically, ISPs would be able to immediately expense all capital spending associated with bringing gigabit services to residents and businesses in Gigabit Opportunity Zones. Additionally, ISPs could carryover any losses for up to seven years, giving new ISP competitors with less revenues a strong incentive to enter the market.

    • The federal government would offer tax credits for qualified startups in Gigabit Opportunity Zones. In particular, the government would establish a tax credit to offset the employer-side payroll taxes for any startup employee who works in a Gigabit Opportunity Zone.

  2. Mobile Broadband for Rural America: A three-step plan to improve high-speed, mobile broadband throughout rural America includes:

    •  Increase the buildout obligations that apply to wireless providers' spectrum licenses to provide service to 95% of the population and extend the license term to 15 years.

    • Reforming the Mobility Fund

    • Setting aside 10% of spectrum auction revenues for the deployment of mobile broadband in rural America

  3. Remove Regulatory Barriers to Broadband Deployment: Five steps to make it easier for ISPs to build, maintain, and upgrade their networks:

    • The FCC aggressively uses its statutory authority to ensure that local governments don’t stand in the way of broadband deployment.

    • The FCC reforms its rules governing pole attachments.

    • The FCC develops a model code for cities and towns that want to encourage broadband deployment and competitive entry.

    • Speed the deployment of broadband on federal lands by establishing a firm deadline so that no matter how many federal agencies need to review an application, an applicant will receive a final answer within one year.

    • Make “dig once” a central tenet of our nation’s transportation policy.

  4. Promote Entrepreneurship and Innovation: Adopt policies that promote Internet-based entrepreneurship. 

Chairman Pai delivered his first major policy speech as Chairman on March 15th (see What More Do We Know About Ajit Pai’s Agenda?). Pai’s speech matched his digital empowerment agenda, again calling for the creation Gigabit Opportunity Zones. Concerning infrastructure investment, he said, “Any direct funding for broadband infrastructure appropriated by Congress as part of a larger infrastructure package should be administered through the FCC’s Universal Service Fund and targeted to areas that lack high-speed Internet access.” Pai’s first speech as Chairman also provided him a platform to reassert his deregulatory philosophy:

The public interest is best served when the private sector has the incentives and freedom to invest and create. That’s why we must eliminate unnecessary barriers to investment that could stifle new discoveries and services. In particular, the government should aim to minimize regulatory uncertainty, which can deter long-term investment decisions.

Chairman Pai has stayed true to his deregulatory approach. In September, in the midst of the net neutrality debate, Pai was re-nominated to serve a new, five-year term as chair. Despite 41 senators opposing Chairman Pai’s renomination, a record for an FCC nominee, the Senate confirmed Pai’s new term.

Two FCC Commissioners

After many, many months of drama and nominations by two Presidents, FCC Commissioner Jessica Rosenworcel returned to the FCC in August 2017 (see Rosenworcel Renomination, Take 3). Prior to her first stint as a commissioner from May 11, 2012 to January 3, 2017,  Rosenworcel served as Senior Communications Counsel for the United States Senate Committee on Commerce, Science, and Transportation, under the leadership of Senator John D. Rockefeller IV. She previously served in the same role on the Committee under the leadership of Senator Daniel K. Inouye. In this position, she was responsible for legislation, hearings, and policy development involving a wide range of communications issues, including spectrum auctions, public safety, broadband deployment and adoption, universal service, video programming, satellite television, local radio, and digital television transition. Before joining the staff of the Committee, she served as Legal Advisor to former FCC Commissioner Michael Copps. She also served at the agency as Legal Counsel to the Chief of the FCC's Wireline Competition Bureau and as an Attorney-Advisor in the FCC's Wireline Competition Bureau.

In June, President Trump nominated Brendan Carr, then-FCC General Counsel appointed by FCC Chairman Pai, the be an FCC commissioner. Actually, Carr received two nominations simultaneously: first to complete the term of former-FCC Chairman Tom Wheeler which expires June 30, 2018 AND a second full term beginning the next day. Although the Senate confirmed Carr for the initial term, his nomination for a full term awaits Senate action.

Pai has been described Carr as a “lawyer’s lawyer.” Carr was also an advisor to then-Commissioner Pai between 2014 and 2017 and a telecom specialist who represented many of the companies he now regulates. Vox wrote at the time that the Carr nomination gives Pai “a reliable political ally as he continues his push to deregulate the telecom industry.”  (see FCC: Brendan Carr, You Complete Me and Senate Confirms Two FCC Nominees, Chairman Pai's Confirmation Waits)

Year One Telecom Policy

An FCC press release highlighted Chairman Pai’s accomplishments in his first 100 days:

Closing the Digital Divide

  • Adopted new Mobility Fund Phase II rules providing up to $4.53 billion in universal service support over ten years to bring 4G LTE to millions of unserved Americans.
  • Set key rules for a Connect America Fund competitive “reverse auction” that will provide nearly $2 billion for rural broadband deployment over the next decade.
  • Partnered with the State of New York to deliver up to $170 million for broadband deployment in unserved rural areas.
  • Created the Broadband Deployment Advisory Committee—a panel of 29 experts to make recommendations on how to promote the deployment of better, faster, and cheaper broadband.
  • Launched a proceeding to lower the cost and speed the deployment of wired broadband infrastructure and to facilitate the transition to next-generation networks.
  • Launched a proceeding to boost wireless broadband by easing regulatory burdens on installing wireless infrastructure.
  • Eliminated an overbuild requirement in order to allow Charter to build out to one million more locations currently without high-speed Internet access.

Modernizing Rules and Eliminating Unnecessary Regulatory Burdens

  • Modernized regulatory framework for business data services in order to promote facilities-based competition and new investment.
  • Adopted rules streamlining extraneous and outdated accounting requirements.
  • Modernized our interpretation of our equal employment opportunity rules to account for the way that people actually look for jobs today.
  • Relaxed third-party fundraising restrictions to permit many noncommercial television and radio stations to air limited fundraisers for the benefit of other non-profit organizations.
  • Eased reporting burden for volunteer board members of noncommercial broadcast stations.
  • Eliminated public correspondence file requirement for broadcasters.
  • Eliminated requirement that cable operators maintain and allow public inspection of the location of a cable system’s principal headend.
  • Gave AM broadcasters greater flexibility in locating their FM fill-in translators.
  • Proposed to eliminate the annual international Traffic and Revenue Reports, which the FCC hasn’t used for years.
  • Adopted new rules enabling 4G LTE broadband services in the 800 MHz Cellular Band.
  • Provided regulatory relief to small Internet service providers by exempting them from costly and overly burdensome reporting requirements imposed in the 2015 Open Internet Order.

Promoting Entrepreneurship and Innovation 

  • Adopted proposal to allow broadcasters to voluntarily use the Next-Generation Television standard, also known as ATSC 3.0.
  • Authorized the first LTE-U (LTE for unlicensed) devices in the 5 GHz band.
  • Instituted process to rule on applications for new technologies and services within one year, consistent with Section 7 of the Communications Act.
  • Launched new experimental licensing website for program licenses for research centers and universities.
  • Ended the wide-ranging investigation into wireless companies’ popular, consumer-friendly freedata programs.

Protecting Consumers and Promoting Public Safety

  • Advanced proposal to help consumers avoid unwanted robocalls, to prevent spoofing scams, and to confront fraudsters calling from overseas.
  • Adopted new rules to make it easier to combat contraband cellphones in prisons and sought public input on new technological solutions to address the problem.
  • Swiftly issued a waiver allowing threatened Jewish Community Centers to work with carriers and law enforcement to identify callers.
  • Adopted new rules to improve the quality and efficiency of video relay services used by individuals who are deaf, hard-of-hearing, and speech disabled, including a “skills-based routing” trial.
  • Commenced investigation into March 8, 2017 AT&T 911 Outage and issued a preliminary report.
  • Proposed a fine of over $400,000 on a New York City resident for apparently operating a radio transmitter on frequencies that the Commission has licensed to the New York City Police Department.
  • Levied a $1 million fine against a Florida-based long distance carrier for impersonating representatives of customers’ existing long-distance providers and illegally switching the customers’ long-distance carriers.

Past the bullet points, here are some of the more controversial issues from Chairman Pai's tenure:

Net Neutrality

By far, the biggest telecommunications policy story from the past year has been net neutrality. On December 14, in a contentious 3-2 vote, the FCC's Republican majority:

  • Reclassified broadband Internet access service as an “information service” under Title I of the Communications Act
  • Reclassified mobile broadband Internet access service as a private mobile service
  • Abdicated broadband consumer protection authority to the Federal Trade Commission
  • Eliminated the FCC's “bright line” rules that banned blocking, throttling, paid prioritization, and affiliated prioritization of lawful content on the internet
  • Eliminated the Internet Conduct Standard
  • Found that transparency, combined with market forces as well as antitrust and consumer protection laws, will protect broadband consumers

The process of repealing the 2015 Open Internet decision has been a controversial one, as millions of comments were submitted through a commenting system that itself was found to be marred by controversy. Our summaries from just the last month:

We specifically charted the handling of net neutrality under the Trump administration in We All Agree on Net Neutrality, Except When We Don’t.

Broadband Deployment

Ajit Pai has stated that his mission as FCC Chairman is to close the digital divide. 

In April 2017, Chairman Pai announced his Broadband Deployment Advisory Committee—a panel of over two dozen experts asked to make recommendations on how to accelerate the deployment of broadband by reducing and/or removing regulatory barriers to infrastructure investment. Issues under consideration are local franchising, zoning, permitting, rights-of-ways regulations, pole attachment, and unreasonable regulatory barriers to broadband deployment. BDAC will hold two days of meetings at FCC headquarters on Jan. 23 and 24, 2018 to consider recommendations from its working groups. The panel will hear reports on creating model codes for municipalities and states, removing state and local regulatory barriers, streamlining federal siting, and fostering competitive access to broadband infrastructure. 

In August, Chairman Pai launched the FCC’s annual inquiry into whether broadband is being deployed to all Americans in a “reasonable and timely fashion.” (See: Got a Smartphone? Then You've Got Broadband!) Public Knowledge’s Jon Brodkin said at the time, “[W]ith Republican Ajit Pai now in charge, the FCC seems poised to [declare] that mobile broadband with speeds of 10Mbps downstream and 1Mbps upstream is all one needs. In doing so, the FCC could conclude that broadband is already being deployed to all Americans in a reasonable and timely fashion, and thus the commission could take fewer steps to promote deployment and competition.”  

Chairman Pai and the Sinclair Broadcast Group

In November 2017, Members of Congress asked the FCC's Inspector General to investigate Chairman Pai over the FCC’s moves to relax media ownership rules and whether they are timed to benefit Sinclair Broadcast Group’s proposed purchase of Tribune Media. The lawmakers cited a number of rules changes, including an FCC vote in April to reinstate the so-called UHF discount. That allows station groups to “discount” the reach of their UHF holdings, providing a way for some companies to comply with national ownership caps. “All of these actions, when taken in context with reported meetings between the Trump Administration, Sinclair, and Chairman Pai’s office, have raised serious concerns about whether Chairman Pai’s actions comply with the FCC’s mandate to be independent,” the request reads. The lawmakers want the Inspector General to investigate whether Pai’s moves show a “pattern and practice of preferential treatment for Sinclair,” and whether there was “inappropriate coordination” between Pai’s office, the Trump campaign, and Sinclair.

In May 2017 Sinclair, the largest owner of local TV stations in the U.S., agreed to buy Tribune Media for $3.9 billion (see Sinclair’s Tribune Purchase, Path Paved By Trump). I wrote then that,  “[i]t seems as though the Trump Administration, by paving the way for increased media ownership consolidation, is granting this conservative-leaning station group owner greater influence over our civic discourse.” A brief timeline:

  • November 2016: Just days after the November 8 election, then-FCC Commissioner Pai speaks to Sinclair’s managers about his views on the media marketplace and broadcasters’ role.

  • April 2017: Chairman Pai’s FCC reinstates UHF discount, enabling Sinclair to fall within the media ownership cap.

  • November 2017: Pai’s FCC votes to relax ownership rules that will allow media companies to operate multiple TV station in a market -- a big help to Sinclair.

Lifeline

In one of Pai’s first acts as Chairman, he told nine companies that they will not be able to participate in the Lifeline program, the FCC’s telecommunication subsidy program for individuals with low-income. The reaction to this move and the surrounding controversy caused Pai to “set the record straight” in a Medium post, where he adopted the now-familiar Trump Administration tactic of blaming the media when his actions were met with criticism (see The FCC Is Sucking The Life Out Of Lifeline). Former FCC staffer Gigi Sohn responded to Pai's defense saying, "the new FCC majority fundamentally dislikes the Lifeline Program and will seek to weaken it by any means possible."

In November, the FCC's Republican majority helped prove Sohn's point, making some immediate changes to how the Lifeline program in Tribal Areas and launching a proceeding many see as a way to weaken the overall program by starving it of service providers, customers, and subsidies (see What's the FCC Doing to the Lifeline Program?).

Conclusion

Chairman Pai has been fast at work implementing his deregulatory agenda, favoring the private sector, allowing ownership consolidation, and, ultimately, abdicating the FCC’s public-interest mission.

It has certainly been an interesting first year. Be sure to follow along daily throughout year two by subscribing to Benton’s Headlines.

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By Robbie McBeath.