Pai Gets Off to Fast Start Focusing on Digital Divide

FCC Chairman Ajit Pai has gotten off to an active start in his first two weeks in the job. Several former FCC officials said early on, in contrast to former Chairman Tom Wheeler, Pai could have a tough time figuring out what to do once designated to lead the regulator, especially given the Republican emphasis on less rather than more regulation and the strong possibility Congress, not the FCC, will address ISP privacy and net neutrality rules. But Pai is already moving forward with a busy agenda, teeing up six items for the Feb. 23 commissioners meeting. Much of his early emphasis has been on closing the digital divide. But controversy arose Friday (see 1702030070).

One of the biggest items on the February agenda is a new mobility fund. Wheeler proposed a fund last year, but had to drop it when Republicans won the White House in November. The item wasn't included as part of a new transparency “pilot” to make texts public before they're voted on. The first phase of the mobility fund was teed up as part of the big October 2011 USF reform order, approved 4-0. The FCC didn’t comment.

In a blog post Thursday, Pai characterized the order as aimed at spending money more efficiently. “Right now, the federal government spends about $25 million of taxpayer money each month to subsidize wireless carriers in areas where private capital has been spent building out networks,” he wrote. “This is perhaps a textbook definition of waste: public funds being spent to do what the private sector has already done.” Instead, the FCC will direct money to pay for “4G LTE service to rural Americans who don’t have it today,” he said: The fund will include “a robust challenge process to identify the areas most in need of service.”

Pai could face some resistance from fellow Republican Mike O’Rielly who already put out a blog post raising concerns about government spending on broadband (see 1702010072), industry officials noted. But Commissioner Mignon Clyburn has been a proponent of a new mobility fund (see 1609090016) and is likely to support many of the Pai proposals to increase broadband deployment, industry officials said. The officials expect Clyburn to oppose Pai on some items, but to pick her battles carefully. Already Friday, she slammed the FCC for how it handled undoing staff decisions from Wheeler's waning days.

The mobility fund order appears to be “extremely similar” to the Wheeler proposal, which the former chairman couldn’t get the votes to approve in November, said Gigi Sohn, a former top Wheeler aide, now a fellow at the Open Society Foundations. “I’m happy they’re moving forward on it,” Sohn told us. “If Ajit Pai wants to focus on closing the digital divide, from a deployment and adoption perspective, that’s fantastic. He’ll get an awful lot of support from across the political spectrum if that’s what he focuses on.”

Controversy; Adoption

Controversy erupted Friday along partisan lines. In an early move, many bureaus under Pai yanked items that were issued by staff under Wheeler. That drew concern from Clyburn and other Democrats.

Meanwhile, Sohn said broadband adoption is as important as deployment and deployment itself isn’t “an easy fix.” Verizon decided not to take Connect America Fund money, she noted. “I had a major ISP say to me the only reason they took CAF money was because they feared political liability from rural state senators if they didn’t.” Big companies in particular often don’t want government money, she said. One option in rural areas is community broadband, but that is prohibited in almost half the states, she said. “The barriers are not just local regulations that slow down antenna deployment,” she said. “There are also state prohibitions or limitations on states even partnering with private entities to bring broadband to their communities.”

Free Press already has gone on record raising concerns about Pai’s proposals on the digital divide. “No matter how laudable the new chairman’s sentiment may be, his proposals to close that divide could be ineffective -- and even harmful,” Free Press said in a recent letter to the FCC. “The Commission must not subsidize build-out that is already occurring in the market, and yet not even address the primary structural barrier keeping tens of millions of people offline: affordability of the services already available to them.” "I am not sure why anyone expected a slow start,” Matt Wood, Free Press policy director, told us Friday. “Pai promised to take a weed whacker to Americans' communications rights.”

Right Moves

Industry observers said Pai is making the right moves.

“Pai is continuing to be a champion for closing the digital divide between rural and metropolitan America,” said Roger Entner, analyst at Recon Analytics. “By focusing on reducing waste and spending money more prudently, the chairman has a bipartisan agenda that all commissioners can support.”

The new FCC chief is right to focus on reforming parts of the USF, including support for LTE, said Larry Downes, project director of the Georgetown Center for Business and Public Policy. Connectivity remains an issue in much of the U.S., though private investments “have shrunk the problem impressively,” Downes said. “But at this point, those not online likely wouldn’t sign up at any price. Surveys from both Pew and the NTIA make clear the most significant obstacle is that they don’t see any relevance of the internet and don’t know how to use even a mobile device. They’re wrong, I think, about the relevance, and it will take public-private partnerships … to help them see why.”

Wireless is the answer in many cases to close the digital gap, Downes said. USF programs “need to remove their longstanding prejudice against mobile alternatives, which have improved tremendously in the last few years and are now fast and reliable enough to offer high-speed broadband,” he said. “Fixed wireless, Wi-Fi, satellite, and cellular options need to be prioritized in these areas, regardless of who is paying and who is doing the building.”

“Pai has hit the ground running,” said Doug Brake, telecom policy analyst at the Information Technology and Innovation Foundation. “After being in the minority for so long, he seems eager to show off what he believes the commission should be up to and what it should be doing. He is already tackling items on his professed focus -- clearing away underbrush and expanding broadband in rural areas. I’m looking forward to seeing the follow-through.”

“The Left began its freak out the moment that Donald Trump won the election, and it kicked into high gear when Pai got the nod to be chairman,” emailed a TechFreedom spokesman. “But for all the apocalyptic headlines sounding the death knell for net neutrality, consumer privacy, and universal service, Pai has already defied his critics by focusing on bipartisan areas of agreement while letting Congress, at least for now, work on bipartisan compromises for the most politicized issues. So far, Pai, the right-wing monster that he is, has begun the processes of making the FCC more transparent, allowing broadcasters to compete in 4K and Ultra HD video markets, and finding common ground on subsidies.”

Pai's "priority appears to be closing market gaps," said Richard Bennett, free-market blogger and network architect. "In unserved rural areas, network subsidies can jump-start market activity for the first time and set networks on the path to sustainability. For population groups that lack the means to pay subscription fees, subsidies can bridge the affordability gap. Previous commissions have supported over-building flashier networks on top of perfectly functional ones the textbook example of government waste. Pai's emphasis on closing the digital divide will bring more people online in more places."

The chairman is off to a strong start, Free State Foundation President Randolph May said in a Friday blog post. But May said partisan divisions at the agency will continue. “It would be a mistake, and naïve, to assume, as some are suggesting, that there won’t any longer be partisan splits on votes on major items under a Pai Commission,” May wrote. “I expect there will be -- and there is nothing inherently wrong with this to the extent that commissioners’ votes are grounded in differing philosophical principles or perspectives. After all, there are real differences in philosophical perspective between the parties with which the commissioners identify regarding the proper role of government regulation.”