Net Neutrality NPRM Expected to Dominate FCC's May 18 Meeting

Net neutrality is expected to be the major focus at the FCC’s May meeting, industry officials said. FCC Chairman Ajit Pai has had a busy agenda so far, but several former FCC officials said Tuesday they're not hearing of much else teed up for that meeting. Pai is to speak at the Newseum Wednesday on the future of Internet regulation, where he's likely to sketch out his plans for a net neutrality NPRM (see 1704240049). Pai is to circulate draft items by Thursday for the May 18 meeting. One other item on tap for the meeting is a proposed “comprehensive review” of FCC media regulations (see 1704250065).

In the background remains the possibility that FCC Commissioner Mignon Clyburn could leave after her term expires in June, which would complicate Pai’s ability to move forward on an active agenda. But many downplay those concerns, saying it still seems farfetched to them that Clyburn would leave the agency without a quorum.

No one on the left or right is looking forward to another long debate on net neutrality, said former FCC officials. Pai is “dotting every i, crossing every t,” getting ready to release the net neutrality rulemaking notice, said an aide to a former FCC chairman. Pai won’t “do anything crazy. … He doesn’t have to get it done by the end of the year if he doesn’t want to.” Net neutrality “will suck all the air out of the room,” the former official said. A second aide to a former FCC chairman noted Pai used to work for the FCC Office of General Counsel and Chief of Staff Matthew Berry is a former general counsel. “They’re not going to do anything that leads to one of their signature items being overturned in court, so I’m sure they’re going to move with care,” the former official said.

Adonis Hoffman, chairman of the for-profit Business in the Public Interest, said he expects Pai to pursue a busy agenda in general beyond the May meeting. "Chairman Pai has been focused and relentless in moving his agenda at a relatively blistering pace,” said Hoffman, a former aide to Clyburn. “Given the momentum, there are no signs that he is going to let up. As he moves to undo the works of the past administration, his dissents provide a forecast for future action, including media ownership, net neutrality the [Telephone Consumer Protection Act], and a host of bureau level odds-and-ends."

“The biggest question facing Pai is whether to swing the pendulum hard right by abdicating broadband jurisdiction to the FTC entirely, or to take a more moderate approach by repealing the Title II classification and putting in place some baseline rules,” said Doug Brake, telecom policy analyst at the Information Technology and Innovation Foundation. “If the goal is seeing long-term flourishing of the ecosystem, then stable, permanent, light-touch but effective oversight should be the aim. But how to realistically achieve the closest approximation, and to what extent the Hill must be involved, is unclear.”

The courts also could overturn the 2015 net neutrality rules, Brake said. “Assuming Pai doesn’t want to wait and see the rehearing decision or allow a cert petition to play out, it makes sense to move sooner rather than later,” he said. “I think Clyburn is sincere in her commitment to continue advocating for her views as a commissioner. But if not waiting for the roulette wheel of the courts, plenty of other reasons contribute to moving quickly making the most sense.”

Many industry observers, including Democrats, have said in recent weeks a Clyburn departure seems possible, and it could hamstring the agency for months until additional commissioners are approved (see 1704140061). Clyburn isn’t saying (see 1704200050).

“I certainly don’t know and can’t predict Commissioner Clyburn’s plans,” said Randolph May, president of the Free State Foundation. “I just hope that if she does depart, she doesn’t do it in a way designed to exacerbate partisan divides by tying her departure to an intent to influence commission business. I wouldn’t expect her to do this and would be surprised if she did. That said, the possibility of her departure, for whatever reason, is just another reason for Chairman Pai to move forward quickly on net neutrality and other items.”

“As a longtime observer of the FCC, talk of FCC Commissioner Clyburn leaving the FCC after her term technically is up and creating a potential FCC quorum problem, seems like a manufactured concern and spin to create the perception of FCC process uncertainty where there is little in reality,” said Scott Cleland, chairman of NetCompetition. “Clyburn has served the FCC for two terms with distinction, including serving as acting FCC chairwoman for five months in 2013, in advance of Chairman [Tom] Wheeler’s confirmation. Nothing we have seen to date from Commissioner Clyburn’s loyal public service would suggest that she would leave the institution and public she has clearly loved serving without a functioning FCC quorum for any significant amount of time.”

“The fear of losing the necessary quorum highlights the need to have a functioning approval process for FCC commissioners,” said Roger Entner, analyst at Recon Analytics. “We need a functioning government to allow the agencies to do their proper work in a fast moving sector of the economy.”

The Phoenix Center, meanwhile, released a paper Tuesday which attempted to put a price on the threat of broadband reclassification and reclassification itself from 2011-2015, the last years for which data is available. “The threat of reclassification reduced telecommunications investment by about 20 percent to 30 percent, or about $30 to $40 billion annually,” said the paper by center economist George Ford. “Actual investment averaged $126 billion annually, a sizable expenditure, but the counterfactual analysis indicates the average investment over the five-year window would have been about $160 billion (or more) annually.” But the paper conceded doing a counterfactual analysis is difficult and there are many factors to take into account. The FCC reclassified broadband in 2015 as part its net neutrality order.

"Phoenix Center has produced yet another highly theoretical analysis that simply doesn’t line up with the known facts," Free Press emailed in response. "Some of us prefer to look at real numbers, but Phoenix Center is welcome to their fake ones if that's the best they can do." Since the FCC reclassified broadband as a Communications Act Title II service "not one single publicly traded ISP has told investors that Title II had any impact on its investments," Free Press said. "The data bears this out. Aggregate industry investments are higher. Cable company capital spending on core network infrastructure jumped nearly 50 percent, as did telco investments in fiber optic ports. Cable companies large and small began and completed system-wide gigabit upgrades in the past two years. And online company investments are up as well, with capital expenditures in the U.S.’s 'data processing, hosting, and related services' sector increasing 26 percent in the year following the FCC’s Open Internet vote."