Industry, Observers, Analysts Hope for, Predict Trump Election Means Lighter Regulatory Touch

November 9, 2016–Telecom sector companies and associations today offered congratulations to President-elect Donald J. Trump, along with statements of hope for light-touch regulation and policies that encourage network investment. Meanwhile industry analysts and observers predicted action from the Republican Congress—freed from the threat of a veto by a Democratic president—to move ahead with an overhaul of the 1996 Telecommunications Act, and for a Republican-majority FCC to roll back some of the actions of the Wheeler Commission, including the reclassification of broadband Internet access as a Title II telecommunications service.

Still, the unified Republican government that House Speaker Paul Ryan (R., Wis.) extolled in a press conference this morning could still find itself with internal disagreement in some areas.

Mr. Trump is proposing a $1 trillion infrastructure investment package that would include broadband, which might go against the inclinations of some fiscal conservatives within his own party.  Mr. Trump’s statements on the campaign trail saying his administration would not approve AT&T, Inc.’s proposed acquisition of Time Warner, Inc., provide another example of an area where the president elect’s policy proclivities may depart from more laissez-faire attitudes within his party toward merger reviews.  And it’s not clear how much room there is in his immigration stance to embrace measure that would increase authorizations for highly skilled immigrant workers, a policy advocated by the tech sector and supported by many Republicans, albeit often with a demand for cut-backs in other immigration categories.

While Mr. Trump has plenty of company in criticizing the Trans-Pacific Partnership trade agreement reached by Obama administration negotiators, it is generally supported by the tech business community, which could ultimately make refusal to implement the agreement uncomfortable for some Republican members of Congress.

Former Virginia Democratic Congressman Rick Boucher, now co-honorary chairman of the Internet Innovation Alliance, told TRDaily that “one of the early orders of business if not the very first one at the incoming FCC will be a return of broadband services to information services status.”  In its 2015 open Internet order, the Wheeler FCC reclassified such services as telecommunications services subject to common carrier regulation under Title II of the Communications Act, a decision that was upheld by the U.S. Court of Appeals for the District of Columbia Circuit earlier this year.

Mr. Boucher said that investment in broadband networks “has lagged since ISPs were declared to be common carriers.”  Because of the large percentage of investment accounted for by the broadband and communications sector, “when they pull back, there’s a broadly felt economic effect,” he said, adding that “the only way” the U.S. is going to achieve the universal broadband deployment that many parties advocate is through the investment of network operators.

“An issue that travels with that is net neutrality,” Mr. Boucher said.  “I’ll also predict that the FCC, because of the broad acceptance net neutrality enjoys, will use existing authority under section 706 in order to protect net neutrality” without common carrier classification  “I predict the FCC will do that too, and do it coincidently with service reclassification,” he said. Reclassification of broadband services as information services would also end FCC oversight of broadband Internet access service providers’ privacy practices, he noted.

Unified Republican government at the federal level “gives us a new opportunity to have a comprehensive revision of the 1996 Telecom Act,” Mr. Boucher said.  “That’s not to say Democrats won’t have a role.  They will have a role.  Republicans don’t have 60 seats in the Senate,” he continued, adding that “telecom reform should be bipartisan.”

He said he is “encouraged” by the fact that Senate Commerce, Science, and Transportation Committee Chairman John Thune (R., S.D.) has said that telecommunications reform will be a priority for his committee in the coming Congress, that that Reps. John Shimkus (R., Ill.) and Greg Walden (R., Ore.), likely successors to current House Energy and Commerce Chairman Fred Upton (R., Mich.) “have said the same thing.”

As for whether the new president is likely to face any areas of telecom and tech policy disagreement with members of his own party on Capitol Hill, Mr. Boucher noted that Mr. Trump has talked about a $1 trillion infrastructure program that could include telecom projects.  “I think we are going to see a major infrastructure bill. … Typically you don’t hear Republicans talking about infrastructure expenditures,” he said, adding that success of the proposal will depend on “how much priority” the new president gives it “and how much capital he’s willing to expend.”

“I think certainly on the Republican side to the extent that people are resistant to expenditures he’ll get a hearing” on the proposal, Mr. Boucher said, adding that “there’s going to be a receptive Congress on a bipartisan basis.”

Mr. Boucher’s co-honorary chairman at IIA, Bruce Mehlman, who was assistant head of the Technology Administration within the Commerce Department during the George W. Bush administration, said in a statement, “GOP control of the White House, House and Senate for the first time in a decade promises significant opportunities for change and modernization of telecom policies. The next FCC has the chance to accelerate investment and constructively pave the way for 5G, radical convergence and the next generation of broadband services. The next Congress has the opportunity to reinvent a two-decades old governing statute woefully out-of-date with modern competitive realities and marketplace challenges.”

Regulatory attorneys, Wall Street analysts, and others who closely follow the FCC said they expect the agency under the Trump administration to take a lighter regulatory approach toward industry, both in transactions and on policy issues.

On policy, many expect a Republican-led Commission to move to undo controversial actions taken by the FCC under Democratic control, especially the open Internet order. Other controversial items pending when the new administration comes in will be left to die, they said. “We all want to see the benefits of the Internet be made available to all,” and Mr. Trump has said that “less regulation, lower taxation” is a way to achieve that goal, Jeffrey Eisenach, a visiting scholar at the free-market American Enterprise Institute and managing director at NERA Economic Consulting who is leading the Trump administration’s FCC transition team, said during a segment of C-SPAN’s “The Communicators” program that aired this past weekend. He also said it was not a surprise that Mr. Trump stressed during the campaign the importance of carefully scrutinizing AT&T’s plan to acquire Time Warner.  Mr. Trump said that his administration would block the deal “because it’s too much concentration of power in the hands of too few.”

Craig Aaron, president and chief executive officer of Free Press, said on the program that he was “pleasantly surprised” by Mr. Trump’s remarks. Otherwise, he said, Trump’s tech agenda was “mostly AWOL. I haven’t seen a lot of it. I see very little written down.”

During a luncheon this afternoon organized by the Federal Communications Bar Association’s wireless committee, analysts agreed that the FCC is likely to use a lighter regulatory hand on both policy issues and transactions in the new administration. “Everybody’s surprised,” Roger Entner of Recon Analytics LLC, said of the election results. “At the same time, everybody is encouraged by President-elect Trump’s comment last night that he wants to grow the economy, he wants to stimulate investment, and [telecom companies are] looking very [hopefully] towards a regulatory environment that stimulates investment and takes away the impediments.” He also said the new FCC would look to reverse 3-2 decisions taken under Democrats, “especially the most controversial ones.”

“I think what you will see is a considerably less aggressive Enforcement Bureau,” Mr. Entner also suggested. “You won’t see people being excessively punished for coming clean with their mistakes.”

As for the FCC’s open Internet regulations, the next FCC could decline to enforce certain provisions, said Robert Kaminski of Capital Alpha Partners LLC. “Net neutrality really takes congressional action,” said Frank Louthan of Raymond James & Associates. But he said the FCC could make it clear that it will not regulate prices and “at least maintain status quo.”

The analysts also mentioned Mr. Trump’s vow to block the AT&T-Time Warner deal. While the billionaire would seem to be a “traditional orthodox Republican” more open to consolidation, there was “a significant populist streak in him” during the campaign, Mr. Entner said.

Still, Mr. Louthan said he’s hopeful that a Trump administration will see “more rationale reasons for consolidation in the industry” and “take away the burden of consolidation,” such as merger conditions. “I’m reasonably encouraged that the FCC can take a less activist role,” he added.

Mr. Entner noted that issues of interest to the telecom community were not generally addressed by Mr. Trump during the campaign. “They haven’t really thought about it yet. So we’re basically poking around in the dark of what they will do,” he said.

Robert McDowell, a former FCC Commissioner and a partner at Cooley LLP, noted to TRDaily today that “no one knows for sure” how the Trump administration will approach telecom issues, “but we can look to who serves on the transition team to get a sense of the philosophy and the type of advice that might be recommended to the incoming administration.” He added that policy pronouncements from the Trump campaign “were more in the direction of deregulation … so we can surmise that that would be the philosophy of a Trump FCC.”

Another follower of the FCC expressed the hope that during Mr. Trump’s tenure, there will be a focus on spurring investment in broadband networks and rewriting the 1996 Telecommunications Act. “It will be a major project,” the source said.

Telecom policy “is not going to be a focus for Trump,” another source predicted, “so I am guessing that appointments and policies will be driven by Republicans on the Hill – with some input from major telecom players (other than high tech).  So look for net neutrality to be re-examined and appointees to come from the Hill.”

With a Trump administration on the way in, one FCC follower questioned whether FCC Chairman Tom Wheeler will still move ahead with the items that the agency is scheduled to consider at its Nov. 17 meeting, including business data services (BDS), Mobility Fund Phase II, and roaming items, and whether he will still try to get three votes for a set-top box order. “Although the new FCC majority can reverse on recon, I believe that at least the Chairman should want to make clear what Democrats believe is the right policy,” the source suggested. An FCC spokeswoman declined to comment today on the speculation.

Industry analysts at Wells Fargo Securities LLC said in a research note that it’s “unclear” whether current FCC Chairman Tom Wheeler will be able to complete ongoing proceedings on business data services and alternatives to set-top boxes before his chairmanship is over “and if he does not, some suggest a Republican FCC will reverse course on these two items. There is also a big question on how a Trump FCC will view transactions including the recently announced T/TWX merger and the LVLT / CTL transaction.

The Wells Fargo analysts expected the generally bipartisan area of spectrum policy to be unchanged by the political transition.  “The FCC’s incentive / broadcast auction of 600MHz should wrap up in the next 3-6 months regardless of the election. We believe that regulators no matter their party affiliation believe that 5G is a game changing technology and will do what it takes to support that evolution. We expect there will be an even greater focus among a Republican House, Senate and White House to raise more general revenues through spectrum auctions; however, it’s unclear whether the industry’s efforts to pry more high band spectrum away from government users will be more or less difficult under a Republican administration,” they said.

Industry analysts at New Street Research said that there has not been a lot of detail in Mr. Trump’s pronouncements regarding telecom and media policy, with the exceptions of a statement that he would reverse the FCC’s Title II reclassification of broadband services and that he would remove unspecified libel protections. “Nonetheless, even without classical campaign position papers, we think Trump will likely be supportive of the general GOP direction in telecommunications policy. For example, we suspect he would favor reversing current FCC efforts on pre-empting state municipal broadband bans, Set-Top Boxes, Special Access, and Privacy, while being more sympathetic to consolidation than the DOJ and FCC have been in recent years. Our belief is premised on the view that on such relatively low-publicity items, the partisan gravity will be sufficient to bring Trump’s view into line with his party’s well-established path,” the New Street analysts.

Industry analysts at S&P Global Market Intelligence note that Mr. Trump has said his administration would “look at breaking up the combination of Comcast Corp. and NBCUniversal LLC.”  They added, “All in all, the media and communications industries could be standing on the cusp of a bevy of deal activity, the likes of which have not been seen in some time. But given Trump’s stance on media mega-deals, it is unclear whether some companies may hesitate to strike deal agreements.”

While many industry participants, advocates, and observers issued statements expressing general intentions of working with the new administration and other policy-makers toward pro-investment and light regulatory touch polices, some indicated they have more specific advice to offer.

The Schools, Health & Libraries Broadband (SHLB) Coalition congratulated Mr. Trump on his election, with John Windhausen, Executive Director of SHLB, saying in a statement that “President-elect Trump intends to move forward with a bold plan to invest $1 trillion in upgrading our nation’s infrastructure, including telecommunications services. Connecting anchor institutions to high-capacity broadband is one of the most cost-effective ways to strengthen America and prepare our economy for the future.  Anchor institutions use broadband technologies to lift all communities, helping the most disadvantaged and rural populations, improve their education, find a job, and start a business. The SHLB Coalition is developing a proposal to promote next-generation broadband for anchor institutions, and we look forward to working with the Trump Administration as it develops its infrastructure investment plan for the future.”

In a primer on the president-elect’s positions on tech and innovation policy issues, the Information Technology and Investment Foundation noted that while these are issues on which Mr. Trump seldom spoke during the campaign, “his comments occasionally were critical. In general, there were few articulated policy positions, especially outside of the tax and trade area.”  ITIF described Mr. Trump’s “general philosophies toward technology and innovation policy” as a “generally conservative position of significantly reducing business taxes and regulations, including a significant reduction of corporate taxes”; an “unclear position on high-skill immigration”; support for “strong homeland security with potential effects on weakening encryption; and a goal of “strengthen[ing] trade enforcement, including by renegotiating existing trade deals.”

The National Association of Counties also had a checklist of policy issues it hopes the new administration and Congress will pursue, including “marketplace fairness legislation,” which would enable states and localities to tax online sales.

TechFreedom President Berin Szóka said, that “bridging the Digital Divide is essential to empowering rural and small town America. Private enterprise has made heroic progress, investing nearly $1.5 trillion in private investment in broadband deployment. Yet broadband deployment remains unnecessarily difficult because of red tape, high fees and poor infrastructure planning at all levels of government. Fixing that could bring faster, cheaper broadband to millions of Americans, especially in rural areas. The Wheeler FCC has fixated on building government-run gigabit networks to serve small numbers of users in heavily Democratic cities. We need a more humble, realistic, pragmatic and inclusive approach.”

Mr. Szóka added, “We also have a new opportunity to end the divisive and distracting fight over net neutrality.  Expect either Congress or the FCC to reverse the two staggering power grabs made under Obama: first, that broadband is a Title II common carrier service and second, that section 706 gives the FCC broad discretion to regulate the entire Internet. The only way to prevent flip-flopping by the FCC on these fundamental issues is a legislative compromise: Congressional Republicans have already proposed giving the FCC clear but narrow authority over the issue. Better still would be to empower the FTC to police the issue. Putting net neutrality regulation on solid footing would be a win for Democrats practical enough to see through the hysteria generated by the radical Left, even if it doesn’t look exactly like what they want. Even more important is undoing the Wheeler FCC’s staggering assertion that the FCC may freely change its mind to regulate up or down without really justifying forbearance. That bold, new power could be used to virtually rewrite the Act. Instead, the FCC should leave that job to Congress, making recommendations about how to fix Washington’s most broken, politicized agency.”

Walter McCormick, president of the U.S. Telecom Association, said, “We congratulate President-Elect Trump, and look forward to working with him and his administration to advance his commitment to infrastructure investment—particularly as it relates to investment in advanced telecommunications networks and services. This election cycle dramatically illustrated the critical role that broadband plays in our nation, providing millions of Americans an unprecedented ability to stay involved in campaigns for public office at the local, state, and national level—and enabling a new kind of citizen engagement in the democratic process. Policies that encourage continuing investment in this sector represent a path to prosperity, job creation, and economic growth.”

In a statement, NCTA said, “As the transition to a new Administration gets underway, we look forward to participating in a constructive and robust discussion about policies that will continue to make America a global technology and entertainment leader.  The internet and television industry is a critical sector of America’s economy and we will continue our track record of healthy investment and inspired innovations that connect, inform and entertain millions of American consumers.”

NTCA Chief Executive Officer Shirley Bloomfield said, “We look forward to working with the Trump administration and Congress to harness the enthusiasm and engagement of the rural voters who cast ballots in this election and build upon past successes to find innovative solutions to our nation’s broadband challenges so that every American—rural and urban—will have access to robust and affordable broadband.”

Mobile Future Chair Jonathan Spalter said that his organization “looks forward to working with [President-elect Trump’s] transition team in the days ahead. America’s broadband infrastructure is the very backbone of our economy, and our mobile innovation ecosystem is evolving at breakneck speed. For mobile to continue to play a critical role in supporting America’s global economic leaderships, we are hopeful that President-elect Trump will give his highest priority to fostering a policy environment that encourages confident investment in our nation’s broadband technologies and networks.”

Verizon Communications, Inc., Chairman and CEO Lowell McAdam said, “I hope the President-elect, and the new Congress, can quickly move past partisanship and gridlock and work together to prepare our country to compete and grow in the 21st century economy.” Mr. McAdam added, “Instead of focusing on parochial needs let’s put the nation first by building and rebuilding infrastructure and promoting the deployment of a digital superhighway to support game-changing innovation that make lives better.” He called for efforts to end education inequality, strengthen STEM (science, technology, engineering, and mathematics) educations, and “reforming the tax code to encourage entrepreneurship, innovation and job creation.”

Gary Shapiro, president and CEO of the Consumer Technology Association, said, “We congratulate President-elect Trump and are optimistic that major policies supporting innovation, infrastructure and the economy can go forward.”  He urged the new administration “to embrace the Technology Sector Presidential Platform put forward by the technology community. This agenda will help the president-elect pursue our shared goals of stimulating job creation, economic growth and innovation in the U.S.” “Additionally, the continued Republican majority in the Senate presents an opportunity for Congress to rollback unnecessary rules, tackle high-skilled immigration reform, reduce patent troll extortion, lower corporate taxes and reduce spending,” Mr. Shapiro said.

American Cable Association President and CEO Matthew Polka said that his organization “looks forward to working with the newly elected and re-elected lawmakers on the vital communications issues facing ACA’s members and customers in our unique communities.”

National Association of Broadcasters President and CEO Gordon Smith said, “We look forward to working with the next administration in support of a pro-innovation and regulatory reform agenda that will allow local broadcasting to flourish and reach every viewer and listener, anywhere and anytime.”

Free State Foundation President Randolph May said, “As a result of the election, it looks like there will be an opportunity for the new President and the new Congress to move forward with a meaningful, pro-growth, pro-competitive deregulatory communications policy agenda that promotes long-term consumer welfare. A reformist policy environment that presumes the existence of marketplace competition, absent convincing evidence to the contrary, rather than one that defaults to ‘Mother-May-I’ regulation as the first option, will promote investment and innovation throughout the Internet ecosystem, not just in certain favored market segments. And consumers will be the beneficiaries. “There is no reason why a bipartisan consensus can’t be developed concerning such a deregulatory, pro-growth policy agenda,” Mr. May added.

Fred Campbell, director of Tech Knowledge, said, “Trump’s victory offers new hope that the Federal Communications Commission will renew its faith in the dynamism of private enterprise and the competitive spirit. The agency’s pre-Obama policy of relying primarily on competitive market forces to drive investment and innovation in communications networks and services enabled the dynamic internet economy that we know and love. The Obama Administration’s love for top-down government mandates threatened to destroy that economy, but it’s not too late. The Trump Administration has a prime opportunity to level the playing field at the FCC and work with Congress on legislation that will benefit all Americans.”

Incompas CEO Chip Pickering, said, “It’s time to build America on competition. Today, we need an entrepreneurial economy and competitive society that creates opportunities and jobs for all.  Deploying new competitive broadband networks, both wired and wireless, to all Americans, urban and rural, could be an important hallmark for the Trump presidency.

“President Teddy Roosevelt and President Ronald Reagan had the vision to break-up monopolies and unleash innovation, but Washington has drifted from these principles. President-elect Trump said more competition is a solution to rising health care costs, and he is a vocal opponent of consolidation and market power in the communications and media industry.  These are encouraging signals, and we look forward to working with the Trump Administration and Congressional leadership to make competition principles the catalyst for creating new businesses and new jobs across America,” Mr. Pickering added.

Public Knowledge Vice President Chris Lewis said, “With only a few specific policy proposals, we have more to learn about the Trump administration’s tech policies, but we will encourage the President-elect to support a creative and connected future that benefits us all. “The communications and technology needs of Americans remain no matter who won the election. Americans need affordable access to high-speed broadband networks, especially in rural and low-income communities. The public needs the networks to remain open and trustworthy to promote the continued growth of the internet, and the continued consolidation of the media/communications industry is making these protections more important. We will continue championing these and other public interest values at Public Knowledge,” Mr. Lewis added.

Keith Krueger, chief executive officer of CoSN, which represents K-12 education technology leaders, said, “CoSN stands ready to work with President-elect Trump and Congress to address the top priorities that will improve student learning. Chief among those priorities are advancing digital equity and supporting access to high-quality personalized learning environments. This starts by investing in a 21st century U.S. infrastructure to deliver modern educational settings and expanded broadband connectivity in and outside of school walls.” —Lynn Stanton, lynn.stanton@wolterskluwer.com, and Paul Kirby, paul.kirby@wolterskluwer.com

Courtesy TRDaily