Panelists Mull Merits of Restructuring of FCC

January 23, 2017–Panelists today mulled whether the FCC should be restructured, as some have advocated, and whether that would hurt or help consumers and competition.The views were expressed this afternoon during a session at Internet Education Foundation’s State of the Net (SOTN) Conference. Panelists said they would like to see more economic and engineering analysis go into FCC decisions. The problem is the agency faces obstacles in hiring staffers other than lawyers, they said.

“It’s much easier to hire lawyers than economists or engineers,” said Mark Jamison, a senior lecturer and director of the University of Florida’s Public Utility Research Center who was a member of the Trump transition team’s panel that looked at the FCC.

“We could sing Kumbaya on this one,” said Gigi Sohn, a fellow at the Open Society Foundation who was counselor to former FCC Chairman Tom Wheeler. Because it’s hard to bring in engineers and economists, the agency ends up relying on industry-funded technical experts and economists, she said. “That’s not what you want,” she added. “We have way too many lawyers, and I say this as a lawyer.”

Larry Downes, project director at the Georgetown University Center for Business and Public Policy, agreed that more economists and technical experts would be helpful. He also said too many issues are considered in silos by FCC bureaus and offices, adding there should be “a rationalization of the structure of the agency.”

“Breaking down the silos is a great idea,” Ms. Sohn replied, saying that Mr. Wheeler considered an FCC restructuring but realized he only had three years to get through important policy actions. “It’s really about prioritizing it.”

She expressed concern that any FCC restructuring will result in scrapping the FCC’s legal authority to protect consumers and ensure competition. And she warned against the Enforcement Bureau becoming “a backwater bureau like it was before.”

Mr. Jamison, who argued in a posting for the American Enterprise Institute’s Tech Policy Daily blog today that the FCC should “be organized along bureaus of economics, engineering, etc. rather than outdated industry silos,” stressed that Congress would have the authority to approve any restructuring through the appropriations process.

The panelists also disagreed about broadband privacy rules the FCC adopted last year (TRDaily, Oct. 27, 2016). Those rules are likely to be targeted by new FCC Chairman Ajit Pai. Ms. Sohn said the rules were “a really nice template” for rules that the agency should adopt for edge companies. She said she expects the new FCC majority will make web browsing non-sensitive instead of sensitive. Such an auction would be more positive than “rolling the whole thing back,” she said.

The order requires broadband Internet service providers (ISPs) to obtain “opt-in” permission before using or sharing information about the sites their customers visit on the Internet and their online communications but allows the ISPs to use non-sensitive information on an opt-out basis—that is, unless the consumer takes affirmative action to object. ISPs would be allowed to infer customer consent to use information to market services typically bundled with services that consumers already subscribe to, as well as to use information for service provision, billing, and collection.

Mr. Downes said the order went too far on its classification of web browsing and he also complained about the “two different approaches toward enforcement,” with the FCC rules focused on ISPs and the FTC regulating edge providers. He would like to see “one set of rules enforced by the FTC.”

Markham Erickson, a partner at Steptoe & Johnson LLP, said he agrees that it is not good to have two sets of rules. Mr. Jamison agreed. Ms. Sohn said she would like to see the FTC’s common carrier exception repealed, but she said she doesn’t think “consumers are confused” about the fact that two agencies have authority over Internet privacy. It is not unusual to have multiple regulators responsible for an industry, she said.

The panelists also agreed about the need to find ways to repurpose or share spectrum with federal government agencies. Agencies should be incentivized to relinquish spectrum, Mr. Downes said.

Mr. Erickson also said he thinks broadband will be part of the Trump administration’s infrastructure package, and Ms. Sohn stressed the importance of carriers working with localities, rather than focusing on preempting municipal action, to site infrastructure, especially the small cells that will be needed for 5G services.

“You can’t get in a battle with the local community, because it’s not going to be a pretty sight,” she said. – Paul Kirby, paul.kirby@wolterskluwer.com

Courtesy TRDaily