2017 brings us a new FCC and a new philosophy.  Former Chairman Tom Wheeler resigned on January 20, 2017, and former Commissioner Jessica Rosenworcel left the FCC at the end of 2016 because her term had expired and she was not reconfirmed.  As a result, the FCC now is down to three Commissioners; two Republicans (Ajit Pai and Michael O’Rielly) and one Democrat (Mignon Clyburn).  On January 23, 2017, Commissioner Pai was officially named the 34th FCC Chairman.  No Senate confirmation was necessary since he was already a Commissioner.  However, he will need to be reconfirmed before the end of the year since his current term will expire.  So, what changes can we expect to see in the next months and years?

• Consumers benefit most from competition, not preemptive regulation. Free markets have delivered more value to American consumers than highly regulated ones.
• No regulatory system should indulge arbitrage; regulators should be skeptical of pleas to regulate rivals, dispense favors, or otherwise afford special treatment.
• Particularly given how rapidly the communications sector is changing, the FCC should do everything it can to ensure that its rules reflect the realities of the current marketplace and basic principles of economics.
• As a creature of Congress, the FCC must respect the law as set forth by the legislature.
• The FCC is at its best when it proceeds on the basis of consensus; good communications policy knows no partisan affiliation

The new Chairman has made it clear that he believes the FCC should: (1) only act where there is proof of market failure; (2) only adopt regulations if the benefits outweigh the costs; (3) remove unnecessary and outdated regulations; (4) promote broadband deployment and make closing the digital divide a “core priority.”  He has consistently called on the FCC to be more transparent, not only in its internal dealings but also in its releases to the public (possibly including the release of draft FCC orders).  So, what does this mean for competitive carriers?

Pai's opposition to the FCC’s Open Internet rules, and in particular the decision to reclassify broadband Internet access services (BIAS) as a telecommunications service is well known.  So, look to the new FCC to do what it can to reverse these policies.  However, the FCC’s path to this objective is not completely clear.  All the rules adopted in the Order have already taken effect and the Order survived its first court challenge.

Happily, for small providers, the first action relating to the Open Internet rules should come in the form of an order reinstating the small provider exemption from the Open Internet Enhanced Transparency rule.  In fact, Chairman Pai already announced that he circulated (and both he and Commissioner O’Rielly voted for) an order that will exempt providers with no more than 250,000 subscribers from the rule for five years.  (The previous exemption, which expired in December 2016, was for providers with 100,000 or fewer broadband connections as measured by their most recent FCC Form 477, aggregated over all of the providers’ affiliates.)  Several petitions for stay of the enhanced transparency rule have also been filed, creating a vehicle for the FCC to decline to enforce the rule for other providers as well. 

The second Open Internet-related action likely will be to close down the prior FCC’s investigation into mobile ISP’s sponsored data plans and zero-rating practices.  When the previous FCC released a mid-January report concluding that some of these plans and practices likely violated the FCC’s Open Internet general conduct rule, Chairman Pai issued a rapid response concluding that “I am confident that this latest regulatory spasm will not have any impact on the Commission’s policymaking or enforcement activities following next week’s inauguration.”  So, it’s unlikely we will see any attempt by the Pai FCC to enforce the general conduct rule and stop mobile ISPs from offering zero-rated data services.

Another area ripe for immediate action relates to the FCC’s new privacy rules, which apply to BIAS providers as well as wireline, wireless, and interconnected VoIP providers.  Here, the path to reversal is fairly straightforward as most of these rules have not yet gone into effect and petitions for reconsideration and administrative stay are pending.  The FCC can use one or both of these vehicles to reverse, alter, or decline to enforce all or some of the new rules.  In addition, various groups are asking Congress to use the Congressional Review Act process to rescind the FCC’s order and associated rules, providing still another avenue to accomplish the same goal.  What remains unclear is what, if any, rules would apply to non-BIAS providers if the new rules never become completely effective.  After all, the new privacy rules were intended to replace the existing CPNI rules, including the recordkeeping and annual certification requirements.  Will they wind up reinstated in full or in part?

Other decisions that may be up for a new look under the Pai FCC are the various IP transition orders and rules adopted by the previous FCC.  Chairman Pai has expressed concern with the scope and complexity of the rules for retiring copper infrastructure and discontinuing legacy telecommunications services.  Could these rules be revisited in the near future? 

What will happen to the FCC’s business data services f/k/a special access proceeding?  The prior FCC was set to adopt new rules late last year but the order was withdrawn from the agenda and apparently is no longer circulating.  Will the FCC now reach a different conclusion in this long-running proceeding and will this market be further deregulated?

Finally, what about inmate calling service rate caps?  Both Chairman Pai and Commissioner O’Rielly dissented from those orders, which are currently under appeal and scheduled for oral argument in early February.  Will the new FCC continue to defend the rate caps?  Or will they ask the court to stay the case or remand the matter back to the FCC for further proceedings?  And what about the ICS reporting and disclosure rules that have yet to take effect?

These are just a few of the issues that may be revisited under the new FCC.  Hold on to your hats; we are in for a wild ride! You can find more information about the staff in Chairman Pai’s office here.  To learn about the new Bureau and Office chiefs click here and for the Acting General Counsel click here.

TMI will continue to watch these issues carefully at the FCC and for any changes at state agencies. We will release regulatory Briefings on breaking news, rule and policy changes, and other industry developments to our TMI Briefing Service subscribers.