Law360, Washington (July 11, 2016, 5:47 PM ET) — With a favorable net neutrality ruling in hand, Federal Communications Commission Chairman Tom Wheeler is likely to push forward on major and potentially contentious regulatory priorities as he looks ahead to the likely end of his post. Here, Law360 highlights what telecom policies to watch for in the second half of the year.
Privacy Rules for Broadband Providers
The D.C. Circuit’s decision in mid-June to uphold in full the FCC’s 2015 Open Internet Order made way for the agency to continue its related plans to set privacy rules for broadband service providers.
The commission in March floated the highly anticipated rules, which would require internet service providers to clearly disclose how customer data is being used, take reasonable steps to protect that information and notify affected customers within 10 days of discovering a data breach.
The plan has met strong industry resistance, with AT&T in recent days warning that the rules are overly broad and costly, and the agency should stick to a model similar to the Federal Trade Commission‘s.
The clock could run out this year on the plans, experts said, but Wheeler has also made the issue a priority.
“It’s clearly very high on the chairman’s agenda and it appears to me that he’s going to try very hard to get something done before the end of December,” Paul J. Feldman of Fletcher Heald & Hildreth PLC said.
Nathaniel Hardy of Marashlian & Donahue PLLC said he isn’t sure something will be adopted before the end of the year, but it’s clear Wheeler “would like the commission to have the authority.”
“He thinks that the commission has some space to work here, not just the FTC,” he said.
Opening Up the Set-Top Box Market
Outcry over Wheeler’s plan to promote competition in the market for pay-TV set-top boxes — which would force providers to allow consumers to access their programming on third-party devices or apps — has mounted since he announced it in January.
The Senate majority and minority leaders have both weighed in with concerns, and in recent weeks Democratic Commissioner Jessica Rosenworcel has said the commission needs to “find another way forward.”
Industry representatives have floated an alternative, which would employ apps for viewing on third-party devices.
Paul Glist, an attorney with Davis Wright Tremaine LLP who has helped advocate for the alternative, said bipartisan opposition has sent a clear signal that the FCC must heed.
“I think that the discussion has certainly changed” since the time of the proposal, he said. “For the last several months there’s been rightful objections to many aspects of what were outlined in the commission’s proposal.”
The “creative alternative approach” would deal with issues raised by critics — including those surrounding copyright and protecting consumer privacy — while still creating competition, he said. The approach could also allow Wheeler to finalize a plan this year.
“We’re doing our level best to make that possible by working closely with the commission,” he said.
Hardy said he also sees the potential for a shift from the original plan given industry resistance and pushback from Wheeler’s own side, but comment cycles will be a factor in whether the rulemaking can be completed this year.
Overhauling the Business Data Services Regime
The FCC’s plan to install a new regulatory regime in the business data services market comes after a yearslong data collection effort. The proposal, advanced in April, asks for feedback on how to determine whether markets are competitive and how to apply pricing and other regulations if they aren’t.
Business data services, also known as special access services, are dedicated network connections used by institutions such as banks and universities that need to transmit large amounts of data. Competitive providers often purchase business data service connections from the incumbent carriers and combine the purchased service with their own networks for clients.
Cable companies have said they are worried a so-called technology-neutral approach to the plan would saddle them with new regulations that would disincentivize new investment, while Wheeler has pushed the proceeding as critical for rolling out 5G wireless.
Hardy said the proceeding may not have the “same sexiness” as net neutrality — and so likely won’t garner the attention of HBO‘s John Oliver — but is critical for industry and consumers alike.
“It’s an important issue because it affects how everybody communicates,” he said. “It’s how the companies connect our calls, deliver our data, and an opening up of that market would presumably be beneficial to the consumer.”
It seems likely that Wheeler hopes to complete something during his tenure, Hardy said.
But according to Feldman, it’s clear that on the key issues that remain this year, the outcome of November’s election could be critical if they aren’t finished.
“If set-top box and special access and ISP privacy are not completed before Wheeler leaves and a Republican administration comes in, it seems highly unlikely that those proceedings would be completed,” he said.
Completing a Review of Media Ownership Rules
The chairman has also moved forward on another pledge, circulating a proposal for modifications to the FCC’s media ownership rules, which many say have become irrelevant. But his plan would keep in place many ownership limits and revive a limit on the ability of TV stations to enter into joint advertising agreements, a rule the Third Circuit had struck down after finding the FCC unduly delayed a review of the underlying ownership rules.
The radio-television cross-ownership rule and newspaper-broadcast cross-ownership rule would remain under the plan, but the newspaper rule would be relaxed for “failed or failing entities,” the fact sheet said.
Republican Commissioner Ajit Pai slammed the plan amid the FCC’s approval of large-scale cable mergers, saying it has agreed to them but “gets the vapors” over a small-town Pennsylvania newspaper owning a radio station.
“Whatever the motivation for the chairman’s proposal, it has nothing to do with the evidence in the record, principled decision-making, or the law,” Pai said. “Indeed, given current trends, it is likely that the commission’s newspaper-broadcast cross-ownership restrictions will outlive the print newspaper industry itself.”
Hardy said for broadcasters, there is disappointment that the plan would apparently tighten rather than relax rules. It’s likely there will be a plan out for comments by the end of the year, he added.
“I thought the tone overall was going to be more favorable to the industry, particularly in light of that their landscape has totally changed after the incentive auction,” he said. “This seems to me to be a perfect time to put them more on an even playing field with some of their other media competitors.”
The proposal reflects some changes in the marketplace but continues restrictions that hurt the ability of stations to compete, he said.
Finishing the Incentive Auction
The FCC’s experimental spectrum incentive auction may be more or less settled policy that is now playing out, but experts said its outcome is one of the most important questions remaining this year.
The initial clearing cost was set Wednesday at $86.4 billion, which is the amount the government would have to pay broadcasters for their spectrum licenses with proceeds generated from the next stage, the forward auction.
The number is high and means that forward auction participants will have to have serious interest for the auction to conclude without a need to lower the clearing target, Hardy said. That change could push the auction into next year.
“It’s prime spectrum,” he said. “But they have to really want it to be able to get over that clearing cost.”
Feldman also said the number is high, but whether the auction will be deemed a success is still uncertain.
“I think at this time it’s a fool’s game to try and make predictions,” he said.
–Additional reporting by Bryan Koenig, Natalie Olivo and Allison Grande. Editing by Mark Lebetkin and Catherine Sum.
