Net Neutrality Likely First Step to More Regulation, Pai Says

"Should the D.C. Circuit uphold the FCC’s order, I would expect to see revitalized efforts to expand the commission’s regulation of the Internet,” Pai warned. “In particular, I would not be surprised if the FCC looked into whether we should stiffen our oversight of the network management practices of wireless broadband providers and whether we should begin to regulate usage-based pricing. With a court victory under the commission’s belt, I believe that the net neutrality order would be the first step, not the last, on our regulatory path."

If the rules are upheld, it would likely mean an uptick in net neutrality complaints filed at the FCC, Pai said. “To date, we've received few complaints that these rules have been violated, and we've done little with any that have been filed,” he said. “But if the regulations are upheld, the agency could well receive more complaints alleging violations and it could spring into action adjudicating them. Uncertainty over how the FCC would resolve these complaints could persist for some time.”

If the rules are rejected by the court, Pai expects the majority Democratic commission to once again explore whether to reclassify broadband as a Title II service. “I have already made my view on this matter clear,” he said. “Under no circumstance will I support Title II reclassification. I am convinced that grafting creaky, burdensome common carrier regulations onto the Internet would dramatically slow broadband deployment, reduce infrastructure investment, frustrate innovation, hamper job creation, and diminish economic growth.” Pai was not on the commission when the controversial net neutrality order was approved.

After his speech, Pai told reporters the discussions on the special access order thus far have been “productive,” though he wasn’t sure when the commission would wrap up a vote. “Ultimately, I'm optimistic that our goal of issuing a mandatory data collection that captures of competition in this market will be achieved,” he said.

Net neutrality is a less “salient” issue today than it was before the FCC approved its order two years ago, said James Cicconi, senior executive vice president at AT&T, who also spoke at the symposium. “I think the real answer will come from how the FCC deals with a decision like that. I think the broadband revolution itself really calls for a high degree of regulatory humility. My hope would be if the rule is upheld that it not encourage a lot of regulatory adventurism or more regulatory aggression.”

Cicconi cautioned against reading too much into the D.C. Circuit’s data roaming decision. “I think each decision in this zone tends to be anomalous,” he told us. “There’s a tendency of legal analysts to extrapolate beyond the four corners of a decision in many cases. I wouldn’t read too much into any one decision in this space."

Policymakers have a key decision to make on the future of regulation, Cicconi said. “This is a fundamental point governmental policy needs to decide,” he said. “Does it want competition that’s based on investment or does it want competition that’s based on regulation? If you say the latter, you're going to have less investment. It’s very simple.”

Verizon Senior Vice President Kathy Brown said the rest of the world watches the U.S. closely to see whether its rhetoric on the Internet is in line with its policies. “If we are going to say to the world that we need a multistakeholder approach, that we do not want intervention into network management, that it would be a mistake to think about having regulators decide pricing … it seems incumbent upon us here in the U.S. to get it right.”