Wheeler Faces Off With Senate Commerce Over Net Neutrality

Ranking member Bill Nelson, D-Fla., asked FCC Chairman Tom Wheeler how he explained rate regulation forbearance to CEOs. Wheeler said the scenario amounted to no problem for the wireless industry over the last 22 years. “It is not your grandfather’s Title II,” Wheeler told Commerce, emphasizing the amount of forbearance in the order approved Feb. 26. Nelson said the current FCC might not do any “dastardly stuff” but asked about a future activist agency. Wheeler’s answer to CEOs, he said: “‘I feel the same way about you, sir,’” referring to net neutrality violations and the need for rules of the road.

It was the second of five oversight hearings involving Wheeler this week and next and was wide-ranging. Wheeler’s written testimony provided a 14-page breakdown of commission priorities, from net neutrality to competition to public safety to commission process. He assured lawmakers that the broadcast TV incentive auction is “on track” to happen during 2016’s Q1. He later told Sen. Maria Cantwell, D-Wash., he’s “confident” the agency “will get on the other side” of the NAB and Sinclair lawsuit in time. He said “mobile has changed the nature of 911.” He insisted that “this is not an FCC power grab” and that there’s “a responsibility” for public safety reasons to address the issue.

Net Neutrality Friction

Net neutrality was a recurring focus. Thune emphasized his desire for bipartisan net neutrality legislation. “Like most first drafts, our draft bill is not perfect,” Thune said. Democrats should join Republicans to help ensure more certainty, he said. He and other GOP leaders circulated a draft bill in January, but Democrats have resisted backing it due to its limits on Title II and Telecom Act Section 706 authority. Nelson said the “key question” is “how to take what the FCC has done and provide the certainty that only legislation can provide.” He invoked “Title X,” a phrase he mentioned as early as November about legislative net neutrality responses. He's “open to true bipartisan congressional action provided that such action fully protects consumers, does not undercut the FCC’s role, and leaves the agency with flexible, forward-looking authority.”

Communications Subcommittee ranking member Brian Schatz, D-Hawaii, cast doubt on bipartisan legislation. “I’m not clear we’re going to get there,” Schatz said, citing no “common ground in the beginning of a negotiation.” Congressional Democrats and the White House would not likely back any legislation “undermining FCC authority,” he said, noting he’s been open to the idea but isn't necessarily hopeful. “I am a little concerned about the litigation risk, not just on the Title II side but the forbearance side.”

Sen. Ron Johnson, R-Wis., grilled Wheeler on the net neutrality time line and what he viewed as dubious agency independence. Johnson chairs the Homeland Security Committee and is leading an investigation into Obama administration influence over the FCC majority (see 1503160064). Wheeler asserted the agency’s independence. Pai lamented “compromised” independence.

Title II reclassification means all Americans will get “the same bad Internet service,” said Sen. Dean Heller, R-Nev. He said he worries Title II will open the door to regulation of content and more taxation. “Reclassification will lead to the imposition of new broadband taxes,” Pai said. Commissioner Mike O’Rielly warned of the “blurry lines” the net neutrality order would create and that it would eventually affect edge providers in a bigger way. Sen. Deb Fischer, R-Neb., worried that the general conduct rule could “jeopardize that regulatory certainty” for a competitive market. The order is "contrary to law," said Sen. Ted Cruz, R-Texas. He repeatedly asked whether the public could read and comment on the order before the commissioners voted: "The answer is no, correct?" Wheeler kept insisting this isn't the way the process works. "The public never reads the order, sir, so the answer is... ," Wheeler eventually said, trailing off. "Would you trust legislation making that explicit?" Cruz asked of a possible bill codifying rate regulation forbearance. Wheeler said he's reluctant to endorse specific legislation.

Sen. Ed Markey, D-Mass., defended FCC net neutrality action and urged Wheeler to explain the basis for his Title II order and forbearance. Wheeler insisted rates would be “set by the market” under his “light touch” order. “You have created a more predictable investment environment,” Markey replied. Sen. Cory Booker, D-N.J., said he’s “pro-business” and believes net neutrality will aid markets.

Blend of Topics

Thune’s questioning first focused on USF and a bipartisan letter he led last year. He asked the commissioners to pledge to help solve the issue by the end of the year, which they all did. Sen. Cory Gardner, R-Colo., led a companion letter as a House lawmaker last year and Wednesday called for a “tailored update to the CAF system.” Wheeler urged “the various segments of the industry to pull together” on this front. Sen. Claire McCaskill, D-Mo., “associated herself” and “has visited with” Pai on his designated entities concern. Pai had testified at length about Dish Network’s use of those during the recent AWS-3 auction. “You can front -- legally!” McCaskill said, calling it “outrageous.” Sen. Richard Blumenthal, D-Conn., asked Wheeler to make sure consumers are protected in the agency’s consideration of the proposed Comcast acquisition of Time Warner Cable. “I should not opine as we’re sitting in judgment,” Wheeler said.

McCaskill also cited concerns with the Lifeline program, which she said “morphed into a program without any kind of controls.” She pressed Wheeler on the Lifeline pilot program involving broadband and encouraged overhaul to the overall program such as taking eligibility out of the hands of carriers, making sure consumers have “skin in the game” and imposing a cost cap. “Doesn’t it make more sense to make it a broadband program?” McCaskill asked, considering whether it should continue. “Companies should not be in that space” of determining Lifeline eligibility, Commissioner Mignon Clyburn agreed. Pai urged the FCC to look to the broadband pilot before expanding Lifeline to broadband. Wheeler said the agency “has to look at this entire program” in assessing it.

Thune wants the FCC to “expect to come before this committee again,” he told the commissioners. Central topics included Thune’s net neutrality legislation and his goal to formally reauthorize the commission for the first time since 1990.

“The commission’s efforts to modernize operations have been hamstrung by level appropriations since 2013,” Wheeler said. “We need to upgrade our IT infrastructure; we have more than 200 relic IT systems that are costing the agency more to service than they would to replace over the long term.” The agency requested $388 million for FY 2016, more than $50 million more than current funding, and a current GOP reauthorization bill draft in the House would freeze FCC funding at $339.8 million for the next four years (see 1503170054).

“Writing the new FCC reauthorization bill should not be a one-off effort” and requires both parties, Thune said. Any agency funding increase should not come from “raiding the universal service fund,” Thune warned. The USF should not be “a reserve fund,” he said.