Wheeler Says Move to 'Gut' FCC, Shift Telecom Oversight to FTC, Would Be 'Tragic'

Scaling back the FCC and shifting duties to the FTC is an idea telecom providers have pushed for years, Wheeler said in response to a question about the Trump FCC transition team's apparent plan to restructure the agency (see 1701170025). Before he became chairman, Wheeler said he saw a newspaper article explaining "how the networks intended to gut" the FCC. "It would be tragic if that happened," he said.

Wheeler called attention to a ruling by the 9th Circuit U.S. Court of Appeals in a case brought by AT&T (see 1608290032). The court ruled the FTC not only doesn't have jurisdiction over common carriers, but also their "noncommon-carrier activity," he said. "There’s a serious question as to what is the scope of the Federal Trade Commission based on the decisions made by the federal court on arguments first presented by those who want to gut the FCC and throw that activity to the FTC," he said. "Good people, great agency, but at the heart, they are enforcers. They don't have what's called rulemaking authority." He also said the FCC is the expert telecom agency and the FTC isn't. “They have to deal with everything from computer chips to bleach, and now we’re going to add telecom into that. I think since 1934 there has been an expert agency in telecommunications and it makes sense to stay that way," he said.

Wheeler was less alarmed by the possible restructuring of FCC bureaus to account for convergence between industry sectors. He said he chose to bring together the expertise of staffers from different bureaus to focus on cross-sector questions, but acknowledged others may have a different approach: "There are multiple ways of skinning the rabbit." He did say the Wireless Bureau has a particularly heavy task in processing 35,000 license transfers a month. "That's not something you can just throw over to another bureau," he said.

"Competition and consumers should come first," said Wheeler, highlighting a net neutrality order that "says the internet should be fast, fair and open for everyone" and privacy rules that say "it's the consumers' information, not the networks' information." He said the FCC's recent focus on cybersecurity was important "because we're the agency that is responsible for networks" and "networks are the attack vectors in cyber attacks." He took pride in E-rate USF subsidy changes that he said boosted K-12 classroom high-speed internet activity -- including through Wi-Fi connections -- and in actions to help people with disabilities get communications access. He said it was disappointing the FCC failed to act on set-top boxes and business data services because it "ran out of runway."

Wheeler had a "Damascus road kind of experience" leading to his shift to reclassify broadband as a Communications Act Title II telecom service subject to common carrier regulation. He said as CTIA chief he championed wireless voice providers being treated as common carriers but given much relief from monopoly-based phone regulation. In the summer of 2014, he realized that approach could be applied to the internet: common carrier oversight minus "some of the most onerous" aspects, he said.

Half a dozen companies want to get rid of Title II broadband, Wheeler said: "But there are tens of thousands of other companies that rely on it. There are millions of consumers that rely on it. So I hope that the Congress, the FCC, whoever wants to revisit this decision, will weigh that in the balance, and say that open networks are as American as apple pie." He said the country has had "open networks" going back to railroads and the telegraph. "We wouldn’t have the internet if the telephone network hadn’t been open so that the early efforts to get online didn’t have to go through any gatekeeper," he said. "That’s how we became leaders in the internet. And we don’t want to go backwards to [having] gatekeepers deciding what will happen."

Net neutrality rules against blocking, throttling and paid prioritization aren't enough, Wheeler said. Technology will continue to evolve, requiring the FCC as a "referee" to "throw the flag and say, no, no, not that." Zero rating is an example, because it has aspects that make sense, such as free data, he said. "But the issue is what happens when someone who controls a network and also controls a competitive service on that network, uses that network to shut down the competition for their other service," he said. "For instance, AT&T [Mobility] is saying, hey, we’ll deliver DirecTV, which they own, for free for you. Wow. But then they’re turning around and saying, if you want to buy [from] DirecTV’s competitor, Dish or somebody else, you are going to have to pay the data rates associated with that, and [that's] going to drive the price up almost double. They are providing themselves a competitive advantage to thwart competition."

AT&T referred us to its Dec. 15 statement responding to an FCC query: "The video entertainment marketplace is ripe for disruptive change, which is exactly why consumers have enthusiastically embraced Data Free TV in all its competitive forms. That enthusiasm has caused competitors to react with additional consumer-friendly video offerings, like the T-Mobile offer announced today."

Wheeler disputed the notion the incentive auction had been a disappointment. He said the FCC's job was to create a marketplace, not dictate how much spectrum was cleared and revenue raised. "Marketplaces are frequently unpredictable. But I think that what we’re seeing right now is that we’ve been highly successful. If the auction closes where it currently is, it will be the second largest amount of spectrum that has ever been made available" by the FCC, he said.

Wheeler said he had a "healthy relationship" with Congress, citing 21 hearings he testified at and many other discussions. He recognized some policy differences with Republican lawmakers, but said he had "respected" the relationship with members of both parties. He said he wished he knew why there had been numerous partisan 3-2 FCC votes, even if "85 to 90 percent" of votes were unanimous. He said there had been bipartisan efforts, including with Commissioner Mike O'Rielly on rate-of-return USF broadband changes. "But at some point in time you gotta pull up and shoot," he said. "This is the way democracy works: that you decide by a majority."

Wheeler said he always favored "insurgents": at NCTA when cable was challenging broadcasters, at CTIA when wireless carriers were taking on wireline telcos, and as a venture capitalist. Today's insurgents are those pioneering technologies and services that need open networks, he said. Asked if people would be hearing from him going forward, he said, "I'm hard to keep quiet."