Trump & Consequences
Like many other sectors of US life, the telecom industry is quickly learning that the Trump administration means business when it comes to rolling back regulations. In the six weeks since Donald Trump became president, his FCC chairman, Ajit Pai, has taken dead aim on multiple fronts, rolling back privacy rules on the use of customer data, giving a green light to zero-rating of favored online content by closing an agency probe there and promising further moves on the Net Neutrality front, to weaken the bold action taken by his predecessor, Tom Wheeler.
On the latter front, it's not yet clear what Pai can do, given that the Federal Communications Commission (FCC) 's move to reclassify broadband under Title II was upheld in court. Pai has signaled his intent to reverse Net Neutrality, however, and may well have Congressional assistance in doing so.
This kind of regulatory whiplash was to be expected -- Wheeler's FCC was as aggressive as any previous agency in working to protect consumers from what it saw as abuses at the hands of a limited set of very large broadband operators. Trump came into office promising to unshackle businesses from such government interference and his choice of Pai sealed that deal. The former Verizon attorney had fought Wheeler on every front, voting against the privacy rules, Net Neutrality and other pro-consumer initiatives as well, including Lifeline services and expansion of the E-rate program.
There are still some unknowns, however. Chief among these is how the telecom sector will react. Will zero-rating of content on wireless networks in any way slow down the shift towards unlimited data plans? Given AT&T Inc. (NYSE: T)'s push to buy Time Warner Inc. (NYSE: TWX) and Verizon Communications Inc. (NYSE: VZ)'s acquisition-fueled plunge into content as well, will we see obvious abuses of this approach to drive their own content packages -- and subsequent consumer reaction?
On the Net Neutrality front, how hard will the telecom and cable giants push to get these rules rolled back -- either at the FCC or Congressional level -- and can their efforts pass the inevitable court challenge?
Where Pai's actions are concerned, there is a bit of a disconnect between his public statements on wanting to close the digital divide and his previous voting record on initiatives in that regard, including Lifeline service. He's being accused by pro-consumer groups of favoring government funding of private sector buildouts, an approach that works in some places but not in the hardcore areas that remain unserved, where the cost of delivering broadband is still prohibitive.
But it's clear the current tilt of the FCC favors the bigger players in telecom -- and I am including the big cable guys in that number as well. There is no longer the assumption made, as it was for at least the last four years, that the FCC needs to act to protect and extend competition, and thus the consumer.
How will the "winners" in this scenario respond to their newfound freedoms? I think that's where things could get tricky. Obvious abuses or even a steady drip of what is perceived as anti-consumer behavior could energize those already concerned about Trump's impact to focus on a major telecom operator or the sector in general, in ways that could have a negative impact.
Remember that Net Neutrality was pushed to the fore by a groundswell of consumer interest, driven by one talk show host. Just imagine what today's more mobilized and media-driven resistance might resemble.
Alternatively, proving that a less regulated industry can innovate faster, in ways that benefit consumers and not just the bottom line, would be broadly welcomed. The question is, are regulations the thing actually holding the industry back where innovation is concerned?
I'm not entirely convinced that is true. I'm also guessing that there won't be any sudden decrease in the number of lawyers and lobbyists employed by telecom network operators. I was among those who were sometimes critical of the Wheeler FCC for what seemed like an over-reach. This is a chance for those who said all that government regulation was an impediment to better service to prove that to be true.
— Carol Wilson, Editor-at-Large, Light Reading