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Here's Pai in Your Eye

Alan Breznick
12/11/2017

Is FCC Chairman Ajit Pai trying to play the bad cop with Congress on the net neutrality issue?

That's what some keen observers of the net neutrality debate like Craig Moffett, principal analyst at MoffettNathanson LLC , suspect may be happening. In a recent note to investors and again in comments at our Future of Cable Business Services event in New York late last month, Moffett suggested that Pai is positioning himself as the bad cop in the debate to make Congress play the good cop and resolve the thorny issue with a compromise that would appease both sides.

Here's the way that argument works. At the Commission's next regular meeting on Thursday, Pai gets the Republican-controlled Federal Communications Commission (FCC) to pass his draft "Restoring Internet Freedom Order," which would eliminate both the core principles of the Commission's current net neutrality rules and the Title II regulatory regime set up to enforce those rules. Then, faced with the inevitable angry public backlash that has already erupted, the Republican-led Congress swiftly rides to the rescue by enshrining the net neutrality concepts into law without reinstating the Title II regime.

As a result, consumers, public interest groups and online content providers get the federal prohibitions they crave against such bad behavior as blocking, throttling and degrading Internet traffic and prioritizing some online content over others for profit. And the big ISPs like Comcast, AT&T, Charter and Verizon get rid of the Title II utility-style regulations that they scorn.

"Had legislation trading net neutrality for Title II been proposed before [the] FCC reversal, it would almost certainly have been viewed as dismantling net neutrality, and would therefore have been painted as anti-consumer," Moffett argues in his note to investors. "Now, in the wake of the FCC's draconian draft order, precisely the same legislative language can be recast as 'coming to the rescue.' " Moffett credits the idea to NCTA President Michael Powell, a former Republican FCC chairman himself.

If that indeed is Pai's clever (some might say devious) plan in stripping net neutrality to the bone, it could actually work. As if on cue, several leading House and Senate Republicans have already called for enacting "permanent net neutrality rules through the legislative process” while many leading Democratic legislators have lashed into Pai's draft order. So that all-too-rare bipartisan consensus in Congress may now be developing to hit the sweet spot on net neutrality.

Of course, compromise and bipartisanship are almost dirty words in Washington these days. Stranger things have happened in DC, though, like the House and Senate passing huge tax cuts for the rich and powerful that most Americans don't want.

Bu let's get back to Pai. If the rookie FCC chairman is truly intent on playing the bad cop, then he's doing an awfully good job of it. First -- unlike at least four of his immediate predecessors at the Commission, both Republican and Democratic, who at least paid lip service to net neutrality -- his proposal basically calls for ripping net neutrality to shreds and letting the free market reign supreme over the Internet, no matter what the consequences. ISPs would pretty much be allowed to do whatever they want so long as they are "transparent about their practices."

Most of the little federal regulatory oversight left would be turned over to the Federal Trade Commission , whose jurisdiction over the Internet is still being sorted out in the federal courts. Meanwhile, the states would be prohibited from doing anything to police bad actors. That goes a long way toward explaining why many net neutrality proponents are now taking to the streets (and Verizon stores) to protest Pai's draft order.

Second, with his rants against today's allegedly "heavy-handed" regulation of the Internet, the former Verizon lobbyist has been peddling the highly questionable narrative that large US ISPs have been cutting back on domestic broadband capital expenditures since the net neutrality rules went into effect two years ago. But there's no solid evidence of that, as my colleague Mari Silbey showed in her post about recent capital spending trends by Comcast, AT&T and Verizon, three of the four largest US ISPs, a few months back. So, at best, Pai is playing with the facts to suit his radical deregulatory agenda. (See The Title II Capex Argument Is Ridiculous.)

Further, Pai has dismissed the overwhelming support for net neutrality rules from the unique, human-authored comments the FCC has received from the public, ignored calls from fellow commissioners for public hearings around the country and shrugged off the fact that more than 1 million of the comments against net neutrality were probably fake. When New York State Attorney General Eric Schneiderman called for an investigation into "a massive scheme that fraudulently used real Americans' identities" to "drown out the views of real people and businesses" late last month, the chairman's office said no thanks and refused to cooperate.

Finally, in almost Trump-like fashion, Pai has started getting personal with those who dare to oppose his drastic deregulatory proposal, with his office deriding net neutrality supporters last week as "getting more desperate by the day." That denouncement came after more than 40 groups appropriately asked him to delay the planned December 14 FCC vote on his draft order until the federal courts make a final ruling on the FTC's actual authority to protect consumers from "unfair, deceptive and anti-competitive practices" on the Internet. Maybe Pai should just start calling his critics "sad," "crazy" and "losers" now, like the man who appointed him to his post.

In other words, the publicly affable Pai appears to be trying to piss off as many people as he can. So, if he's not just playing the heavy here to get Congress to pass compromise legislation, his strategy is puzzling, to say the least. It certainly doesn't seem like the best way to make friends and influence people, even in today's highly polarized political climate.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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JamesCMaxwell
JamesCMaxwell
12/11/2017 | 6:34:08 PM
Broadband market is an oxymoron
Broadband market is an oxymoron. In most localtities there is one dominant provider. Now this may because of the way cables have to be laid, hisotrical facts about who was dominat etc. But making the carrier s the aribitars of what apps use internet at what price is the quinteessential example of picking winners and losers. Except in this case virzona dn ATT will choose it.  
DanJones
DanJones
12/11/2017 | 5:38:18 PM
Re: Pick Your Poison, when it comes to Tech I want Government out of the Way
Well, governments have the ultimate lock on 5G whatever happens. They get to decide how and when to auction 5G spectrum.
brooks7
brooks7
12/11/2017 | 12:10:15 PM
Re: Pick Your Poison, when it comes to Tech I want Government out of the Way
@Austin,

Net Neutrality is certainly a potential problem.  It has been around since before 2015, but yes I expect that the Service Providers are tightly regulated.  I actually want them to be forced to deploy gigabit tecnhologies to every premise in the US.  The exact way the phone network was built starting in 1934.

seven

 

 

 
Austin Idol
Austin Idol
12/11/2017 | 11:15:30 AM
Pick Your Poison, when it comes to Tech I want Government out of the Way
Most people don't even understand that Net Neutrality was brought to you in 2015 to fix a problem that did not exist. Simply the government wanted to have a key into the hen house and Netflix, Google, and Facebook want as much of the pipes as possible. Are you going to force Verizon, Comcast, and AT&T to invest billions into their networks while the government dictates their rates and rules? People worry about AT&T, Comcast, and Verizon but aren't worried about the Government Reach, Netflix, Google, Amazon, and Facebook? How quickly will 5G come about if the government is in the way?
Duh!
Duh!
12/11/2017 | 11:05:08 AM
Alternate Explanation
Ajit Pai is a free-market zealot. He is so convinced of the righteousness of his cause that neither fact nor reason nor law nor public opinion will get in his way.  

The only futures that are not foreordained is which public interest group will be lead plaintiff, and which of many procedural violations will send it back to the FCC.
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