FCC Course Correction

Silicon Valley is apprehensive about the Administration’s current and future immigration policy, which may severely limit tech’s access to low-cost foreign labor. Restricting H1B visas would put older American engineers back to work; the shoe is expected to drop shortly. In the meantime, life goes on in tech policy.

The FCC has made a number of expected decisions on pending issues and signalled a willingness to alter the course of network regulation in a more permissive, innovation-friendly direction. Here are some highlights of recent actions.

706 Report Delayed

The 706 report on the progress of “Advanced Telecommunication Capability” (ATC) was placed on circulation by former Chairman Wheeler before leaving office. This is the annual report called for in Section 706 (b) of the Telecommunications Act: “…the Commission shall determine whether advanced telecommunications capability is being deployed to all Americans in a reasonable and timely fashion.”

It could be called the “Conflict of Interest Report” because it empowers the agency to take certain actions if and only if it makes a negative finding. The report is always ambiguous because broadband progress is never uniform across the entire nation. This will always be the case because the nation’s broadband infrastructure is constantly under construction.

Converting the old telephone, satellite, cellular, and cable networks from their original purposes to their current role as carriers of Internet protocol at ever-increasing quality has been likened to converting the Wright Brothers’ airplane into a jumbo jet while in the air. The parts that have been most recently remodeled are ahead of those further down the list.

Upgrade Priorities

The priority of upgrades depends on population density and profitability: A $100,000 spend that upgrades 1000 accounts is always going to take precedence over a similar spend that only affects 100. And when we get to rural areas, that same spend may not even affect a dozen.

So every year the FCC is faced with deciding what constitutes ATC as well as how to measure “reasonable and timely” when the economics are so wildly different. We’ve suggested before that ATC should be defined on the basis of activities, as many scholars are now saying it should be. Perhaps a mathematical definition of “reasonable and timely” is the next step toward a politically-neutral report.

In any event, Chairman Pai has removed the 706 report from circulation so it can be revised and corrected. This is good because it’s more important to do it right than to do it strictly according to schedule. Depending on how we define broadband and how we assess the relative value of mobile, satellite, and wired networks, this problem is solved for more than 90% of America. But those are some very big definitions. See the story in Communications Daily for more.

Transparency Waiver Improved and Extended

John Eggerton reports that the anticipated extension of relief from open Internet data reporting by small carriers has all but passed: “FCC chairman Ajit Pai has circulated an order waiving the FCC’s Open Internet order’s enhanced transparency requirements for smaller ISPs for five years and upping the trigger for that waiver to 250,000 subs or fewer.” This is a good move because the 2015 Open Internet Order went a bit haywire on data collection.

While it would be better to limit data collection all the way around to items of concrete value to regulators and scholars, providing relief to the WISPs and other rural carriers will make a lot of people breathe easier. Once networks are properly instrumented, it’s easy to collect the information the FCC wants.

But people who are fighting fires every day don’t always have the time to order, install, and test new data collection systems. Many WISPs rely on home-grown software that would have to be modified to produce the reports as well, and in many cases they only have one competent employee to revise the code. That person is the owner in many instances.

This data is over and above the 706 reporting requirement. Turbo Tax for WISPs, anyone? It would help.

Congress Asks for Set-Top Box Halt

Nineteen members of Congress asked Chairman Pai to put an end to the troubled set-top box order. The order had been in limbo since last fall because Chairman Wheeler couldn’t get enough support from his own caucus to pass it. The order itself was largely incoherent. It assumed a vague plan developed by a Public Knowledge lobbyist was sufficient to protect content from piracy, but the plan was too full of holes to even evaluate.

The Chairman complied, but has so far not closed the docket. Current status is MVPDs (cable companies to you and me) are working with streaming device companies to develop customized apps that meet usability and protection standards.

In two to three years, the industry will be able to publish detailed technical specs that could be the basis of a future order. It’s not clear such an order will ever be necessary because the MVPDs have every interest in getting their content to their customers wherever they happen to be.

I would expect the docket to remain open for a year or so just in case a situation emerges that demands action.

Business Data Service Price Controls

Finally, the BDS item was taken out of circulation but not closed. This item was enormously controversial because the FCC made some deeply disturbing moves with its economic justification. While Wheeler generally preferred political analysis to economics, you can’t very well impose price controls without a sound economic basis.

The FCC’s approach was eviscerated by economic analysis, and many key parts were withheld until late dates that prevented comment.  Hence, a ten-year-old proceeding was rushed across the finish line without adequate public comment.

The major problem with this order is its failure to recognize that TDM – the old telephone technology – is dead and business will rely on Ethernet for the foreseeable future. This burdens carriers with supporting an obsolete technology with money that would be better spent on the networks of the future.

This really shouldn’t be hard to grasp.

Advertising (AKA “Privacy”) Order

The FCC hasn’t acted yet on rescinding the Wheeler “privacy” order creating an unlevel playing field for Internet advertising. This order was passed by the last FCC in its final days, but may be overturned by the Congressional Review Act, a Motion for Stay at the FCC, or a Petition for Reconsideration to the FCC.

The multitude of options suggests that 11th hour actions of major significance by lame-duck commissions aren’t appreciated by lawmakers. It’s not clear which path will be taken to vacate the order, but it’s reasonably certain that it’s going down. My guess would be the CRA, but it’s far from certain.

The final result is likely to be a rewritten act that harmonizes the privacy obligations of ISPs with those of edge services such as Google and Facebook. This could come about by revoking the common carrier exception in the FTC Act and sending the ISPs back to their traditional privacy regime; by revoking the Title II classification of ISPs under the 2015 Open Internet Order; or by changing the text of the privacy regulations to make them align with current and future FTC privacy guidelines.

One way or another, this is bound to happen but the path is not yet clear.