Free market meets net neutrality

Free market meets net neutrality
© Greg Nash

In a Capitol Hilton ballroom last week, Chip Pickering, CEO of the telecommunications trade group Incompas and a former GOP congressman from Mississippi, argued on an economic conference panel that Republicans deserve credit for the competitive nature of the tech world.

“If you look historically — 1984, who broke up AT&T? It was Ronald Reagan,” Pickering said. “If you look at the current open internet policy that was just adopted by the last [Federal Communications Commission] chairman — who gave him the blueprint to do so? [Supreme Court] Justice [Antonin] Scalia.”

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These days, it’s uncommon to see a Republican arguing in favor of the FCC’s open internet rules, more commonly known as net neutrality, a set of regulations passed during the Obama administration that are now on the chopping block in the new Republican-controlled FCC.

Pickering, who still considers himself a fiscal conservative, sees net neutrality as the “last great battle” in competition policy.

“I think the open internet has been the most successful expansion of free-market capitalism in world history,” he said in an interview with The Hill.

You would be hard pressed to find a sitting Republican who shares his view on the FCC rules. In the past 10 years, his party has become all but united in its opposition to what it sees as Obama-era regulatory overreach.

“He’s maintained those principles,” said Gigi Sohn, who was an adviser to former FCC Chairman Tom Wheeler, the architect of the current net neutrality rules. “He hasn’t sold out like many of his colleagues.”

The momentum has shifted against net neutrality this year with President Trump taking office. Early on, he elevated then-FCC Commissioner Ajit Pai, a fellow Republican, to be the regulatory agency’s new chairman.

Pai wasted little time taking on regulations pushed through by Wheeler. In April, he announced his plan to undo the landmark net neutrality regulations, which passed in 2015.

Those rules ban internet providers from blocking or throttling web content and from creating paid “fast lanes.”

Conservatives and telecom industry advocates have railed against the legal framework for the rules, which reclassified internet providers as telecommunications services, opening them up to tougher regulation from the FCC.

Pai’s proposal, which is currently open to public comment at the FCC, would undo that reclassification and revoke the agency’s authority to implement and enforce net neutrality protections.

Advocates such as Pickering see the FCC rules as the most effective way to keep the internet free and competitive.

The fight over net neutrality can be confusing. Both sides are voicing support for a “free and open” internet, and companies including AT&T, Comcast and Verizon, which have fought hard against the FCC rules, have even said that they agree with the principles of net neutrality.

The partisan battle lines largely correspond with divisions in the internet ecosystem. The major players in the broadband industry are against the net neutrality regulations, while many web-based companies support them.

“Today it’s hard to imagine any Republican really being the champion for the internet side or the competitive side — or vice versa: the Democrats not being with the internet or the competitors,” Pickering said. 

Pickering grounds his net neutrality argument in conservative principles. He sees the issue as a choice between maintaining a competitive free market and allowing giant broadband providers to use their position as internet gatekeepers to pick who will succeed or fail in the online marketplace.

“It’s impossible to create competitive free markets without laws, legislation and rules,” Pickering said. “So we just have to counter what I think is a misrepresentation of competitive rules and policy so that Republicans can say, ‘Yeah, that’s consistent with my beliefs.’ ”

Charles Willis Pickering Jr. spent his undergraduate years at the University of Mississippi and later got his master’s degree at Baylor University.

After finishing graduate school, Pickering joined the George H.W. Bush administration to work on trade with the collapsing Soviet Union before joining the staff of Sen. Trent Lott (R-Miss.). As a staffer for the Senate Commerce Committee in the mid-1990s, Pickering helped write the 1996 Telecommunications Act, which was designed to promote more competition in the industry.

He was elected to the House in 1996, replacing 30-year veteran Sonny Montgomery as the representative for Mississippi’s 3rd Congressional District. Pickering served until 2009.

During his years in Congress, Pickering was a strong fiscal conservative, often receiving high marks from free-market groups. He was also an early advocate of net neutrality, which wasn’t so uncommon for a Republican in the years before President Barack ObamaBarack Hussein ObamaGOP rep: North Korea wants Iran-type nuclear deal Dems fear lasting damage from Clinton-Sanders fight Iran's president warns US will pay 'high cost' if Trump ditches nuclear deal MORE came into office.

But somewhere along the line, Republicans began siding more and more with the large telecom companies — which Pickering refers to as “incumbents” — and Democrats cast their lot with Silicon Valley web companies.

“To a certain degree, the internet companies socially align more with Democrats. That’s part of it,” Pickering said. 

“The incumbents always try to capture whichever party is in power,” he added. “That’s just the nature of economic incumbents partnering with political incumbents.”

After deciding not to seek reelection in 2008 and spending a number of years as a lobbyist for Capitol Resources, Pickering became the CEO of Comptel, which was then an association of small telecom companies created to advocate for more network competition.

Pickering believed that those firms had a shared interest with internet-based companies in fighting back against the incumbents. So over the past three years, Comptel became Incompas and expanded its membership to include web services such as Amazon, Facebook and Netflix.

“One of the things we hope to do with Incompas is to find a way to restore that type of cross-industry bipartisanship so that we can reach major agreements on open internet policy or infrastructure telecom initiatives,” he said.

This year has been tough for Incompas’s competitive telecom members. In April, the FCC voted in favor of deregulating the $45 billion business data services (BDS) market, which allows companies to transmit large amounts of data over special lines.

Pickering believes the move, which was pushed through by Pai and eliminated price caps for some areas that only have one BDS option, will only help the more established players in the market, such as AT&T.

“Pai is probably the most pro-incumbent chairman in the era of competition,” Pickering said. “His view in the BDS proceeding that one provider equals competition is a pretty dramatic departure from Republican and Democratic view of markets.”

“Chairman Pai has one goal in mind: increasing access to robust broadband and data services that benefit consumers and the economy,” an FCC spokesman told The Hill when asked about Pickering’s comments. “And the best way to do that is to unleash market forces that have historically made our Internet economy the envy of the world.”

Despite the BDS loss, and the looming repeal of the net neutrality rules, Pickering says he is “cautiously optimistic” and believes that the open internet fight may not go according to Pai’s plan.

“Over the last three years, we’ve won more battles than we’ve lost,” he said. “And now the question is, with a new chairman and a new administration, how is this going to play out?”