For the FCC, competition by any other name

FCC, Net Neutrality
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In the marketplace of ideas, common sense does not always prevail. Such is the case when it comes to communications policy in Washington. What makes perfect sense to the common man often moves policymakers to promulgate confusion.

{mosads}For example, consumers today have an embarrassment of riches in choosing video, voice, data, Internet and broadband services. Well before the Christmas rush, any one of us could assemble a customized entertainment and communications plan to talk, text, watch, search and share just about anything, anywhere with anyone. In fact, there are so many new options coming at such a dynamic clip, it is hard to keep up with all the choices.

Starting with basic mobile phone service, the top four carriers — AT&T, Verizon, Sprint and T-Mobile — all have marketing and advertising campaigns to convince customers to get more and more voice, text and data plans at lower and lower prices. Looking at video and entertainment options, the market appears even richer. For a few dollars a month, we can watch our favorite television programs and movies on just about any device in our possession, through either cable, satellite, DSL (Digital Subscriber Line) or over-the-top (OTT) on the Internet. And, if a small business wants to throw up a website, engage in e-commerce, or sell its wares around the world, the communications possibilities are countless.

With this abundance of choice, it should be easy to conclude that competition is alive and well in the telecom, media and technology marketplace. But not so fast.

In a curious move before New Year’s, the Federal Communications Commission (FCC) sent a summons to AT&T, Comcast and T-Mobile to come in and explain their new streaming video plans. These new plans are services that allow customers to view streaming video without being charged against a data cap. Just last week, AT&T rolled out an unlimited data plan for new customers to very warm reviews. Given the promising popularity of these plans, there are sure to be even more hitting the market at enticing price points. Consumers seem to like and want these services, no matter how they are branded, and they are not a bad deal when you want a bigger bang for your buck.

Citing “concerns” by critics, however, the FCC told the companies it wants to “understand how these services relate to the Commission’s goal of maintaining a free and open Internet while incentivizing innovation and investment from all sources.” To the discerning skeptic, that evokes images of the Spanish Inquisition and points to the perditious path of regulation. Through such an inquiry, the FCC seeks to determine whether these plans are net neutrality heresy. If so, it wants to make sure the companies bow to the commission’s Open Internet orthodoxy. But the data cap was not part of the net neutrality liturgy, and arguably falls outside the reach of the FCC. Regulation may not be sanctioned. Advantage: consumers.

The word “competition” gets thrown around a lot in Washington these days. The FCC’s very own “Strategic Plan” for years 2015 to 2018 states: “Promoting competition is a fundamental goal of the Commission’s policymaking. Competition has played and must continue to play an essential role in the mobile wireless industry — leading to lower prices and higher quality for American consumers, and producing innovation and investment in wireless networks, devices, and services.” It is at the heart of every big telecom merger and lives in almost every speech from the head regulator in town. Tom Wheeler, the avuncular chairman of the FCC, has stated, “Where there is ‘Competition, Competition, Competition,’ the need for regulation is diminished.”

Relying on that mantra as a beacon, business leaders hoped for a real-world sentience to the regulation of the communications market. Those hopes were dashed when the FCC veered onto a collision course with the broadcast industry, rolling back years of custom on broadcast joint sales agreements (JSAs), and alienating broadcasters and their champions on Capitol Hill. Next, came a sharp left turn on the Internet, as the FCC yielded to the president’s pronouncement that utilities-style regulation was the preferred path forward for net neutrality.

Some policymakers have found comfort in an old saw, which says if nobody likes the outcome, you must be doing something right. Balderdash. Anyone coming up on the short end in Washington will look for another way to win. And that seems to be the case today. In a stroke of bipartisanship led by Senate Democrats, Congress reclaimed its statutory mojo and unwound the FCC’s prohibition on JSAs in the Omnibus Budget Reconciliation Act before it recessed for the year. Advantage: broadcasters.

Similarly, the U.S. Court of Appeals for the District of Columbia Circuit appears poised to redirect the FCC’s errant steps on Internet regulation. After briefs and oral argument in December, the court is expected to send the FCC a familiar demarche: Go back to the portals and undo the sweeping use of Title II authority over broadband. Advantage: telecommunications companies, Internet service providers and the free market.

As we enter 2016, competition policy affecting the telecom, media and technology (TMT) sector is both inchoate and inconsistent. Among other things, regulators will be looking into competition in the market for business data, or so-called special access services; competition in the online video distribution (OVD) or over-the-top (OTT) market; competition in mobile and wireless services; and competition in broadband offerings as averred in the pending Charter-Time Warner Cable and Altice-Cablevision mergers.

These proceedings are certainly de rigueur and apropos for the world’s leading communications market. Given this reality, the enduring hope among business leaders in the TMT sector is that government regulators will be guided by common sense, pragmatism and a scintilla of hoi polloi wisdom, which advises “if it ain’t broke, don’t fix it.”

Hoffman is chairman of Business in the Public Interest and adjunct professor at Georgetown University. He served as a chief of staff and senior legal advisor at the FCC from 2013 to 2015.

Tags AT&T Comcast FCC Federal Communications Commission T-Mobile

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