Requiem for an Agency
The Federal Communications Commission had a great run.
Under six Chairmen, Democrat and Republican, the FCC played an important role in one of the greatest economic and cultural transformations in history: the global rise of the converged digital communications environment that now pervades our lives. The agency wasn’t the source of the entrepreneurial ideas, technical innovations, and massive investments, of course. All that took place predominantly in the private sector. Yet without the FCC, the internet ecosystem today would be different, and in most ways worse: less vibrant, less advanced, less competitive, less open, and less reflective of American leadership and values. Along the way, this tiny agency—a tenth the size of the EPA—became a highly visible and important player in critical public policy debates.
And now, I fear, the FCC’s moment in the sun is coming to an end. The Trump FCC may become at best insignificant, and at worst, a tool for mischief and dirty tricks that will weaken the foundations of our democracy.
The FCC wasn’t always so influential. Fifteen years ago, an article in Mother Jones remarked on the agency’s rise to prominence:
Before TV cables carried Internet access, before media conglomerates’ revenues shot into the billions and cell phones became middle-class accessories, the FCC was a bureaucratic backwater. … But the advent of the information economy has turned the FCC from a minor D.C. player into one of the government’s most powerful agencies.
Before the 1990s, the FCC’s signature moments in the public eye were 1960s Chairman Newt Minnow railing ineffectually against the “vast wasteland” of television programming, sanctions against a radio station for broadcasting George Carlin’s “Seven Deadly Words” monologue, and the Reagan-era elimination of the Fairness Doctrine that promoted balance in media. The Commission’s other important activities, such as reviewing telephone company tariffs and managing wireless spectrum allocation, were too abstruse to register on the public consciousness.
Beginning in the mid-1990s, the FCC took on a higher profile. It shepherded the launch of digital television; led efforts to privatize and liberalize telecommunications markets around the world; broke open the local telephone monopolies; passed judgment on mergers (some heavily conditioned and some blocked) that transformed multiple industries; kickstarted the wireless revolution through its world-leading spectrum auctions; and pioneered efforts to bring the dynamism and technologies of Silicon Valley into government. And that leaves out the FCC’s greatest legacy in this period: the growth of the internet. Had the FCC not earlier put in place rules ensuring network access for new devices and applications, and opened the unlicensed wireless capacity for WiFi, the internet would never have taken off so robustly in the U.S. In the late 1990s, had it accepted the arguments of industry groups who wanted to impose metered charges on internet access, ban internet telephony, and subject small software companies to legacy regulations and fees, the internet as we know it could have been stopped in its tracks.
It’s hard to remember now, but in the mid-90s, much of government, and powerful incumbents in the private sector, were worried about the internet. Congress passed the Communications Decency Act to censor online communications, and restrictive provisions of the Digital Millennium Copyright Act to combat copyright infringement. The Clinton Administration pushed for a “Clipper Chip” with a mandatory government backdoor in encryption systems. The textbook theories of “agency capture” and “public choice” would put the FCC on the side of the legacy industries it knew, not the techno-rabble preaching digital transformation.
Not so. The FCC knew a real revolution when it saw one. It could have thrown its weight behind the CDA, holding the evidentiary hearings that Congress failed to conduct, but it chose not to. And it could have gone along with various questionable schemes by content owners to interfere with the functioning of the internet, but it largely demurred. Instead the FCC talked up the transformative potential of the internet, promoted a vision of limited regulation for nascent services, and worked relentlessly to adapt its rules for the new age of digital convergence. Behind the scenes, it continued its longstanding work to promote universal service, accessibility, interoperability, consumer protection, and network reliability: the oft-ignored supports for a well-functioning market.
The FCC has been equally important in the internet’s second act, fueled by broadband and wireless. Despite a late start relative to other countries, the FCC’s National Broadband Plan set forth a detailed and powerful vision. The FCC engaged in to hard work of eliminating economic and technical barriers to broadband deployment and adoption. Most prominently, it wrestled for over a decade with how to ensure the internet remained an open platform for innovation of all sorts. A court decision this June seemed to finally establish network neutrality as the law of the land, and the FCC as the “cop on the beat” to address emerging threats to the open internet.
Five months later, everything changed.
Don’t be distracted by the chatter about how various Trump Transition members have expressed hostility to net neutrality. This shouldn’t surprise anyone, and it masks the real concerns. Republicans uniformly and intensively opposed the FCC’s 2015 reclassification of broadband access providers as regulated telecommunications carriers. And while some supported the principles of net neutrality—the FCC’s first statements and actions on the issue came under two Republican Bush-era Chairmen—most Republicans have always been skeptical of the need for formal broadband non-discrimination rules. What has changed, ironically, is the position of the industry. Though still opposing common carrier status and some of the FCC’s specific requirements, virtually every major operator is on record endorsing what would have been considered strong net neutrality rules in 2004 or even 2008. They’ve lived with net neutrality requirements for the better part of four years now, and the sky hasn’t fallen.
What Comes Next
So will the new FCC Chairman just reverse the FCC’s broadband reclassification? It doesn’t work that way. An administrative agency cannot act in an “arbitrary and capricious” manner. That includes changing its position 180 degrees when a new party captures the White House. It’s the whole point of having independent administrative agencies, and the D.C. Circuit Court of Appeals takes this principle very seriously. The current FCC went to extreme lengths to convince the court that circumstances had changed in the decade since it first classified broadband access; the new FCC won’t be able to show they changed back overnight.
Nor could the FCC simply declare its unwillingness to enforce the prior decision. The FCC’s jurisdictional finding in the 2015 order was that broadband fundamentally is a telecommunications service under the Communications Act. Again, an agency can’t refuse to follow its authorizing statute. The new commission could limit the scope of net neutrality, by expanding its zone of “forbearance” and simply delaying action on open questions such as “zero rating” plans that exempt chosen content from usage caps. But that would leave the basic regulatory framework intact.
So instead, what the Republicans will almost certainly do is go over the FCC’s head. Congress can change the classification of broadband at the stroke of a pen. And it can do so for no reason other than its ability to marshal enough votes and avoid a Presidential veto. There were, in fact, several Republican Congressional efforts to prevent or reverse the FCC’s broadband reclassification. They all failed to muster sufficient support in the face of a certain veto by President Obama. That’s no longer a factor. Rep. Marsha Blackburn, a key Republican Congressional leader on these issues, signaled this was the plan in a recent speech.
As Congressional reversals of signature Democratic policies go, this one would be an easy lift. There’s no need to come up with a replacement ala Obamacare, or to herd various factions of the fractured Republican coalition. Political costs will likely be minimal. While net neutrality advocacy drew a surprisingly strong popular movement, it’s still not an emotional or personal issue for most Americans. Moreover, the Republican legislation will almost certainly endorse limited net neutrality principles banning blocking and blatant discrimination against competing services. Remember, industry has no problem with this. The Republicans will claim—truthfully—that they are for the first time formally enshrining net neutrality in U.S. law. Democrats friendly to the telecommunications industry would probably vote in favor, giving the majority a rare opportunity to crow about bipartisanship. And Republicans will have a strong PR message that they reversed President Obama’s rash action to “regulate the internet.” I can’t see why they won’t take the opportunity.
It’s the rest of the potential legislation that’s more concerning. The bill will doubtless remove the FCC’s jurisdiction to regulate broadband access providers further, and limit its ability to enforce the new net neutrality rules. That much was in the previous Republican bills. A new one could well cut down the agency’s legal authority further. It will also include procedural changes that could hamstring the FCC’s ability to act, such as requirements of detailed economic cost-benefit analysis and explicit findings of necessity before adopting any rules. Such requirements may sound reasonable, but in practice are often nothing more than ways to throw sand in the gears of policy. Budget cuts will go along with the reduced responsibilities. “Starve the beast” is a particularly effective technique against a small agency where many functions have already been cut to the bone.
Republicans on the FCC and in Congress are angry the current Chairman, Tom Wheeler, has (in their view) run roughshod over objections and cut corners to get his way. In an Administration where score-settling is the coin of the realm, expect the FCC to pay the price. Some procedural reform to open up and streamline the FCC policy-making process would be welcome. We’ll get a bit of that mixed with punitive measures to ensure nothing like the FCC’s net neutrality initiative can ever happen again. An agency rendered impotent and immobile cannot possibly address the challenges the future throws at it.
What could prevent this scenario? Perhaps Congress will be too busy with other big-ticket items to act. Perhaps the new Republican majority at the FCC will find some clever legal means to neuter net neutrality. In either case, though, the decision would only last until a Democrat regains the White House. The most likely thing that gets in the way is if Congressional Republicans get more ambitious. Rather than pass a simple bill to reverse net neutrality and muzzle the FCC, they could open up a fundamental rewrite of the Communications Act. This isn’t farfetched. The leadership of the relevant committees has talked about it for years. Virtually everyone across the spectrum agrees the current law is a badly-executed set of old compromises that looks about as well tailored for the current communications and internet marketplace as President Trump’s suits. Once Pandora’s Box is opened, though, passage of the legislation, especially quick passage, is less certain.
It Gets Worse
Frighteningly, an ineffectual FCC may be the best case scenario for a Trump Administration. For there is another, darker history at the agency. Before the FCC was a bureaucratic backwater, it was at times a cudgel against free speech. Richard Nixon sought to use FCC licensing of TV stations as leverage against the meddlesome Washington Post, for example. And there was that fine against the station airing the George Carlin routine. The FCC wields more potential power to constrain free speech than perhaps any other organ of government, though its ability to sanction broadcasters and impose ownership restrictions on other media outlets. The Janet Jackson “wardrobe malfunction” aside, it has rarely used that power in recent decades, and generally only grudgingly.
Enter Donald Trump. A man who relentlessly denigrated and threatened the media throughout his campaign. And a man singularly passionate about settling scores and punishing enemies. One of Trump’s first acts as President-elect was to summon the leaders of major media outlets to an off-the-record meeting, where he reportedly screamed at them for publishing unflattering stories. His prominent supporter Peter Thiel secretly funded a lawsuit to put an online media company out of existence. Is there any reason to think Trump wouldn’t see the potential in the FCC as a means to harass and muzzle the free press? If Trump doesn’t, one can be sure his advisor Steve Bannon, late of the new media company Breitbart, does. The FCC is supposed to be independent of the White House, but can anyone imagine this team honoring that rule (or this Congress launching an investigation if it didn’t)?
The FCC’s visibility and industry oversight role makes it a perfect bully pulpit. Even when it can’t directly force companies to act, it Chairman can threaten and cajole them, publicly and privately, in ways that are difficult to refuse. I’ve sat in the Chairman’s office and watched prominent CEOs receive a dressing-down. And in some areas such as merger review, the FCC’s power to extract concessions seemingly unrelated to the deal is broad. Used wisely, this can be a flexible tool to promote the public interest. In the hands of those who hope to muzzle unfiltered information and dissent, it’s a cudgel. Expect a further wave of communications and media mergers in the new deregulatory environment. Trump’s throwaway comment on the proposed AT&T/Time-Warner combination wasn’t hostility to big media, it was hostility to media he doesn’t control. What better tool for control, leaving few fingerprints, than the FCC?
Attacks on the media could easily morph into attacks on the internet. President-elect Trump railed against Apple for refusing demands from the FBI during the campaign, and he clearly noticed that virtually all of Silicon Valley lined up squarely with Hillary Clinton. He benefitted spectacularly from his campaign’s use of Facebook and his use of Twitter, but if those companies clamp down on the fake news and harassment from his supporters, he’ll turn on them in a heartbeat. In theory, the First Amendment remains a bulwark against government repression of free speech. Can we count on the courts, though, especially after a Trump selection replaces President Obama’s Supreme Court nominee?
And then there’s the religious angle. Vice President-elect Mike Pence hails from the Christian right, where indecency remains a far greater concern than among the general population. Complaints continue to pour into the FCC about inappropriate content on local stations. The agency has had little stomach to pursue them aggressively, but a Pence protege might feel differently. Certainly it’s important for the FCC to enforce its legal obligations. And certainly there is a place for protecting children from pornography and obscenity. In today’s pervasive digital media environment, however, a more aggressive FCC on indecency enforcement will do far more to chill legitimate speech than to shield anyone.
It doesn’t have to be this way. There is an honorable, and defensible, conservative position on communications policy. Perhaps market forces will bring better results with less government engagement. That’s not my view, or that of a great many economists and scholars who study the past, present, and future of the internet. But it’s the other side of a well-formed debate. Even the question of whether we need an FCC as currently constituted is fair game for discussion. A careful dismantling of the FCC and reassignment of its essential functions, destructive as it might be, would be better than the hollowing out or corruption that might occur instead.
Trump’s Transition staffers, thoughtful people from think tanks and academia, spring from the conservative policy world. It’s critically important to understand, however, that the Transition is not the government. I can say this with some authority, as the co-leader of the FCC Transition for President Obama. The Transition lays critical groundwork, but the leadership of the agency sets the policies and creates the culture. The FCC was quite different under the two Bush Administration Chairmen (Michael Powell and Kevin Martin), and it was quite different under the two Obama Administration Chairmen (Julius Genachowski and Tom Wheeler). Given the prominence the the FCC, its new head is unlikely to come from a think tank or university. It might be current Commissioner Ajit Pai, an ambitious conservative with friends in the Senate. As with other Trump appointments, though, a wild card is more likely.
What seems hard to imagine under any scenario is that a Trump FCC will have the authority, desire, and capability to tackle the important challenges of the next stage of the internet. Too many Americans still aren’t online, or don’t have affordable competitive broadband options. We’re behind the rest of the world in leveraging digital connectivity to provide public services, and supercharge our transportation and healthcare sectors. The revolutionary technologies of 5G wireless, augmented reality, and the Internet of Things will benefit from significant government engagement around standards, deployment, and security. Demand for bandwidth won’t abate. And the dynamism of the internet will still require an open environment where innovators have room to roam. Some influential country needs to push back on China, Iran, and other governments promoting a neutered and heavily surveilled alternative. Hillary Clinton’s Technology and Innovation Plan, for which I served on an outside advisory group, details just how much important work remains to be done.
The FCC didn’t build the internet. Its senescence won’t kill it. But neither is the internet a self-driving car that proceeds unerringly to its destination. Essential questions will have to be addressed somewhere. If the FCC is once again a bureaucratic backwater (or worse), just where will that be?
