Net neutrality is in focus as the FCC gears up for a vote today that will likely roll back one of the signature Internet policies from the Obama-era.
Chairman Ajit Pai maintains that current rules went too far in imposing potentially stifling regulatory burdens on broadband providers, while consumer advocates and tech companies feel they protect Internet users and website owners.
Signaling in line with many observers' expectations, new FCC Chairman Ajit Pai has promised to roll back outdated rules at the agency.
It's a top priority to "remove unnecessary or counterproductive regulations from the books," Pai said today after chairing his first meeting.
He's not yet speaking extensively on what will happen to the "open Internet" order -- net neutrality. That landmark order began to treat broadband providers as the government does utilities. He's also quiet for the moment on whether the agency will seek a review of AT&T's (T +0.8%) $85B deal for Time Warner (TWX +0.2%).
He had previously withdrawn proposed reforms of the business data services market and the TV set-top box market. Today, the agency (now majority Republican) voted to abolish a requirement that cablecos, TV and radio broadcasters retain some public inspection files.
As expected, President Trump has named Republican Ajit Pai the new chairman of the Federal Communications Commission.
In a statement, Pai said he was "deeply grateful" for the appointment. "I look forward to working with the new administration, my colleagues at the Commission, members of Congress, and the American public to bring the benefits of the digital age to all Americans."
Pai will lead (for the moment) a three-member FCC, composed of himself and fellow GOP commissioner Michael O'Rielly and Democrat Mignon Clyburn.
Pai's leadership signals coming reversals on key issues most likely including the FCC's approach to net neutrality, broadband subscriber data privacy, and mergers (watching closely: investors of AT&T (NYSE:T), Time Warner (NYSE:TWX), Sprint (NYSE:S), T-Mobile (NASDAQ:TMUS), Comcast (NASDAQ:CMCSA) and Charter (NASDAQ:CHTR)).
Pai has been a vocal part of the two-commissioner Republican minority on the FCC under outgoing Chairman Tom Wheeler. Among his notable dissents has been one on the 2015 Open Internet order ("net neutrality") -- pointing to a possible reversal of the regulations that were opposed by major telecom players including AT&T (NYSE:T) and Comcast (NASDAQ:CMCSA).
If selected, Pai would lead the agency with a 2-1 GOP majority (for now; Trump can nominate commissioners to fill two open seats).
Along with opposing net neutrality regulations, Pai objected to a vote to set subscriber data privacy rules affecting broadband providers, and he is more supportive of industry mergers than agency Democrats.
“Serving as F.C.C. Chairman during this period of historic technological change has been the greatest honor of my professional life," he says in a statement.
"It has been a privilege to work with my fellow Commissioners to help protect consumers, strengthen public safety and cybersecurity, and ensure fast, fair and open networks for all Americans.”
Wheeler's departure likely paves the way for Republican leadership of the agency, and may be welcomed by companies opposed to reforms he was pushing: in set-top boxes for pay TV, and in business data services.
With Donald Trump set to take over the White House, FCC Chairman Tom Wheeler's plan to reform the pay TV set-top box market is "95% dead," according to one analyst.
Wheeler's proposal to kill off the boxes met with opposition from the industry even after it was modified to be much closer to pay TV providers' app-focused approach. The FCC said the market for the boxes sat at $20B a year and that the cost of renting them had gone up 185% since 1994, while other consumer electronics dropped 90% in price over that period.
"I would say it's 95 percent dead," said Bloomberg Intelligence's Matthew Schettenhelm. "It's a very long road to get this done.”
House Republicans have asked Wheeler to focus on the ongoing broadcast incentive spectrum auction, and not to move forward with “complex and controversial items that the new Congress and Administration will have an interest in reviewing."
FCC Chairman Tom Wheeler's proposal for new rules governing pay TV set-top boxes -- set for a vote today, but facing opposition from the industry and even a swing-vote Democrat on the panel -- has been pulled from today's meeting (now getting under way), but will stay in circulation.
Wheeler had changed a previous proposal and appeared to move closer to pay-TV industry wishes for an app-based approach, but still faced pushback from service providers and resistance from Commissioner Jessica Rosenworcel, who along with Republican Commissioners Ajit Pai and Michael O'Rielly could form the three votes to sink the proposal.
The Department for Professional Employees -- a coalition of technical-worker unions affiliated with AFL-CIO -- has joined other unions in sounding off against the FCC's revised set-top box rules proposal.
The group criticized the "de facto" compulsory licensing scheme set up by the agency's chairman, Tom Wheeler, in order to prevent anticompetitive agreements among pay-TV providers.
That regime is "unacceptable and unworkable," the DPE says.
"The FCC does not have this authority," says Paul Almeida, the DPE's president, in a statement. "The one-sided proposal undermines the value of creative works, shrinks revenue streams that middle-class creators depend on to make a living and threatens the hard-fought wages and benefits of creative industry workers."
The FCC has said the set-top box market is at $20B a year, and consumers pay an average annual cost of $231 (aside from programming and service costs) for the boxes -- up 185% since 1994 while other consumer electronics have dropped 90% in price over that period.
Any new revisions may be targeted at the swing vote on the five-member FCC, Democratic Commissioner Jessica Rosenworcel, who has expressed concerns about the licensing body created by the new rules to prevent anticompetitive agreements between providers.
Chairman Tom Wheeler's fact sheet about the rules laid out how providers would need to create apps enabling consumers to see all the content they paid for on their own devices, without paying expensive rental fees for a box. (The FCC estimates Americans spend $20B on box leasing fees that have jumped 185% since 1994, a period during which other consumer electronics have fallen 90% in price.)
Top pay TV providers (those serving about 95% of the subscriber population) will need to comply with the new rules within two years if they're adopted in a Sept. 29 vote.
As for platforms, Wheeler's fact sheet singled out Roku, iOS/Android and Windows, but any operating system with U.S. shipments of at least 5M devices qualifies to have an app written for it by providers.
Devices would also meet the requirement if they're already built on a qualifying platform (such as on Android).
Alternately, smaller device providers could strike their own deals with providers (such as with Comcast's Xfinity TV Partner Program) to get access to the apps.
FCC Chairman Tom Wheeler has circulated a final-rules version of his "ditch the box" proposal to open the market for pay television set-top boxes, and it's moved considerably toward an app-based approach cable providers favor.
"Today, I am sharing with FCC colleagues a plan to end the set-top box stranglehold and monthly rental fees," Wheeler says in presenting the new order, which he says simplifies the original proposal while still fulfilling Congress' mandate to the agency to ensure consumers can use preferred devices to access programming they've paid for.
Keys to the new order: Providers will have to offer a free app for subscribers to access all the programming they pay for on a variety of devices, "including tablets, smartphones, gaming systems, streaming devices or smart TVs." And consumers won't be forced to pay monthly rental fees for a box. Providers will also have to make their apps available to popular platforms including Roku, iOS/Android and Windows.
Also, the rules force providers to allow consumers to search content in one place whether it comes from the provider, over-the-top services or a programmer's stand-alone app, with no discrimination allowed.
Copyright and licensing are protected as providers will oversee end-to-end content delivery with control over their apps, Wheeler says.
The FCC will vote on the new order Sept. 29; if it's adopted, the biggest pay-TV providers (covering 95% of subscribers) will have two years to comply.
FCC Chairman Tom Wheeler says in a blog post that he won't offer up new rules regarding retransmission-rights negotiations between TV programmers and providers.
The stance comes alongside an increasing environment for disputes and lengthy blackouts of TV service as pay-TV companies and content creators tussle over the increasing costs of programming.
Based on staff review, "it is clear that more rules in this area are not what we need at this point ... So, today I announce that we will not proceed at this time to adopt additional rules governing good faith negotiations for retransmission consent."
Wheeler says Congress could yet expand the FCC's scope of authority which could provide for more action. But "What we need is not more rules, but for both sides in retransmission consent negotiations to take seriously their responsibility to consumers."
Dish Network (NASDAQ:DISH) and Tribune Media (NYSE:TRCO) are in the middle of an ongoing fight, including a blackout.
House testimony today indicates that an FCC proposal to open the market for TV set-top boxes may be losing its majority.
FCC Commissioner Jessica Rosenworcel -- considered a swing vote here -- acknowledged under questioning that the proposal (voted to move forward on party lines in February) was flawed.
Asked by Rep. Marsha Blackburn to answer only yes/no, Rosenworcel and GOP commissioners Ajit Pai and Michael O'Rielly said "yes" to the question "Do you agree that the initial FCC set-top proposal is flawed?" Rosenworcel also said "yes" to "Do you agree that if the FCC is to move forward, it should follow a different approach than outlined in the NPRM?"
FCC Chairman Tom Wheeler admitted that a "Ditch the Box" counter-proposal from the TV industry, focused on using apps, showed "promise," but said "One page is not a proposal; it is a press release."