Now, Keep Moving Forward!

Now that the Senate has confirmed Ajit Pai to another term, he again can devote his undivided attention, as the agency’s Chairman, to leading the Commission. There is still much to do to reform communications policy and the institution itself.

It is an unfortunate indication of the temper of the times that someone as well-qualified as Mr. Pai was subject to an effort by pro-regulatory interests to defeat his confirmation simply because of differences in policy perspective that, in the past, would not have led to such opposition. In the face of this campaign – and some overheated rhetoric – I urged here that Mr. Pai be promptly confirmed. There is no need now to rehearse all of what I said there. Suffice it to say the blog’s last sentence captured my view: “Mr. Pai surely is the right person to lead the FCC at this time.”

So now there is an opportunity to keep moving forward. But, first, a “correction.” Right up there in my first sentence, I see that, in a slip of the keys, I said Chairman Pai “again” can turn his undivided attention to his job. That might imply – wrongly! – that Mr. Pai has spent time thumb-twiddling while awaiting his confirmation. Not so.

Since becoming Chairman last January, Mr. Pai (almost always with the support of his Commission colleague, Michael O’Rielly) already has accomplished much that is notable. For example, regarding procedure and institutional reform, Chairman Pai began – and has now made permanent – the practice of releasing to the public draft proposals and orders three weeks in advance of agency open meetings. This gives the public an opportunity to see the draft of the proposed Commission item on which the commissioners will be voting so that interested persons have the opportunity to provide reactions to the draft before the Commission vote. So far, this move to increase the transparency appears to be working well.

Also notable from an institutional procedural perspective is Chairman Pai’s commitment to ensuring that the commissioners vote on important matters that should not be delegated to the staff for handling. A good example is the restoral to the commissioners of the authority – and the responsibility – to vote on the various congressionally-mandated competition reports, such as the recently adopted Wireless Competition Report.

With regard to matters of substantive policy, the accomplishments thus far likewise have been noteworthy. For instance, early on in his tenure, Chairman Pai terminated the Commission’s innovation-stifling investigations into various popular free data wireless plans that had been initiated by the Wheeler Commission. With Commissioner O’Rielly, he stayed parts of the Wheeler Commission’s overreaching privacy order from taking effect.

And, of course, most consequentially, again with the support of Commissioner O’Rielly, Chairman Pai initiated the Restoring Internet Freedom proceeding to consider reversing all or parts of the public utility-like regulatory regime imposed on Internet service providers by the Wheeler Commission’s 2015 Title II order. The Commission’s Notice of Proposed Rulemaking (NPRM) seeks comment on important questions relating to whether the agency possesses the legal authority to adopt the 2015 regulations and, even assuming such authority exists, whether, as a matter of policy, it is reasonable for the Commission to do so. [For the views of Free State Foundation scholars on the issues raised in NPRM, see our initial comments and reply comments.]

Going forward, acting in the Restoring Internet Freedom proceeding is the single most consequential item on the Commission’s agenda. For the reasons discussed in the Free State Foundation’s filed comments and reply comments, it is important for the Commission to eliminate, or at least curtail to a substantial extent, the regulations currently applicable to Internet service providers.

But consistent with, and in furtherance of, the commendable efforts already begun by Chairman Pai to rollback unnecessary and costly regulations that don’t make sense in today’s competitive communications landscape, there is more that should be done. In remarks at the Free State Foundation’s Tenth Anniversary Gala Luncheon on December 7, 2016, then-Commissioner Pai pointed out that the “regulatory underbrush at the FCC is thick” and declared: “We need to fire up the weed whacker and remove these rules that are holding back investment, innovation, and job creation.”

To that end, I want to urge, once again, that Chairman Pai and his fellow commissioners, consider a series of reform proposals I published earlier this year, all but one of which were co-authored by my Free State Foundation colleague, Seth Cooper. [Links to each of these proposals may be found below at the end of this piece.]

I want to call special attention to the FSF proposals for improving the Commission’s periodic regulatory reviews and forbearance reviews mandated by Sections 10 and 11 of the Communications Act and the proposal for improving the Commission’s periodic review of regulations that have a significant economic impact on small businesses. In each instance, in recognition of the evidence that the communications marketplace is largely effectively competitive, the Commission should establish deregulatory rebuttable evidentiary presumptions. As explained in detail in each of the pertinent proposals, these evidentiary presumptions would not alter the substantive standards or findings required by the regulatory review, forbearance, or small business statutory provisions. Rather, adoption of an evidentiary presumption consistent with the deregulatory congressional intent of these provisions would facilitate eliminating regulations that are no longer necessary due to changed competitive circumstances.

To the extent that there was ever any doubt concerning the Commission’s authority to adopt rebuttable presumptions such as those that I have recommended, such doubt should have been expelled by the D.C. Circuit’s July 2017 decision in National Association of Telecommunications Officers and Advisors v. FCC. There, in a unanimous decision, the court affirmed the Commission’s adoption of a rebuttable evidentiary presumption to the effect that if a cable franchise area is served by at least two competing providers, each of which offers services to at least 50% of the franchise area’s households, and the number of households subscribing to the services of providers other than the largest exceeds 15% of the households, then the FCC presumes the franchise area is effectively competitive. In adopting this deregulatory presumption, which reversed a presumption running in the other direction, the Commission cited the changed competitive landscape. To his credit, then-Chairman Wheeler joined with Commissioners Pai and O’Rielly to forge the Commission majority in favor of this sensible deregulatory action.

In affirming the Commission’s decision, the D.C. Circuit observed in NATOA that “the Commission has grounded its presumption in strong evidence of market conditions and facilitated rebuttal where the facts may warrant it.” Furthermore, the court declared that merely because a statute requires the Commission to make “findings,” this does not indicate that the use of presumptions is precluded, especially where, as the court put it, “Congress has not spoken directly to the question whether the Commission may use a rebuttable presumption in lieu of case-by-case findings of fact….”

Now that Chairman Pai has been confirmed to another full term, and as he prepares to lead the Commission in a direction that removes unnecessary rules that, as he has said, are “holding back investment, innovation, and job creation,” he and his fellow commissioners should consider employing deregulatory rebuttable presumptions as a means of minimizing regulatory roadblocks.

I’m confident that this course will enhance overall consumer welfare, while spurring the nation’s economy.

SOME FREE STATE FOUNDATION PROPOSALS FOR REGULATORY REFORM

Randolph J. May and Seth L. Cooper, “A Proposal for Improving the FCC's Regulatory Reviews,” Perspectives from FSF Scholars, Vol. 12, No. 1 (January 3, 2017).

Randolph J. May, “A Proposal for Trialing FCC Process Reforms,” FSF Blog, January 9, 2017.

Randolph J. May and Seth L. Cooper, “A Proposal for Improving the FCC's Forbearance Process,” Perspectives from FSF Scholars, Vol. 12, No.4 (January 17, 2017).

Randolph J. May and Seth L. Cooper, “A Proposal for Improving the FCC's Video Competition Policy,” Perspectives from FSF Scholars, Vol. 12, No. 5 (February 8, 2017).

Randolph J. May and Seth L. Cooper, “A Proposal for Improving the FCC’s Regulations Impacting Small Businesses”, Perspectives from FSF Scholars, Vol. 12, No. 6 (February 13, 2017).

Randolph J. May, “A Proposal for Spurring New Technologies and Communications Services,” Perspectives from FSF Scholars, Vol. 12, No. 7 (February 21, 2017).