FCC’s Wheeler says retaining net neutrality rules maintains a forward path

tom wheeler fcc
FCC Chairman Tom Wheeler noted how internet ISP investments have increased since the order was passed in 2015, and argued that "open networks invite innovation.”

As current FCC Chairman Tom Wheeler gets ready to step down from his post this Thursday as President-elect Donald Trump takes office, he made one last case to defend the net neutrality rules that he championed during his three-year tenure with the regulator.

Speaking during his final speech (PDF) on Friday at the Aspen Institute on Future of Broadband series, Wheeler said that maintaining net neutrality rules is a move forward for the telecom and IT industries.

“Tampering with the Open Internet rules means taking away protections that consumers in the online world enjoy today,” Wheeler said. “What some describe as free market economics cannot simply mean freeing incumbents of their responsibilities.”

Wheeler added that a “hands off approach to network oversight is more than a shift in direction, but a decision to remove rights and move backwards.”

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Wheeler cited how internet ISP investments have increased since the order was passed in 2015 “because open networks invite innovation.”

Specifically, investment in internet-related activities has risen 35% at the edge and in core networks since the rules were finalized in 2015.

Wheeler cited how Randall Stephenson told President-elect Donald Trump during a meeting about job creation has made large investments of capital since 2012.

“The CEO of AT&T reportedly told the president-elect that his company has been the leading investor of capital for each of the last five years,” Wheeler said. “This of course includes two years since the adoption of the open internet rules.”

AT&T is also reaping the benefits of lower network construction costs.

Wheeler cited how John Donovan, chief strategy officer and group president for AT&T Technology and Operations, said earlier this year that it will deploy 250% of the capacity it deployed in 2013 and 2014 for 75% of the cost.

“This investment makes sense,” Wheeler said. “Innovative new products and services have the effect of driving up usage of the internet and with this increased usage ISP revenue is up.”

Given the capital that has been invested in AT&T and others networks, Wheeler said the incoming Republican administration should look at the benefits that the Open Internet Order has created since it was passed. 

“Where’s the fire? What has happened since the Open Internet rules were adopted to justify uprooting the policy?” Wheeler asked. “As I said a moment ago, network investment is up, investment in innovative services is up, and ISPs revenues—and stock prices—are at record levels. So, where’s the fire?”

Consistent, Continuing and Comprehensive

As Wheeler sees it, the FCC’s passing of the net neutrality rules are based on three main concepts that are designed to ensure a fair and open network:

  1. Comprehensive: Limiting the definition of net neutrality to blocking, throttling and a ban on paid prioritization does not carry much weight if it does not protect consumers against gatekeepers that control what users can access over their broadband connections.
  2. Continuing: Since it’s unclear what the future of the internet will bring, the FCC can offer consumers a general conduct rule. Similar to a referee on the field, the FCC will have the ability to act when it needs to "prevent anti-consumer and anti-competitive practices."
  3. Consistent: This is a consistent standard so that an ISP, edge provider or consumer has a clear definition of what constitutes fair access to the internet.

“Passing legislation or adopting regulations without these key provisions and calling it net neutrality would be false advertising,” Wheeler said.

Wheeler added that consumers’ ability to connect to an open internet is "essential to the 21st century economy.”

Driving edge provider benefits

Wheeler also noted how edge providers like AT&T are using interconnection to deliver services.

AT&T recently launched its DirecTV Now service, one that allows consumers to stream programming on any device, including tablets and smartphones, over a wireless or an existing broadband connection.

In order for the DirecTV service to work in any location, AT&T’s customers will need access to a network, be it an existing wireless network or another wireline cable and DSL network provider.

“When AT&T—in its role as an edge video provider—is assured access to the broadband networks of Comcast and Charter for its competitive cable-like DirecTV Now service, it is proof that the Open Internet rule is working,” Wheeler said. “One only has to remember the interconnection and porting debates that hindered the access of over-the-top (OTT) video providers pre-Open Internet-rule to appreciate the importance of an open internet to everyone—even its opponents.”

Wheeler added that “the porting and interconnection problems that existed pre-rule have been eliminated without heavy-handed regulation,” Wheeler said.

Over the past two years, a number of the large OTT providers like Netflix and their internet backbone providers like Cogent and Level 3, have garnered interconnection agreements with not only AT&T, but also fellow telcos Verizon and CenturyLink.

As more of these interconnection deals have gone through since the net neutrality rules were passed, interconnection pricing between last mile providers and edge providers like Netflix and their partners have declined.

“The mere fact that the FCC declared interconnection a Title II activity under the rules—but chose not to regulate—has produced an upswing in interconnection agreements and a downturn in interconnection pricing,” Wheeler said. “This is a significant development because it shows how the Open Internet order is successful simply by being watchful.”

Net neutrality's days look numbered

Regardless of Wheeler’s pleas to maintain, it’s clear that the incoming Republican administration will work to overturn the net neutrality rules. While incoming President-elect Trump has not revealed specific details about his technology plans, he has named a number of conservative members for its technology transition team.

Just last week, Trump’s transition team named Carolyn Tatum Roddy, an Atlanta-based telecom attorney, as the latest member of President-elect Donald Trump’s FCC transition team.

Roddy becomes the fifth member of Trump’s FCC transition team. Other members of the team include David Morken, co-founder of Republic Wireless and Bandwidth, and American Enterprise Institute Fellows Jeffrey Eisenach, Mark Jamison and Roslyn Layton.

Trump’s FCC transition team, according to a Multichannel News report, has adopted a measure to realign the FCC in a way that reflects the conservative, light regulatory principles supported by the regulator’s Republican commissioners Ajit Pai and Michael O'Rielly. Pai and O’Rielly will be two of the three Republican leaders on the commission.

One of the proposals calls to restructure FCC as way to reflect the realities of today’s communications market while moving what it says are "duplicative” functions it like competition and consumer protection, to other agencies like the Federal Trade Commission (FTC).

Meanwhile, Ajit Pai told attendees in a speech (PDF) he gave in Cincinnati last September that he wants to focus the FCC’s on finding ways to extend more broadband services to economically challenged areas by providing financial incentives for Internet service providers to deploy gigabit broadband services in low-income neighborhoods.

Pai would also advocated methods to simplify the obligations required by service provides to build out wireline and wireless broadband services in rural areas.