FCC's Wheeler: There were 'no secret instructions' from the White House to implement Title II regulation

It's been hardly a week since the FCC released its net neutrality order that reclassifies ISPs under Title II of the Communications Act, and FCC Chairman Tom Wheeler is now on the Congressional hot seat whether President Barack Obama drove the commission to make this new regulatory move.

Speaking to the U.S. House of Representatives Committee on Oversight and Government Reform hearing on "FCC: Process and Transparency," Wheeler said that the commission did not have a covert agenda developed with the Obama administration.  

In February, Committee Chairman Jason Chaffetz (R-UT) accused the White House of improperly influencing the FCC's decision-making process and asked the regulator to provide all communications between the FCC and White House.

"There were no secret instructions from the White House," Wheeler said in a statement. "I did not, as CEO of an independent agency, feel obligated to follow the President's recommendation. But I did feel obligated to treat it with respect just as I have with the input I received – both pro and con - from 140 Senators and Representatives."

Wheeler added that the president's Nov. 10 announcement telling the FCC to reclassify broadband providers under Title II of the Communications Act did have an impact on the decision.

"The push for Title II had been hard and continuous from Democratic members of Congress," Wheeler said. "The president's weighing in to support their position gave the whole Title II issue new prominence."

In February, the FCC voted 3-2 along party lines to reclassify broadband providers as common carriers under Title II and impose net neutrality restrictions that prevent them from blocking or throttling Internet content or prioritizing content in exchange for payment.

The FCC said in the 300-page order that it will forbear from utility-style provisions. Under the auspices of its light-touch approach, the FCC will not require telcos to unbundle last-mile network facilities. The regulator will also not apply rate regulation and cost accounting rules that existed in the AT&T Bell System monopoly.

Another consideration of Title II reclassification "was the potential impact of any regulation on the capital formation necessary for the construction of broadband infrastructure."

Wheeler told Congress that "an interesting result of the President's statement was the absence of a reaction from the capital markets."

However, major telcos like AT&T (NYSE: T) and Verizon (NYSE: VZ) largely disagree. Both have publicly argued that the new Title II regulation will hamper network investment and will face a number of legal challenges.

John Stephens, CFO of AT&T, told investors during the Deutsche Bank conference that the new rules are a solution looking for a problem and that they will create uncertainty for service providers to make new service and network investments. "Any kind of uncertainty is not good for investment," Stephens said.

Similarly, Verizon's CFO Fran Shammo said that the legal challenge process the order will create will cost taxpayers a lot of money.

For more:
- see this statement
- ars technica has this article

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