Pai’s ascension to the FCC chairman throne heralds direct threat to net neutrality, BDS reform

FCC headquarters
Regardless of when Pai takes over the FCC reins, it’s likely he’s going to find ways to reverse or dilute regulatory oversight on issues like net neutrality and business data services (BDS) reform.

FCC Commissioner Ajit Pai is about to take the chairman post at the FCC, signaling a new policy regulatory regime that will look to challenge and overturn key issues like net neutrality and business data services reform.

On Friday, a report in The Hill, citing two unnamed sources, confirmed that new President Donald Trump has named Pai as the next FCC chairman.  

Industry watchers have long argued that Pai would be chosen by incoming President Donald Trump to take over from Tom Wheeler, the Democrat who has served as the FCC chairman since 2013. Following the presidential inauguration on Friday, Wheeler officially departed from the FCC.

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Besides reports in various media outlets, fellow commissioner Michael O’Rielly and outgoing FCC Chairman Tom Wheeler congratulated Pai on Monday morning.

However, an FCC spokesman would not comment on a request from FierceTelecom’s sister publication FierceWireless’ request for comment on Pai’s appointment.  

“I’d refer you to the White House on this one,” the spokesman said in an email to FierceWireless.

Regardless of when Pai takes over the FCC reins, it’s likely he’s going to find ways to reverse or dilute regulatory oversight on issues like net neutrality and business data services (BDS) reform—two issues he argued exceeded the FCC's authority.

Net neutrality days numbered

Now that Wheeler has left the FCC, the agency’s political structure will shift to a 3-2 Republican majority after a replacement for Wheeler and Jessica Rosenworcel are made. Rosenworcel’s term recently expired in December.  

When Pai does take over the leadership role of the FCC, his first order of business will be to join O’Rielly in finding a way to realign or overturn the net neutrality rules. Specifically, the pair will likely find a way to undo (PDF) both claims of legal authority underlying the FCC’s net neutrality regulations: Title II and Section 706.

Pai and O’Rielly told five lobbyist groups in a letter (PDF) that represent wireless operators and smaller service providers about their plans to exempt regional service providers from various net neutrality disclosure requirements.

However, their efforts will face varied feedback. Internet companies like Google and Netflix will protest any efforts to overturn it while large telcos like AT&T and Verizon will hail the efforts as a lighter touch regime that will encourage network investments.

In June, the D.C. Circuit court upheld the FCC's net neutrality rules 2-1, a decision that will usher in challenges from incumbent telcos like AT&T and Verizon at the Supreme Court.

BDS reform also in danger

Net neutrality is just one element of the Tom Wheeler era that Pai and the eventual new FCC will seek to dismantle.

BDS covers a set of wholesale services that traditional telcos and, increasingly, cable operators sell to competitive providers to address off-net locations for their services. Wheeler’s goal was to ensure larger operators didn’t impose onerous prices on smaller operators, and not surprisingly his proposal received mixed reactions from traditional telcos and competitive providers.

While competitive carriers like Level 3 voiced support for Wheeler’s proposals, while traditional telcos like AT&T and CenturyLink, as well as large cable operators like Comcast and the new Charter, said the reforms would chill investment in new last-mile facilities.

Pai was also one of the two opponents to Wheeler’s proposals to reform the BDS market, saying that there was plenty of competition from CLECs and cable operators.

“Our goal should be ubiquitous competition, not universal rate regulation. Our guide should be the data—wherever it leads us—not an ideological drive to regulate,” Pai said in prepared remarks in April when the FCC voted to further review the BDS issue. “Our focus should be furthering the public interest in next-generation broadband deployment, not advancing the private interests of particular competitors. And our framework should be one that promotes competitive entry, not punishes it.”

As reported in FierceCable and Fierce Wireless, Pai has been also opposed to other issues including zero rating, net neutrality and the As reported in FierceCable and Fierce Wireless, Pai has been also opposed to other issues including zero rating, net neutrality and the cable set top box proposals.