FCC’s Wheeler tells Silicon Valley what it wants to hear

The new FCC Chairman was quick to assure Silicon Valley Thursday that he’s on board with an open internet, would consider an experimental approach to the tough issue of the transition from copper to IP networks and is in favor of freeing up more licensed and unlicensed spectrum. In short, Tom Wheeler gave his audience mostly what they want to hear in a speech at the Computer History Museum.

The Chairman’s office released a copy of his speech ahead of the event, and in the speech Wheeler again referenced the new Sponsored Data plan by AT&T(s t) where companies can pay a consumer’s data charges on select content. Om Malik called the plan double-dipping and harmful to innovation, while Stacey was less concerned with its ability to harm consumers and startups in the long term. Plus, it doesn’t appear to be a network neutrality violation under the current rules the FCC issued back in Dec. 2010, which are now before the courts.

Tom Wheeler (right) with President Obama

Tom Wheeler (right) with President Obama

Wheeler struck the right notes on this issue, especially given the strain of libertarianism that’s rampant in the Valley. He said:

The necessity for these policies and the wisdom of case-specific approaches to implementing them is demonstrated by a coincidental occurrence earlier this week. AT&T announced a mobile service offering that enables subscribing firms to cover the airtime costs of accessing their content. Based in part on the premise that consumers have more choices for mobile wireless service than for fixed, the Open Internet Order did not discourage this type of two-sided market for mobile uses. It also made clear, however, that the Commission would monitor these types of development carefully.

This seems to me to be the right approach. It may well be that the kind of offering AT&T has announced enables increased competition and increased efficiency—both things that benefit consumers. It is not the sort of thing that should be prohibited out of hand. But, again, history instructs us that not all new proposals have been benign. There has to be some ability on the part of government to oversee, to assess, and, if warranted, to intervene.

Let me be clear about this. I am not advocating intervention unless there is an unmistakable warrant for it. I am not interested in protecting competitors from competition, nor am I interested in presiding over a festival of rent seeking. But I am committed to maintaining our networks as conduits for commerce large and small, as factors of production for innovative services and products, and for channels of all of the forms of speech protected by the First Amendment. We should not let these things be impaired.

In earlier comments Wheeler came out in favor of an open internet, but also expressed a desire to adjudicate the issue on a case-by-case basis. This is possibly prudent given that the court seems to be leaning toward weakening the FCC’s Open Internet Order that governs the topic, but it isn’t the right way to go if we want to truly protect the open internet. While Wheeler is going to great pains to assure us he’s not captive to the industry, there’s no assurance his successor won’t be. Wheeler said:

Second, I support common law-like approaches to discerning the difference between appropriate and inappropriate broadband network conduct. In other words, the very general principles found in the Open Internet Order should be reduced to justiciable practices on the basis of facts arising from specific circumstances.

AT&T flagship store logo So in the AT&T case, if there are sufficient consumer harms, perhaps an outcry from tech lobbyists or legislators, he’ll act. This may be good policy today, but it ignores the shifting nature of Washington regulators. For telecommunications firms eager to impose anticonsumer pricing on mobile internet access (or even wireline internet access) the key to their success under Wheeler may be to find the line in the sand and then line up at the edge of it while hoping for the crumpling of the Open Internet Order in the courts.

When Wheeler implements his common-law like approach on specific issues the telcos will back off, meanwhile pushing for a new FCC chair down the line who will move the line father in their favor. It’s a long game, but that’s what these guys play.

Meting out airwaves

On a more positive note, Wheeler also devoted a good part of his speech to spectrum and the FCC’s plans to open up more airwaves for both commercial use (i.e. carriers) and unlicensed uses such as Wi-Fi and Bluetooth. But he said that the success of those plans rested largely on the shoulders of the TV broadcasters, that currently hold the 600 MHz airwaves the mobile and tech industries are eyeballing.

Gavel and moneyThe FCC is proposing an incentive auction in mid-2015, in which broadcasters indicate what airwaves they’re willing to sell. The 600 MHz map would then be reconfigured to create new mobile broadband channels suitable for technologies like LTE, and carriers would bid on them. The buffer zones in between those channels – called guard bands – would be used for unlicensed technologies. If spectrum broadcasters give up more spectrum, then there would not only be more 4G frequencies, but also more unlicensed airwaves, Wheeler said.

Broadcasters have always been skeptical when the FCC comes knocking asking for airwaves, and today Wheeler gave them the hard sell. He said broadcasters shouldn’t look at the auction as an imposition, but an opportunity. Digital broadcasting means TV networks no longer need such big swathes of spectrum to deliver their video content, and the auction gives them the chance to not just take advantage of that efficiencies, but collect a big paycheck in the process.

Wheeler said:

“I cannot remember a point in history when it has been simpler, safer, or more profitable for an incumbent service provider to take advantage of new technology. Typically, new technology plows under the old business models; in this case, however, the FCC is overseeing a once-in-a-lifetime opportunity for profitable repurposing of an important business activity. That this is a once-in-a-lifetime opportunity is not hyperbole. The rebanding associated with this auction is hard enough; when it is done the ability to do it again will be virtually nil. There will not be another round of broadcast incentive auctions.”

Wheeler’s focus on unlicensed spectrum was no coincidence, given the growing dependency of his Silicon Valley audience on Wi-Fi and Bluetooth to deliver their services. He also said that the FCC is targeting other bands for commercial use, including a vast swathe of 3.5 GHz spectrum, which the commission is exploring as a kind of small cell band that could be used to layer large amounts of capacity into mobile networks in urban areas. The catch is carriers would have to share it with existing government users.