FCC votes yes on net neutrality in partisan spectacle

It took four million public comments and a pitched political fight invoking everything from civil rights to Presidential power, but the FCC has finally passed new rules on net neutrality.

On Thursday, the FCC voted to reclassify broadband internet providers as “common carriers,” as part of a new order that will forbid ISPs from slowing down or speeding up web traffic, or cutting any deals with websites to offer them special service.

The outcome of the vote, which took place along 3-2 partisan lines, was widely expected, but the process served to provide additional details about how exactly the new internet rules will apply.

While the specific text of the regulations will not be posted for a week or two, and the FCC issued only a short summary, officials’ comments suggested that the FCC will carry out one reclassification rather than two.

Earlier reports had suggested that the agency was considering conducting a separate legal process for imposing net neutrality on the so-called “middle mile” of the internet — where ISPs connect with websites (as opposed to ISPs connecting to consumers).

But the FCC appears to have concluded that a single legal step will suffice to ensure that ISPs can’t unreasonably throttle sites like Netflix in order to extract a payment.

The agency also confirmed that the rules would, for the first time, apply to mobile internet services. In addition, it stated that it would it exempt broadband providers from rate regulations and other burdensome obligations that come with common carrier reclassification.

The five commissioners are holding a press conference right after the hearing, and I’ll update with any new details and clarifications (see below).

Bright lines and “general conduct” — how it will work

In a press conference following the vote, Wheeler and FCC staff provided additional details about how the rules will work in practice — though not to the full satisfaction of everyone in the hearing.

The two biggest issues concern interconnection (ie if Verizon can charge Netflix not to impede its stream), and so-called zero rating. The latter term describes situations where an ISP or phone carrier decides certain apps or services, such as music, don’t count against a customer’s monthly data cap.

In both situations, the FCC explained the three new bright line rules — no blocking, no throttling, no fast lanes — do not apply.

Instead, the agency will use a catch-all general conduct provision to stop practices that the FCC deems “unjust” and “unreasonable” under the common carrier law.

FCC staff added that this system does not mean that ISP’s will have to seek permission to charge for interconnection, or to offer free data plans. But all the same, the agency will step in if companies have gone too far, and will investigate complaints.

The upshot is that my colleague Stacey Higginbotham appears to have been correct when she suggested earlier this month that the general conduct rule could serve as a big loophole in an otherwise sound set of rules.

The bottom line is that the new rules (unless they’re upended by a court or Congress) will ensure ISP’s like Verizon and Comcast can’t offer fast lanes, or direct consumers to one website over another. Also, the FCC has now asserted clear authority for the first time over interconnection deals and zero rating — but it is far from clear how it will use that authority.

Civil rights and socialism

In a reflection of how politicized the net neutrality debate has become, some of the commissioners embarked on long soliloquies to equate the vote with larger narratives of their parties.

Democratic Commissioner Mignon Clyburn suggested that the new net neutrality rules served to further broader goals of justice and civil rights.

Meanwhile, her two Republican counterparts characterized the new rules as a “radical departure” that would lead the government to cripple the internet.

Commissioner Ajit Pai, in particular, spoke at unusual length to repeat GOP talking points that the reclassification decision was part of a larger, sinister agenda by President Obama to usurp power from citizens.

Chairman Tom Wheeler dismissed this rhetoric, however, saying, “This plan is no more a plan to regulate the internet than the First Amendment is a plan to regulate free speech.”

The preamble to the presentation included an address from the CEO of Etsy, and from Sir Tim Berners-Lee, the inventor of the World Wide Web, in support of the new rules.

Here’s a guide to how the process unfolded today, and the upcoming court battles.

This story was updated at 2:45pm ET with details of the proposal.

Does the FCC want to oversee peering deals like Netflix vs. Comcast?

The FCC will soon pass new rules for how ISP’s must handle broadband traffic and, while it’s expected to impose a policy of net neutrality when it comes to consumers, it’s been less clear how the agency will resolve another thorny internet issue: whether network providers can charge content companies to accept their traffic — and throttle their streams if they don’t pay. On Wednesday, a report surfaced that suggested how the issue will play out.

The issue, known in the industry as peering or interconnectedness, became a hot topic last year as Netflix feeds failed across the country, leaving consumers to shout at their screens and wonder who to blame. Big broadband providers like Comcast and Verizon sought to fault Netflix and the content companies, claiming they should have to pay a toll to offset the large volumes of internet traffic they create.

Netflix and traffic management services like Level 3, however, claimed that the ISPs has deliberately degraded their traffic by refusing to carry out low-cost upgrades to key internet ports. Calling the tactic a form of extortion, the content companies have also accused the ISPs of double-dipping — saying the ISP’s already charge consumers to receive the internet, and those charges should include all infrastructure fees on the backend.

Now, a long report from Bloomberg cited a source that claims to know how FCC Chairman Tom Wheeler plans to resolve this grand conflict.

According to the source, Wheeler is prepared to bless those paid peering deals as part of a larger framework of internet rules. But he will reportedly also do so in a way that permits the likes of YouTube or Vimeo to complain if the ISP’s are not being “fair or reasonable” with their agreements. As the report said:

FCC Chairman Tom Wheeler has decided the rules, scheduled for a vote next month, will permit the agreements but include a procedure for companies to ask for agency review, said the person, who asked to remain anonymous because the plan hasn’t been made public.

This pronouncement, however, may be premature.

Blanket ban or case-by-case?

No one will be surprised if the issue of interconnectedness appears in the first draft of the new FCC rules which, under law, must be circulated by Chairman Tom Wheeler to the other FCC Commissioners at least three weeks before a vote. These are expected to go out (and get leaked to the press) on February 5.

Indeed, Wheeler demanded data from the companies last summer, as part of an investigation into the public outrage that occurred over the stuttering Netflix streams.

The big question now is not just whether Wheeler will include peering agreements in a larger framework of rules, but the way in which such arrangements will be overseen.

According to a source familiar with the debate, ISPs are likely reconciled to the fact that their current paid arrangements with Netflix, which are currently unregulated, will come under the nose of the FCC in the future.

As such, they are now pushing to ensure that any enforcement occurs on a case-by-case basis over whether a given deal is “fair and reasonable,” rather than in response to a bright line rule that outlaws the sort of pay-for-service deals the ISP’s forced on Netflix last year.

The Bloomberg report, which does not cite any documents and on which the FCC declined to comment, suggests that Wheeler has decided to go with the case-by-case approach. While this would nominally ensure fair oversight, it would also allow the ISPs, as they have done in the past, to deploy their formidable legal teams to ensure any complaints would take years to resolve. In other words, this could be a case where ISPs are trying to make the best of a bad outcome.

As such, it’s unclear if the report is a bona fide insight into Wheeler’s thinking, or is instead just an opening salvo in what is sure to be a ferocious spin cycle as the day of the FCC vote gets closer.

GOP calls for open internet, but more in symbol than substance

“Open internet” has become one of those political catch-phrases like “freedom” or “innovation” that enjoys universal support but is rapidly losing any real meaning. Consider, for instance, the new broadband bill trotted out on Friday by Republicans with a press release that promises “open and unfettered access to the Internet.”

The bill itself, which comes as the FCC prepares to vote February 26 on new rules for the internet, contains language intended to address consumers’ fears that telecom giants like AT&T want to remake the web so as to favor the delivery of some websites over others.

The preamble, in particular, contains strong words that will ring familiar to net neutrality advocates (my emphasis):

ensure Internet openness, to prohibit blocking lawful content and non-harmful devices, to prohibit throttling data, to prohibit paid prioritization, to require transparency of network management practices

And the text of the bill, proposed by Sen. John Thune (R-SD) and Rep. Fred Upton (R-MI), drives the point home by saying that internet providers “may not throttle lawful traffic by selectively slowing, speeding, degrading, or enhancing Internet traffic.”

Alas, what the bill gives, it also takes away. For instance, it gives internet providers broad latitude to offer “specialized services,” a term that, as Public Knowledge notes, could quickly come to stand for “fast lanes” by another name.

Meanwhile, the bill also strips the FCC of key oversight powers, and is silent about whether its proposed anti-throttling rules should apply to a deeper layer of the internet, where Verizon and ISPs have been demanding companies like Netflix pay a toll or else see their streams get degraded.

For net neutrality advocates, all of this suggests that the Republican approach presents considerably more risk than the one that FCC Chairman Tom Wheeler is expected to propose at the February meeting. (His plan is expected to invoke a law known as Title II in order to treat broadband like a utility, akin to electricity or phone service, but also using the FCC’s so-called “forbearance” powers to spare ISPs from most of Title II’s regulatory obligations.)

For practical purposes, though, the Republican bill is most likely a symbolic gesture given that President Obama has made clear his preference for the Title II approach, and will almost certainly veto the bill if it passes.

But whatever the outcome, the Republican bill is significant as it reflects how notions of “open internet” and “throttling,” which were long familiar only to geeks and policy wonks, have now become part of mainstream political discourse in the U.S.

In surprise FCC filing, Sprint endorses net neutrality

Supporters of net neutrality got a boost from an unlikely source on Friday as telecom giant Sprint stated in a letter to the FCC that it would support so-called “Title II” regulation, which is the only legal tool that the agency can use to ensure internet providers can’t favor some websites over others.

The filing is significant because, until now, the telecom industry has been largely opposed to the use of Title II. Here is the key passage from the letter (my emphasis):

So long as the FCC continues to allow wireless carriers to manage our networks and differentiate our products, Sprint will continue to invest in data networks regardless of whether they are regulated by Title II, Section 706, or some other light touch regulatory regime.

This position stands in stark contrast to what other carriers, including [company]Verizon[/company] and [company]AT&T[/company], have espoused. In particular, the carriers have warned that Title II would provide a major disincentive to invest in upgrades to their internet offerings.

Sprint’s letter, which can be read in full below, comes before an important FCC meeting on February 26 at which the agency is expected to vote on new rules for the internet. The process became necessary after a major court decision one year ago that struck down a prior version of the FCC’s net neutrality rules.

While wireless data providers like [company]Sprint[/company] were not covered by the earlier net neutrality rules, FCC Chairman Tom Wheeler has hinted strongly that they will be included in whatever new regime the agency imposes.

The letter from Sprint also represents an ongoing shift in momentum in favor of Title II, which appeared to be a long shot at the outset of the process.

Last spring, FCC Chairman floated a plan that would have allowed internet providers to offer special “fast lanes” to preferred websites, but soon reversed course. Meanwhile, companies like Netflix and comedian John Oliver also helped to increase consumers’ support for net neutrality.

Letter – Bye to FCC

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Is public broadband a threat to taxpayers? Let towns decide

A casual observer might think towns across the country are contemplating Communism, rather than construction projects. Such is the state of the national debate over how to build more high speed internet, which is becoming as indispensable to modern life as hot water or electricity.

The crux of the debate is over how small cities, especially those where fast internet is in short supply, can get better broadband networks. The right answer, however, should not be a matter of partisan politics — but in looking at the competence of individual towns, and ensuring that their populations can have a say in the decision on whether or not to build. The FCC will vote on the issue on Feb 26, but in the meantime the right role for public broadband will remain a hot topic for the President, pundits and consumers across the country.

Blessing or boondoggle?

The state of the national broadband debate was on display this week in Cedar Falls, Iowa. President Obama was there to extol the town’s homegrown broadband network, and to urge the FCC to override laws in some states that restrict cities from building high speed internet projects of their own. In response, Republicans and industry groups pounced on his remarks, accusing the President of promoting a broadband model that meddles with the market and sticks it to taxpayers.

Why is a place like Cedar Falls at the center of this? The answer is the town’s community-owned internet provider, which reportedly offers its 40,000 residents connected speeds of 50 megabits a second for $45.50 and, for a little more money, 1 gigabit speeds. This sort of service is unavailable to many Americans and, especially, to those outside major cities where the fastest internet may be well below a new proposed 25 Mbps definition of broadband.

The Cedar Falls example is also what led Obama to call on the FCC to come to the aid of places like Wilson, North Carolina and Chattanooga, Tennessee, which have promising broadband projects of their own, but are being stymied by state rules that restrict their operations. The two towns currently have a petition asking the agency to invoke federal law in order to override the state rules, and there’s a good chance the FCC will grant the request since Chairman Tom Wheeler has repeatedly stated cities should be able to decide for themselves what to build.

Not everyone, however, is as enthusiastic about cities getting involved in the broadband business. Groups with names like the Center for Boundless Innovation in Technology and the Taxpayers Protection Alliance have been loudly claiming that city-run broadband projects are a sinkhole for taxpayer dollars. Here is how the latter group described the situation in a recent press release (my emphasis):

Five high-profile municipal broadband networks have failed spectacularly, including one in Provo, Utah, which was sold to Google for $1, though taxpayers will continue to pay off the construction costs for another 12 years. Another, in Burlington, Vermont, was sold to a private company for $6 million, not even coming close the $51 million cost of the network. And the debt racked up by a third network in Salisbury, North Carolina, was the reason Moody’s downgraded the entire city’s bond rating. The system in Salisbury was such a financial mess that they resorted to using water and sewer funds to make up shortfalls from the network’s expected revenue, which isn’t being realized.

You get the idea. The underlying argument is that city-run internet will inevitably turn into an expensive failure, and that state laws that limit municipal broadband projects (either through outright bans or cumbersome procedural rules) amount to a sensible shield for consumers against government boondoggles.

U.S. President Barack Obama inspects a piece of fiber-optic cable during a visit to Cedar Falls Utilities on January 14, 2015 in Cedar Falls, Iowa. Obama spoke of plans to increase access to affordable high-speed broadband internet service across the nation.

U.S. President Barack Obama inspects a piece of fiber-optic cable during a visit to Cedar Falls Utilities on January 14, 2015 in Cedar Falls, Iowa. Obama spoke of plans to increase access to affordable high-speed broadband internet service across the nation.

Despite the above claim of “five high-profile” examples, however, the overall evidence is thin that city broadband projects are intrinsically flawed or wasteful.

According to Christopher Mitchell, who leads community broadband studies at the Institute for Local Self-Reliance, most of the 450 municipal internet networks the group is tracking were not financed by tax dollars in the first place. And most of the 100 or so that are have avoided financial trouble.

Mitchell added that, in places like Burlington that have lost money, the critics have also overlooked overall benefits to the city from the project.

“The City did indeed borrow $51 million and the network has recently been sold in part for $6 million – but the deal is much more complicated. These groups often ignore all the revenue generated over the life of the network – so they compare the full costs of debt with only some of the revenues. Now in the case of Burlington, it happens that the debt does outweigh all the revenues over the years – but the network also lowered prices from competitors in the market, generated many jobs, and other benefits,” Mitchell said by email.

Meanwhile, in the case of Chattanooga, which made a prescient decision to invest early on in a fiber network, the project has not just been financially sustainable in its own right. It has also brought the town new cachet as a “gig city” that can attract businesses in search of fast and affordable internet.

The upshot is that there doesn’t appear to be an over-arching economic case one way or the other as to whether cities should supply broadband in the same way they do sewers or electricity.

“I don’t think every city should do it, but I think every city should analyze it,” said Mitchell, adding that places with a history of competent local government, including Wilson, are good candidates for broadband projects, while those with a history of corruption are not.

The problem is that municipal voters in many states don’t get a choice to decide in the first place.

Should states ban city transit too?

As the President noted in his Cedar Falls speech, there are 19 states in which legislatures have passed laws to ban or restrict cities from building broadband infrastructure (a recent report suggests the number of states is actually 21 — see full list below).

!

Craig Settles’ report breaks down state laws restricting broadband into 3 categories: 1) “If-Then laws” that impose requirements on communities before they can build; 2)  “Minefield Laws” that create major obstacles but fall short of a total ban; 3) Total Bans (some states may have loopholes)

Despite the prevalence of these laws, however, they don’t seem to be grounded in economics. Instead, as a withering investigative report from last year suggests, they appear to be the fruit of a larger campaign by telecom incumbents like AT&T to stymie competition through lobbying and litigation.

The result is a situation in which millions of Americans can choose from only one company — and sometimes none — that is capable of offering real broadband (defined as 25 Mbps). But at the same time, their local governments are also barred from acting to increase competition.

Harold Feld, a senior lawyer with advocacy group Public Knowledge, likens the situation to one in which states forbade cities from building public transit.

“Take public transportation as an example. Sometimes it works out well, sometimes it works out poorly. But no one would say that the problems we’re having today in Washington DC prove that New York City shouldn’t be allowed to operate a subway system,” said Feld by email.

The issue of what cities can and cannot do in terms of internet infrastructure will become clearer in the next month or so when the FCC decides whether to pre-empt the state laws. (If the agency does opt for the pre-emption route, however, the process is likely to end up in a swamp of court challenges brought by AT&T or another big incumbent).

In the meantime, the current legal logjam means thousands of towns across the country will not only continue to lack Cedar Falls style internet amenities, but they will be cut off from pursuing them in the first place. As Feld notes, this situation bodes poorly not only for the push for more broadband, but for basic American principles of self-governance as well.

“As a rule, communities don’t get into the broadband business unless they feel they have no alternative. That ought to be their decision, not the decision of special interests lobbying state houses to get bills passed behind closed doors. Preempting these state bans used to be a bipartisan issue. I’m hoping it will be again.”

The states with laws that ban or restrict municipal broadband, according to a 2015 report by analyst Craig Settles, are: Alabama, Florida, Arkansas, California, Louisiana, Missouri,  Colorado, North Carolina, Montana, Iowa, South Carolina, Nebraska, Michigan, Utah, Tennessee, Minnesota, Virginia, Nevada,  Pennsylvania, Washington, Wisconsin. 

3 big questions remain as net neutrality heads to the end game

The FCC has scheduled a February 26 vote on net neutrality, touching off a final flurry of debate over how the agency should oversee the internet. The home stretch will be dominated by politics, public perception and, just maybe, by Google.

The policy positions are clear enough: consumer advocates, and most Democrats, believe the FCC should invoke so-called “Title II” provisions that would require broadband providers to treat websites alike, and stop them for creating special fast lanes for certain sites. The telecom industry, supported by Republicans, counter that such net neutrality rules could harm innovation.

But certain wildcards make the final outcome hard to predict. Here are three unresolved questions to watch in coming weeks:

How far will Republicans go to stop Title II?

A spate of stories in the last week, particularly in the Wall Street Journal and Politico, suggest the GOP could respond with a burn-it-down approach if FCC Chairman Tom Wheeler dares to reclassify broadband providers as public utilities under Title II. The threatened retaliation includes budget cuts to the FCC, new legislation to stamp out Title II or obstructionist antics to prevent Wheeler conducting an important spectrum auction. It’s unclear, however, if the Republicans would actually go through with all of these measures — or if Title II opponents are just raising them in the media as a way to intimidate Wheeler and net neutrality supporters into backing down.

The legislative threats, for instance, may be hollow since President Obama wields a veto pen for two more years, and he has made clear he supports Title II. Meanwhile, a move to scuttle the planned auction could backfire in light of the fact that a recent spectrum sale raised an eye-popping $45 billion for the federal government: would Republicans really forgo that type of money simply to stick it to Wheeler?

But given the increasingly ideological tenor of the debate, anything could happen between now and early February, when Wheeler’s final proposal is likely to be leaked.

What does the public believe (and do they care)?

Republicans have been attempting to equate net neutrality with over-regulation and bumbling bureaucrats. If such rhetoric proves persuasive, it will give Title II opponents the upper-hand in the public debate since policy decisions that smack of big government are unpopular with the public. (It’s true that Title II wouldn’t necessarily be a burden due to so-called forbearance rules, but these sort of details are typically too arcane for political sound bites).

On the other hand, Republicans’ position makes them standard bearers for the likes of Comcast, AT&T and Verizon — companies that oppose Title II, but that are also deeply, deeply unpopular with the American public. This means Democrats and net neutrality debates could sway the debate if they can frame Title II as pro-consumer, rather than as government meddling with markets.

Finally, the outcome will turn on how many people are paying attention in the first place. While the issue has gripped Reddit readers and parts of the Beltway, it’s unclear how many average voters know or care about net neutrality in the first place. The issue gained brief traction last fall thanks to comedian John Oliver and an “internet slow down” day, but that has been waning (the momentum could change again, however, if the topic pops up in the President’s State of the Union address on January 20)

Will Google get on board?

The last time the net neutrality debate crested in 2011, Google was front and center. This time, the search giant is sitting on the sidelines, offering only vague support for net neutrality, and leaving relative small fish like Netflix and Etsy, which lack any real lobbying clout, to lead corporate opposition to Comcast and the rest of the telecom industry.

But last week, Google signaled it might step into the fray after all. In a filing with the FCC, the company pointed out that the agency could use Title II to oblige incumbents to grant access to utility poles and other infrastructure. In practice, this would make it much cheaper for Google to deploy its Fiber technology — and increase the competition for broadband.

While the filing falls short of a full-throated endorsement for Title II, it does provide the FCC with new ammunition if it chooses to defy the telecom industry. And if Google does decide to go all in, its endorsement would likely prove to be a game-changer, leading to a shift in lobbying power, and causing the rest of the tech sector to follow suit in favor of Title II.

As Comcast merger enters final phase, deal may be on thin ice

When telecom giant Comcast announced plans in February to swallow its largest rival, Time Warner Cable, the consensus in Washington and on Wall Street was that regulators would let the deal go through. Now, as the final phase of an FCC comment period draws to a close, all bets are off.

Recently, views of the merger have shifted amid growing public concern over the state of U.S. broadband, which is rapidly eclipsing pay TV as consumers’ go-to source for entertainment and information. Meanwhile, Comcast’s rivals have gained momentum in their quest to stop the deal.

The final outcome of the review process involves many wild cards — from the fate of net neutrality to Republican control of Congress — but it’s safe to say for now, based on evidence and experts, that the merger’s chances of passing are lower than they were a few months ago.

A new skepticism

A shift in sentiment over Comcast’s proposed merger has been reflected in both stock market activity and by the behavior of the deal’s opponents.

Investors’ doubt about the merger’s fate can be seen in the fact that share prices of [company]Comcast[/company] and [company]Time Warner Cable[/company] are still valued as if the companies are separate entities. As the New York Times noted in November, the adjusted share price of two firms should move toward the same value as the close of the merger approaches — but that is not happening.

Corporate opponents, such as Netflix and smaller telecom firms, have recently ramped up their lobbying game, and launched a new anti-merger campaign.

According to sources in Washington, the fact these companies are bankrolling new initiatives like “Stop Mega Comcast” so late in
the process reflects a newfound hope that the FCC or the Justice Department will block the deal. This is a contrast from the summer when merger opponents sometimes conceded in private that they viewed Comcast as too big and too well-connected to stop.

These developments are evidence of the growing skepticism over the deal’s prospects, but they don’t describe the underlying reasons for that skepticism. Those reasons are rooted in evolving views over how regulators should examine the antitrust issues that led to a review of the deal in the first place.

When the deal was announced in February, Comcast sought to preempt antitrust objections by promising that it would divest some cable TV subscribers in order to ensure the combined company would have less than 30 percent of the U.S. market — thereby quelling concerns about monopoly.

The problem is that the monopoly fears surrounding the deal don’t just stem from its potential effect on the cable TV market.

big dog

Bully for broadband

“What makes Comcast unique is its power in three different facets — as a programmer, a distributor and an ISP,” Maurice Stucke, an antitrust professor at the University of Tennessee, told me in a recent interview.

According to Stucke, who opposes the merger, Comcast has tried to frame its proposed acquisition of Time Warner Cable through the lens of cable distribution and downplay other dimensions of the deal, especially its potential effect on the market for internet services.

Stucke suggests the combined company would have an unrivaled ability to leverage its broadband connections in order to get exclusive online deals from content providers, or to give special treatment to some websites over others.

In practice, this would see Comcast and its X-1 set-top box acting as a new type of master gatekeeper, determining which apps and websites can be easily accessed by consumers. Indeed, there are signs this is happening already.

[pullquote person=”Maurice Stucke, University of Tennessee professor” attribution=”” id=”902775″]”What makes Comcast unique is its power in three different facets — as a programmer, a distributor and an ISP.”[/pullquote]

Earlier this year, Comcast demanded that Netflix pay tolls to prevent its internet stream from being degraded. In the future, critics fear, a merger would make it easier for Comcast to exercise the same sort of control over a wide range of other over-the-top internet services, including a standalone HBO. Comcast could one day control online entertainment options in the same way that it currently controls TV channels.

Such fears have led merger opponents to say the FCC or the Justice Department should step in not because of cable TV concentration, but to ensure that Comcast can’t monopolize broadband-based content.

The actual amount of control that a combined Comcast–Time Warner Cable would wield over the internet is in dispute. Comcast claims the merger will not give it a commanding slice of the broadband marketshare, while critics warn the merger will hand the company control of over half the residential high speed connections in the country.

The question now is what the FCC will conclude, and how both the agency and the Justice Department will respond.

So far, FCC Chairman Tom Wheeler has been clear that he believes the U.S. needs more and faster broadband, and that competition is the key to achieving this. This could bode ill for Comcast’s merger plans if Wheeler agrees that the deal is indeed about internet service, not cable TV.

At the same time, Wheeler will have to contend with Comcast’s contention that internet competition should not be defined only by conventional connections, but by other forms of internet access like fiber, next generation DSL or over-the-air offerings from phone carriers and others.

“Anyone who tells you what the future of broadband holds is shooting in the dark. We’ve seen time and again people’s inability to predict what will happen in the real world,” said Christopher Yoo, a law professor at the University of Pennsylvania, who argues that the FCC should leave broadband build-out to the market and let the merger go through.

Entrepreneur Mark Cuban has likewise expressed concern that the FCC might do more harm than good by taking a hands-on role in promoting broadband. Others, however, point out that many consumers have only one realistic option for high speed-broadband and that a Comcast merger would result in these de facto monopolies becoming more entrenched.

comcast_xbox

Picking battles

Comcast’s proposed merger is facing an unprecedented level of opposition, which will grow more shrill in the wake of a final round of comments that poured in this week from competitors and public interest groups. Meanwhile, a new filing foul-up by Time Warner Cable has forced the agency to slow down the review process for a second time, and the longer the review process drags on, the less likely it will succeed.

While the momentum is on the sides of the opponents, the overall merger process itself is tied not only to the broadband debate, but to the greater game of the FCC and Washington politics. In this context, Chairman Tom Wheeler must take account of an incoming Congress that will be controlled by Republicans, many of whom support the merger.

While the FCC is an independent agency and Wheeler controls three of the five necessary votes to make decisions, any sign that he intends to block the merger could result in a partisan backlash in the form of threats to the FCC budget or a series of subpoenas. People who know Wheeler say he would find the latter possibility — in which he would have to sit before grandstanding minor-league Republicans — especially irksome.

The threat of partisan obstruction also has implications for the FCC’s other agenda items, including a major spectrum auction that Wheeler regards as critical to the country’s broadband future and that he hopes to make part of his legacy. A political blow-up with Republicans could make the auction harder to pull off.

Meanwhile, there is the ongoing dance over net neutrality, and whether the FCC will reclassify broadband providers as so-called Title II common carriers, which, for now, is the only legal path to prevent internet companies — including Comcast and Time Warner Cable — from giving special treatment to some websites over others.

After the White House delivered an unexpected declaration of support for Title II in November, the FCC is expected to go forward with the reclassification process early in 2015. The plans to do so, however, are already drawing howls of protest and political shenanigans from the telecom giants, including Comcast. As a result, a decision to block the merger would make Comcast a double loser, and potentially lead the company to seek political payback against the rest of Wheeler’s agenda. (For now, however, the outcome of the Title II is still up in the air pending the FCC’s decision and recent proposals for a new type of net neutrality legislation.)

A final piece of the political puzzle related to the merger lies with the Justice Department, which could offer the FCC important covering fire but has yet to do so.

Specifically, the Justice Department could declare that it regards the merger as a violation of antitrust laws, and that it intends to sue under the Clayton Act. The legal case for a lawsuit appears to be strong, and the mere threat of legal action would likely be enough to scupper the deal (as occurred when AT&T sought to acquire T-Mobile). But for now the file still lies in the FCC’s lap, in part because it can stop the merger simply by not acting.

Under the law, the FCC must conclude that a cable merger benefits the public before granting approval. In the case of Comcast and Time Warner Cable, the benefits are far from clear, which means the agency can stop the merger by demanding a sky-high host of concessions or simply by sitting on its hands.

Doing either of those things, however, would require Wheeler to absorb the full political backlash, which is why he may be waiting to see if the Justice Department will weigh in.

The end game

Right now, the proposed merger between Comcast and Time Warner Cable still stands a good chance of going through. Yoo, the law professor, and people at Comcast acknowledge that its prospects are not as rosy as before, but are ultimately optimistic about its chances.

The final outcome, though, is likely to be determined by a combination of politics and straight-up policy analysis. At Gigaom, the editorial staff is opposed to the merger on the grounds that it will diminish competition in the market for broadband, and allow Comcast to shoehorn the new era of online entertainment into the old bundle model of cable TV.

But these considerations may not be determinative. The ultimate decision, which is likely to come in February or March, must be made by Chairman Wheeler, and will be shaped in large part by the degree of support he receives from the Justice Department.

Federal Communications Commission (FCC) Chairman Tom Wheeler testifies before the Communications and Technology Subcommittee on Capitol Hill in Washington, DC, May 20, 2014.    (Photo by Jim Watson/AFP/Gett

Federal Communications Commission (FCC) Chairman Tom Wheeler testifies before the Communications and Technology Subcommittee on Capitol Hill in Washington, DC, May 20, 2014. (Photo by Jim Watson/AFP/Gett