On April 26, Federal Communications Commission Chairman Ajit Pai laid out his battle plan for overturning the 2015 Open Internet Order, which declared the internet a public utility. At its May 18 meeting, he said, the FCC will vote on a notice of proposed rulemaking to repeal the rules.
This is a big deal, and it will deservedly get lots of attention. But as those watching closely know, it is just the latest in a series of moves to reverse the radical regulatory expansionism of the Obama years and put the communications industry back on the path to deregulation. In less than 100 days, the FCC has become a shining example of how to “deconstruct the administrative state.”
Sworn in as permanent chairman on January 22, Pai was handed a 2-1 majority as a result of Chairman Tom Wheeler’s resignation and the Republican Senate’s decision not to reconfirm Obama appointee Jessica Rosenworcel. With support from fellow Republican commissioner Mike O’Rielly (and also, on occasion, from Democrat Mignon Clyburn), he has used that majority and his authority as chair to implement a raft of procedural and substantive reforms at a pace more akin to an internet startup than a moribund Washington bureaucracy.
To begin, Pai has put in place a number of common sense procedural reforms, like making proposed orders public before the commission votes, revoking the staff’s “editorial privileges” to rewrite orders after they are approved, and instructing the staff to provide commissioners of both parties full access to information on ongoing proceedings. Both Pai and O’Rielly had been calling for such reforms for years, but they were non-starters under the imperial chairmanship of Wheeler.
Pai has also delivered on his promise to take a “weed whacker” to the regulatory underbrush, while strengthening protections against waste, fraud and abuse, acting to repeal costly paperwork requirements and to require companies applying for subsidies under the agency’s fraud-ridden Lifeline program to demonstrate their bona fides.
The most important of the new reforms, however, are fundamental policy changes. Just 10 days into his tenure, Pai terminated his predecessor’s open-ended investigation of free data programs like T-Mobile’s “Binge-On,” noting that such “zero rating” programs have enhanced competition and declaring that the commission would “no longer focus on denying consumers free data.”
In early March, the two Republicans voted to stay a part of the commission’s inherently discriminatory privacy rules, the main effect of which was to protect advertising giants like Facebook and Google from competition. Congress quickly went a step further by passing a Congressional Review Act resolution — signed by the president — that repealed the privacy rule altogether.
Less visibly but equally important, the two Republicans also voted in March to end the Obama commission’s foray into the regulation of “business data services,” another special-interest-backed boondoggle designed to regulate prices in the highly competitive market for high speed business services. Instead, they approved a “large-scale deregulation” of the market, combined with targeted, case-by-case enforcement where needed.
Net neutrality is the big kahuna. Backed by the most radical elements of the Progressive left, bankrolled and lobbied by the Silicon Valley giants that stand to benefit most directly, the rules were adopted in early 2015 after President Obama personally dictated the outcome in an unprecedented YouTube video. Chairman Wheeler, faced with the president’s demand and harassed by MoveOn.org-style picketers in the front yard of his Washington townhome, abandoned the moderate approach he’d been pursuing in favor of the nuclear option: Declaring the internet a public utility, and imposing price controls on internet access services.
The decision had nothing to do with the law or the facts, and certainly nothing to do with economics — the commission’s chief economist later stated that the Open Internet proceeding had been an “economics free zone.” Rather, as Chairman Pai said in his speech, “it was about politics … a transparent attempt to compromise the agency’s independence. And it worked.”
The coming fight will showcase the modern Left in all its glory. The two Republican commissioners will be pilloried by the liberal media, insulted by progressive members of Congress, and threatened by mobs every time they appear in public. In the face of such intimidation, Pai drew the battle lines clearly and accurately by pointing out that the proponents of net neutrality are one and the same with the violent mobs seeking to shut down freedom of speech on college campuses. “And we are somehow supposed to believe that their true motive is to protect free speech on the internet? Please.”
The upshot of all this is clear: No matter how hard you try, you can’t take the politics out of regulation. The bigger the issues and the larger the economic interests at stake, the more politics will intervene. Good process can help — and the reforms put in place in the last several weeks are both laudable and worthwhile — but as long as there are regulators to redistribute wealth and power, the lobbyists will lobby, the lawyers will lawyer, and the swamp will stink — until you drain it.
Which brings us back to deconstruction, and to a speech by Commissioner O’Rielly last week. In it, the former top congressional staffer noted that there have long been discussions on Capitol Hill about whether deregulation would eliminate the need for a stand-alone communications regulatory agency. The FCC’s perceived independence, he said, was “a large argument” for keeping it, but “to the extent that independence no longer exists, I can see great interest in revisiting this entire issue.”
The deregulatory reforms underway at the FCC are important in and of themselves. But they are also, potentially, something more: the first steps on the road to deconstruction.
