Pai Talks Net Neutrality and Digital Divide; O’Rielly Addresses Overbuilding and LFAs at ACA Summit

Federal Communications Commission Chairman Ajit Pai and his colleague, Commissioner Michael O’Rielly, both addressed the recent 26^th Annual ACA Summit in Washington, D.C. Both of their remarks celebrated the investment in, and deployment of, broadband infrastructure in rural areas by small providers. They also discussed how regulatory costs can fall upon small businesses in a disproportionate manner, and steps they have taken, and plan to take, to mitigate these burdens.

Chairman Pai joined ACA CEO Matt Polka for a conversation as part of the conference’s closing sessions, just before attendees began attending meetings on Capitol Hill. As at last year’s event, he received a warm response from the crowd when he mentioned the 2018 reform of network neutrality rules. This time, he had a year of real-world experience with which to back up his defense of that decision. Many of the “hysterical predictions” that were made during that proceeding, he said, had not only failed to come true, but in retrospect are looking “increasingly silly.” Things like higher rates for Internet access, a bifurcated fast lane and slow lane structure, and similar scenarios, he pointed out, had not come to pass. “You can still hate-tweet your favorite FCC Chairman without any kind of impediment,” he said, smiling, seemingly pleased to take in stride the severe criticism he endured as a result of that proceeding.

He also repeated his statement that closing the Digital Divide remains the FCC’s top mission. In addition to things like access to spectrum and rights-of-way reform, he singled out pole attachments as an area that has need of reform. He noted that pole attachments might constitute as much as 15 percent of the deployment costs for rural provides, which he said was far too high.

Pai stressed that the costs of regulatory burdens disproportionately up on small businesses. He noted that he had established the FCC’s Office of Economics and Analytics to help anticipate and account for the costs of proposed rules. The chairman listed a number of regulations the FCC is looking at eliminating or streamlining in order to reduce paperwork. He also acknowledged that current proposals to re-purpose C-Band spectrum from its current video backhaul role to 5G may be problematic for rural video providers, and he is examining the issue carefully. He encouraged more providers to participate in the Connect America Fund (CAF) support program as it continues to be adjusted, and recognized the ongoing challenges associated with making broadband mapping efforts more effective.

An audio recording of the conversation between Matt Polka and Chairman Pai is available here.

O’Rielly Cautions Against Subsidized Overbuilds; Calls for Local Franchise Authority Revamp

The previous day, Commission Michael O’Rielly also spoke to Summit attendees. He praised Summit attendees for taking the risk to invest in rural broadband infrastructure. He then pulled no punches in his assessment of those who encourage overbuilding by government entities.

“No good deed goes unpunished,” he said, “as you have been under constant attack by those pointy-headed liberal advocacy groups hellbent on driving profit margins to zero – or even worse – and who at the same time promote below-cost, government-sponsored and operated networks” to compete against those who have invested in bringing broadband to rural customers.

He then warned that “new federal money allocated by Congress facilitate broadband deployment has the chance, and dare I say likelihood, to be used to fund other providers to overbuild areas where you serve.” He emphasized that it is especially important to guard against government-supported overbuilding when so many places remain unable to obtain any broadband at all.

Next, the Commissioner suggested that the traditional role of Local Franchise Authorities (LFAs) is outdated, noting the growing trend of consumers to purchase video via broadband apps. “Let me suggest to you,” he said, “that the entire government oversight model for video services needs a complete overhaul from top to bottom.” He warned that as the traditional cable market evaporates, LFAs will become “even more aggressive in searching for fees, taxes, and add-ons.” He continued, “And it is going to motivate a whole host of creative franchise authorities to go rogue. Such bad behavior and practices cannot be permitted.”

He listed a number of things LFA’s typically engage in, and suggested that federal law could appropriately be used to reign in certain behaviors. “For instance,” he began, “why should a local franchise authority be allowed to scrutinize mergers, transactions, modifications, or even renewals with the goal of enacting new or renewing old fringe benefits, especially if traditional video services are dissipating?” He also mentioned LFA’s requiring the use of specific accounting practices and the funding of public and educational channels, and rights-of-way discrimination. “It’s extremely unlikely,” he concluded, “that any of these burdens will ever be applied to OTT providers, and therefore they serve as discriminatory burdens and create unfair market distortions.”

Commissioner O’Reilly’s full remarks are available here.

Steve Pastorkovich is a Washington, D.C.-based consultant specializing in telecommunications, trade association operations, and public policy. LinkedIn https://www.linkedin.com/in/steve-pastorkovich-4a94412/