Wheeler channels Bernie to regulate set-top boxes

It is all too clear who is running the FCC these days, and it’s not Chairman Wheeler. In a January 27 op-ed in Re/code, Chairman Wheeler announced his intention to have the FCC begin regulating television set-top boxes — the devices that connect televisions to cable TV or satellite TV networks. The plan is to force cable and satellite providers to open up their boxes to other technology companies, allowing each customer “to use one for all of the video sources you use.”

Whose plan is this?

Perhaps the most disturbing aspect of Chairman Wheeler’s proposal isn’t its substance, but that it removes all doubt that he has given a once independent agency over to politics. A Huffington Post article — “Bernie Sanders and Elizabeth Warren may have just saved consumers $14 billion” — appeared the day after Chairman Wheeler’s op-ed and credits presidential candidate Bernie Sanders and Senator Elizabeth Warren with the set-top box initiative. Senator Sanders must agree that he deserves the credit; his campaign website provides text from the article and its headline and makes no mention of Chairman Wheeler. Even Chairman Wheeler seems unabashed regarding the political underpinnings of the initiative. His op-ed and FCC blog cite no studies by FCC economists or engineers and no agency reports. Instead, he quotes statistics (without attribution) from Senators Ed Markey (D-MA) and Richard Blumenthal (D-CT). These senators collected information from cable and satellite providers in July 2015 and summarized it on Senator Markey’s website. According to The Huffington Post, Senators Sanders and Warren orchestrated a letter to Chairman Wheeler calling for him to do just what he has done. Senators Markey and Al Franken (D-MN) signed on.

The demise of the FCC?

A number of intelligent and thoughtful people are calling for the dismantling of the FCC. You would think that Wheeler would come to its defense. Instead, he is busily adding fuel to the fire. About a hundred years ago, the US developed independent regulatory agencies such as the FCC to serve three basic purposes: to control market power, to develop expertise and academic-quality analyses, and to limit political opportunism. The FCC has effectively abandoned all three purposes. Wheeler’s expansive regulatory agenda is not about market power. In its Open Internet order, the FCC applied 1930’s era regulatory laws to the Internet that were intended to control telephone monopolies, while explicitly stating that the FCC had not made a finding of monopoly power in the Internet access market. On set-top box regulation, Wheeler’s opening line in his op-ed was this: “Thanks to advances in technology, American consumers enjoy unprecedented choice in how they view entertainment, news and sports programming.” Again, no indication of market power. The FCC is also failing as an expert agency. Professor Timothy Brennan, who was the FCC’s chief economist at the time the agency’s Open Internet order was released, has called the order an “economics-free zone.” The FCC’s “findings” in its broadband fact sheets and reports no longer align with the underlying data. And, as I said above, the chairman’s experts on set-top boxes are five US Senators. While their political talents are well established, analyzing the situation with set-top boxes is beyond their abilities. In reality, they seek to impose standards for an all-encompassing video gateway even though customers have gone the direction of multiple gateways: Verizon suggests customers drive their televisions using their smartphones using a wired connection, Roku® Streaming Stick®, or Miracast™, which allow customers to access a broader range of content than cable or satellite television offer. Sling makes cable television available on PCs, and viewers access traditional television programming over the Internet. Smartphones have numerous video options. Limiting political opportunism is a critical role for an independent regulatory agency. Investments in networks and systems are sunk, which makes the businesses vulnerable to political actors who want to do favors for their supporters by expropriating the networks’ value. Empirical research has consistently shown that, absent an independent regulatory agency, this opportunism makes investors reluctant to provide capital for expanding networks, for maintaining existing networks, and for innovating to new technologies. The FCC appears to have largely abandoned its role as buffer between politics and investment. It is well known that the agency found its direction for the Open Internet order from the White House. Wheeler is now taking directions from Democratic senators. It is unclear where the agency finds its conclusions for its broadband reports.

What should be done?

The FCC needs revitalization. My primary function at my university is to provide education for regulatory agencies around the world so that they are able to serve their roles effectively and efficiently. I know regulators in Africa, the Caribbean, Latin America, Europe, and Asia that are shining examples of what an agency should be. These professional organizations serve their countries well. The FCC used to be that caliber of organization and should be again. If the president is unwilling to provide leadership in revitalizing the FCC — and this seems likely given that he has had his way with the agency — then Congress should do so by removing commissioner authority over industry reports, holding the agency accountable for the lack of substantive analyses in its decisions, and shining a light on its own complicity in aligning with commissioners along party lines. The courts should also act by not deferring to expert agencies whose expertise has been compromised. The work of the FCC is too important to the country to give it up without a fight.

The post Wheeler channels Bernie to regulate set-top boxes appeared first on Tech Policy Daily.