FCC Commissioner Michael O'Rielly

The Federal Communications Commission recently adopted rules that impose new burdens on supposed “rogue” Internet Service Providers under the guise of protecting consumer privacy. The three-to-two vote fell along party lines, placing me in the non-winning camp once again. While the text of the item is not available at the moment – a flaw in the Commission procedures – I am free to express my thoughts and views on the item and the topic as a whole.

From my perspective, the biggest substantive areas of concern are (1) the ill-conceived definition of sensitive information, which includes web browsing history and application usage and thus requires consumer opt-in mechanisms; (2) the unreasonable limitations on first-party marketing; and (3) the effective establishment of a new Commission regime to review consumer privacy trades.

A good part of my focus at the Commission has been on opening closed doors for broadcasters to leverage new technology and reinvent themselves and the industry. Another recent area of reform involves the move to transition the public inspection files maintained by broadcasters to an online format. Additionally, last month, the Commission altered its old ad hoc foreign ownership approval procedures to allow broadcasters greater access to capital. On another front, many of you are likely following the Commission’s efforts on AM revitalization, which my colleague Commissioner Pai has been instrumental in moving forward. After a lot of consternation, we were finally able to reach accord and provide many AM radio stations with new options to compete in the ever changing marketplace.

Given the prominence of this venue and Hudson Institute’s legacy of addressing more substantive issues, I thought it would be appropriate to discuss a topic often not addressed by FCC Commissioners: certain tenets of judicial review of FCC items.

Traditionally, many within the legislative and administrative branches of government tend to shy away from discussing particular outcomes of court cases or the collective approach of judicial review. Perhaps hoping that the lack of criticism or comments will prevent a bad outcome in the next case, they avoid discussing altogether or temper their review of instances where the courts have misapplied the law or pursued a line of reasoning devoid of logic or common sense. Having witnessed a number of bad decisions recently, however, I have less compulsion to keep mum about the judicial branch, although I hope the following does so in a relatively respectful way. Additionally, I would argue that the lack of review or analysis of decisions generally deemed out of the mainstream, even by those supportive of a particular outcome, does a disservice to the American people and the court system as a whole. To do this, I will use court review of the Commission’s Net Neutrality rules as a basis for examination. I suggest that the court review of the Commission’s “work” both lacked appropriate rigor necessary for the conclusion reached and established a host of dreadful precedents that will haunt communications policy and administrative law for years to come.

Since the set top box deliberations presumably will continue in coming weeks, it seems appropriate and necessary to outline the problem areas I see preventing a conclusion:

Federal Communications Commission Control of the Model License and API: Some have proposed replacing provisions in earlier versions that provided explicit FCC review and approval roles with active FCC monitoring and threats of future action if progress is deemed unsatisfactory.
The Myth of Universal Search: One of the benefits of the item touted by proponents is that it will enable a competitive market in so-called “universal” or “integrated” search apps.
Questionable Feasibility: A key component of this item is a requirement that every multichannel video programming distributor with over 400,000 subscribers develop and support a native app for every widely deployed operating system.
Opening the Door to the App Tax: Today, many of the widely deployed platforms usually receive an upfront fee or cut of revenues from software developers to have their apps made available on these very popular platforms.
Competition from Pirated Content: Programmers and MVPDs have registered valid concerns that the third party integrated search engines contemplated by the item would result in pirated content being displayed in search results alongside legitimate MVPD content.
Substantively, the only way to fix the item is to address the key problems and flaws identified above. Only by doing so would a true app-centric approach be workable for most of the affected companies. More importantly, it’s the only way to get a resolution that would benefit consumers by eliminating the set top box altogether for those interested.

The Commission seems intent to push forward, in the coming weeks or months, with a specious plan imposing new broadband privacy mandates and burdens. Reacting to this impending action, a number of broadband providers have sought to retain the ability to offer consumers incentives in exchange for consumers’ willingness to share a greater level of private information. Seemingly in disagreement, Federal Communications Commission leadership is quoted as saying that they “hope privacy doesn’t become a luxury item.” If data sharing enticements are prohibited, however, it would harm the overall operations of the Internet, increase companies’ costs for offering features and functions, and decrease consumer options. Such an approach tramples on the notion of consumer choice.

In the coming weeks, the FCC will debate internally over whether and what consumer privacy protections to enact. Arguably, the Commission should rethink its insistence to enact new broadband privacy rules, but assuming it moves forward, it should not prohibit private data exchanges that benefit consumers in the form of lower prices, greater service or more features and functions.

The following discussion of network neutrality, cybersecurity, privacy, encryption and the right to be forgotten boils down to an overarching, fundamental debate: how do we ensure the continued functionality and growth of the Internet. Everyone accepts that the Internet has transformed everyday life, but people – both domestically and internationally – do not always agree on the best means to preserve such an important global resource.

Last November, one wireless company announced a zerorating plan, which Federal Communications Commission Chairman Tom Wheeler declared to be “highly innovative and highly competitive”, only to reverse his position a month later, and then start a very public investigation into this offering, along with three others. At this point in time, the FCC has been investigating for ten months, and there appears to be no end in sight. While I disagree with this type of inquisition, the Commission should have the obligation to quickly review these services and inform these providers in writing the status of their offerings, including those that are in the clear. I have had conversations with industry participants that withheld new offerings because it isn’t worth being caught up in an FCC investigation. One company told me that their engineers came up with some new interesting ideas that were shot down almost immediately by their general counsel because of this rule. It is never a good thing when lawyers are dictating technology winners and losers, no offense to the lawyers in the room.

Federal Communications Commission Commissioner Michael O'Rielly sent Washington Metropolitan Area Transit Authority CEO Paul Wiedefeld a letter saying he’s baffled by the decision of the system to halt a pilot program for Wi-Fi service in train stations. Metro officials have said that an ongoing pilot program bringing Wi-Fi service to six downtown stations will stop after 45 days so they can examine the service. Commissioner O'Rielly wants to know why Metro couldn’t keep the service operational while it evaluated the success of the pilot. “Given the overall questionable state of communications capabilities within the entire system, it seems counterintuitive to cease operations of an additional mechanism that the public can use to reach emergency personnel when warranted."

I am pleased that [Federal Communications Commission Chairman Tom Wheeler] has initiated our statutory responsibility under section 11 to review our telecommunications regulations, and I hope my colleagues will vote quickly on this rather clean procedural step to get the process started. My staff and I have been at a loss as to why the Commission has failed to conduct this important task since 2012, despite the requirement that it occur biennially.

Given that the Commission has already missed one opportunity to minimize our burdens for telecommunications carriers, it will be particularly important to seize this moment to really scrub off the cobwebs. To expedite the overall process, I’ve asked that we shorten our internal review from four months to two. It shouldn’t take individual Bureaus and Offices more than eight weeks to thoroughly examine rules under their purview and recommend candidates for elimination. With a little cooperation, this could be the most significant execution of section 11 to date.

Federal Communications Commission leadership recently indicated that we will issue final rules for a new mobile-only universal service subsidy program by the end of 2016. While I remain greatly skeptical about the timing and value of doing so, given our experiences and the changes that have occurred over the past five years, it seems reasonable that if we are going to have this fund it must be structured and operated far better than today’s wireless universal service fund (USF) spending. We owe it to those Americans that could benefit from a functionally-sound program and, more importantly, to those consumers and businesses that pay for our universal service programs.

Since it appears that the purpose and structure of the program are still up for discussion and debate, I am putting forth some key elements that will guide my review of any reform. Without addressing most, if not all, of these points, it is hard to see how a unanimous, bipartisan vote can be achieved:

1. Prohibit Overlap & Target Support – It makes no sense to subsidize a wireless carrier in an area that has another unsubsidized competitor.
2. Subsidize Only One Carrier – Assuming we can get funding targeted to where it is needed, we should not fund multiple carriers to serve the same area.
3. Phase Out Current Support – Some existing recipients of funds under the current wireless program argue that without continued subsidies, they may have to turn off certain unprofitable towers. This has been labelled the “Rusty Tower” problem. Much of this territory, however, is already covered by multiple 4G carriers.
4. Populations, Not Roads – In determining areas that remain unserved, the Commission has traditionally targeted population areas. This makes complete sense as we are trying to serve where people actually live, work and function. The alternative discussed of funding road areas leads to huge outlays for tiny portions of mainly unused roads and represents an inefficient use of funds. In the end, this may mean that not every single square inch of America receives wireless signals.
5. Providers Must Offer Broadband – Currently, wireless carriers receiving existing support under the old program have few real service obligations. This is no longer tolerable. Every USF program that has been reformed recently has installed requirements for subsidy recipients to offer broadband of certain capabilities. Wireless carriers under a Mobility Fund Phase II should be no different.
6. Finish Remote Areas Fund (RAF) – I would prefer to address the RAF in conjunction with creating the Mobility Fund Phase II. If that isn’t in the cards, the Commission needs to at least consider interaction between RAF and Mobility Fund Phase II when adopting Mobility Fund Phase II rules.

In my two and a half years as a Commissioner at the Federal Communications Commission, I have tried to make productive suggestions to improve the internal workings of the Commission. These efforts have never been an attempt to undermine the authority of the Chairman or the ability of the Commission majority, whoever they may be on a particular issue, to get items completed in a timely manner. Instead, this entire effort is about improving the efficiency of the Commission and increasing fairness and transparency with regard to a process that is questionable in some instances and downright objectionable in others.

The chart below outlines the 24 reform proposals that I have suggested, to date, in various blogs and Congressional testimony. Those proposals that have been adopted in whole or in part – all three of them – are in yellow. In all fairness, item number 17, pertaining to improving the circulation process, was only proposed a few weeks ago. To the extent that the public or practitioners before the Commission have additional suggestions to improve the Commission’s workings, I would be pleased to review and consider supporting them. I plan to continue to call out for the need to improve the functionality of this Commission to ensure every sound idea is given due consideration, and will add to this list as the process issues pile up.