Ahem, FCC, who do you think you are? The FTC?

US Congress to probe new rules on net neutrality, the internet and spectrum auctions

A US Congressional hearing this week will ask two heads of the Federal Communications Commission (FCC) some pointed questions about its recent spate of decisions, in particular auction rule changes and why it thinks it's the Federal Trade Commission (FTC).

On Tuesday, the House Energy and Commerce Committee will talk with FCC chair Tom Wheeler and his fellow commissioner Ajit Pai about a whole range of recent (and split) decisions taken by the independent regulator covering everything from net neutrality rules, to controversial spectrum auctions, to banning robocalls, to discounting broadband access for low-income households.

The net neutrality issue – addressed through the more neutral "open internet order" terminology – continues to dominate discussions even though the rules have been approved, survived an initial court challenge, and officially come into effect.

A press release [PDF] put out by the committee about the hearing has a decidedly positive attitude on the issue, specifically noting that the rules and the court denial to stay them is "the right outcome to keep the Internet fast, fair and open."

It says: "Americans now have a referee on the field to deter blocking, throttling, pay-for-priority fast lanes, and other behaviors that could harm consumers and innovators."

And it notes that despite the dire predictions, the rules would mean an end to broadband investment (which in hindsight now sounds every bit as silly as it should have before the vote). "The CEOs of Sprint, T-Mobile, Cablevision, Charter, and Frontier have all publicly said Title II regulation does not discourage their investment. Recent transactions, both announced and rumored, point to the same conclusion."

However the briefing memo [PDF] is less glowing and focuses in on one of the outstanding problems: the fact that the FCC decided it was going to become a consumer complaints organization for the internet despite having absolutely no experience of doing so.

There was some controversy over this aspect of the net neutrality rules, and the FTC – which has always acted as the consumer complaints body on these issues up to now – was also unimpressed with the FCC's power grab.

In the committee's briefing memo this issue has been carefully placed under the topic "privacy." It notes:

With the application of Section 222 on Internet privacy protections, and the announcement of additional rules to come, the FCC has removed broadband Internet service providers from the jurisdiction of the Federal Trade Commission (FTC)... the reclassification created a regulatory vacuum by removing from the playing field the referee that had policed consumer privacy protections on the Internet since its inception.

It then notes, with what could well be a hint of sarcasm, that in its effort to create an entirely different function within its bureaucracy, the FCC "convened a workshop" to explore the Commission's role in protecting the privacy of consumers that use broadband Internet access service.

But to the meat of it:

The Commission's nullification of the FTC's jurisdiction and entry into the sphere of consumer online privacy raises significant and immediate concerns... the FCC has made clear through the Enforcement Advisory of its intention to scrutinize practices and hold broadband internet service providers liable notwithstanding the lack of established rules.

Which is a polite way of saying "you don't know what you're doing."

And as if to prove the fact that the FCC is wholly unsuited to such a role, when the organization announced that its in-house lawyer Arul Patel was to become the new ombudsman for the job, it refused to grant us an interview with her.

"We are not doing interviews on this but hopefully you can get what you need from our press release yesterday," said the FCC's deputy press secretary in response to a query directly to Patel. We wrote back: "It's not very encouraging if the person that consumers are supposed to approach with complaints is not even willing to talk about her role on the day that it is announced." We've heard nothing back.

Auction rules

Another bone of contention is the rules around spectrum auctions, which were revised after some controversy with the last set.

In January, a whopping $45bn was raised by a spectrum sale. The majority of it was grabbed by a single telco – AT&T – and the vast majority of the 1,614 licenses went to the large incumbents.

Aside from the fact that smaller companies were completely squeezed out (including the not-so-small T-Mobile and Sprint, who decided not to even bother), rules that were designed to help out smaller telcos were controversially used by DirectTV to save itself a small fortune – $3bn in fact – in fees.

As a result of these issues, and the fact that a much more significant auction will be held next, the FCC tweaked its rules. Although it did not do what T-Mobile CEO John Legere asked for, which was to set aside 50 per cent of the spectrum for the market outside the giants.

Unsurprisingly, not everyone is happy about those changes – including Commissioner Pai – and so the House Committee will be digging in.

And finally: you

And the last big topic in the list will be reform of the FCC itself. The background memo notes:

The recent history of FCC activities demonstrates that although FCC leadership has publicly committed to process reform on more than one occasion, process failings persist. The incidents of process failures – some stark, others subtle – have been vetted before the Committee in prior hearings, have been the subject of letters from this Committee to the Chairman, and have been the subject of numerous press reports. The abuses of delegated authority, lack of transparency and accountability in agency decision-making and other agency processes (such as agency restructuring and budgeting), and agency overreach, paints an unsettling picture.

In particular, the FCC's ludicrous system of approving rules and then not letting anyone actually see them for 30 days – something that drew particular ire with the net neutrality rules – will be under scrutiny.

We'll get to see how much leeway the House Committee manages to make. ®

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