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Net neutrality? Bye bye, says American Pai

Them good ole ISPs are drinking whiskey and rye

By Kieren McCarthy, 28 Feb 2017

MWC Ajit Pai – chairman of America's broadband watchdog, the FCC – has outlined his vision of data networks in the United States. And it most definitely does not include net neutrality.

Speaking at the Mobile World Congress in Barcelona today, Pai – who has been in office for just over a month – outlined a philosophy and approach that is wildly at odds with the previous FCC administration.

Calling the decision to pass network neutrality rules a "mistake," Pai painted the decision to reclassify broadband providers as utilities "a deviation from our successful, light-touch approach."

"The FCC decided to apply last-century, utility-style regulation to today's broadband networks. Rules developed to tame a 1930s monopoly were imported into the 21st century to regulate the Internet," he argued.

Although he did not outline specific plans for what he will do with the current Open Internet Order, Pai went to some lengths to explain what he feels is the correct approach to the future of both wired and wireless networks: get out of the companies' way.

"America's approach to broadband policy will be practical, not ideological. We will embrace what works and dispense with what doesn't."

However, it was notable that many of Pai's statements parrot the exact arguments put forward by Big Cable, and did not reference the counter-arguments made against them.

Pai argued that net neutrality issues were having a damaging impact on the rollout of networks. "Networks don't have to be built. Risks don't have to be taken. Capital doesn't have to be spent in the communications sector," he said – providing no evidence that telcos have scaled back their investments.

Not so fast

In fact, as the previous FCC chair Tom Wheeler noted, there is evidence to suggest the net neutrality rules had no impact at all. This time last year, itself one year after the Open Internet Order had been approved, Wheeler noted that AT&T had in fact increased its planned capital expenditures by $2bn to $22bn on the previous year.

Both Comcast and Verizon also promised to increase investment in infrastructure, he noted – attributing that fact to "more network usage and – surprise! – that increased usage is driving more revenue per user. More openness, more demand, more broadband. It's just that simple."

Pai believes otherwise: "The more difficult government makes the business case for deployment, the less likely it is that broadband providers big and small will invest the billions of dollars needed to connect consumers with digital opportunity."

The FCC chairman also reiterated Big Cable's arguments over why net neutrality may actually damage innovation: "To realize the 5G future, we need smart infrastructure, not dumb pipes. And we need to make sure our rules recognize this reality."

And he dismissed arguments made against so-called "zero rating" – where companies offer some services for free and without an impact on data caps – with the populist argument that "consumers like getting something for free."

While Pai is entitled to his views, the fact that he was very light on data, and did not even acknowledge the arguments made against the Big Cable view of the world, is not going to win him many followers.

The reality is that the market for broadband in the United States is highly inefficient: there is very little real competition, and as a result Americans pay many times more what other Western countries do for fast internet access. At the same time, cable companies continue to make record profits.

Query

The question as to whether using old legislation was the right way to correct that issue going forward is a valid one. Previous FCC chair Wheeler knew he had no chance of getting new telecom legislation through Congress and so fell back on the 1934 Telecommunications Act to achieve his aims. But it was still a fudge and one that favored internet giants like Google over incumbents.

Congress is in a position, theoretically, to bring US laws up to date for the digital era and anything Pai could do to help that effort progress would be hugely beneficial.

But, in this speech at least, he appeared less interested in coming up with a long-term solution and more interested in unraveling the past few years of FCC decisions and putting his personal stamp on things. Of course, those achievements will be just as easy to unravel by the next chair if there isn't a more solid foundation beyond rhetoric.

He outlined his regulatory goals as "removing barriers to innovation and investment instead of creating new ones" and that means "targeted action to address real problems in the marketplace instead of imposing broad, preemptive regulations."

Worryingly, Pai said he would be "acting with humility as we regulate one of the most dynamic marketplaces history has ever known" – the sort of sentence construction that only ever comes from someone with a highly developed sense of self worth. ®

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