FCC Chief Sparks Clash With Call to Repeal Net Neutrality

(Bloomberg) -- The chairman of the U.S. Federal Communications Commission proposed rolling back the Obama-era net-neutrality rule, prompting the regulation's defenders to vow a “tsunami” of resistance.

FCC Chairman Ajit Pai said he would ask the agency next month to begin considering removing the strong legal authority that underpins the rules, and to take suggestions for replacement regulations.

“This is going to be a political debate that will engage millions of people,” Pai said on Bloomberg TV. “But we are going to stay focused on the facts and the law.”

Pai said Americans want to see new networks built, rather than “heavy handed regulations that saddle businesses with a lot of rules.”

The rules, passed with only Democratic votes at the FCC in 2015, forbid broadband providers from blocking or slowing web traffic, or from charging higher fees in return for quicker passage over their networks.

Supporters of the rules say they are needed to keep network owners from unfairly squelching rivals and discouraging web startups. Critics say competition will discipline broadband providers, and the rules discourage investment while exposing companies to a threat of heavier regulation including pricing mandates.

Open Internet

Republican lawmakers and broadband providers welcomed Pai's move.

Pai is acting to remove a “stifling regulatory cloud,” AT&T Inc. Chief Executive Officer Randall Stephenson said in an emailed message. The rule has created “a cloud over broadband investment decisions and innovation,” said Brian Roberts, chief executive officer of Comcast Corp.

Senate Majority Leader Mitch McConnell in a Tweet lauded Pai's “bold action,” and House Speaker Paul Ryan called Pai's announcement “welcome news.”

Critics pounced.

Gigi Sohn, who helped craft the endangered net-neutrality rules while an FCC aide, called the proposal “a radical abdication of the FCC's responsibility.”

“Any effort to weaken Open Internet protections must be rejected,” said Chip Pickering, chief executive officer of Incompas, a trade group with members including Facebook Inc. and Amazon.com Inc. “The risks of FCC action far outweigh any reward.”

Pai, a Republican commissioner chosen by President Donald Trump to lead the FCC, has long criticized the rule.

FCC's Net Neutrality Rules Now in Republican Sights: QuickTake

He has said he supports an open internet, and opposes the assertion of strong authority over broadband providers. Pai said Wednesday that the FCC's regulation had discouraged investment in broadband.

Democratic lawmakers said Pai is gutting measures that protect the open internet.

“It makes no sense,” Senator Ed Markey, a Massachusetts Democrat, said at a news conference before Pai's talk. “We cannot keep the promise of net neutrality openness and freedom without the rules that ensure it." He predicted “a tsunami of resistance from a grassroots movement of Americans.”

Congressional Democrats have little leverage to stop Pai, since they are in the minority. Republicans generally have opposed the FCC's rule, and offered legislation that Democrats criticized as weakening net neutrality protections.

“I plan to fight,” Senator Al Franken, a Minnesota Democrat, said in a Twitter post.

Why Republicans Want to Nix U.S. Net Neutrality Rules: QuickTake

The fate of the rules matters to internet entrepreneurs, to web giants such as Google and Facebook that want to ensure they can reach customers unimpeded, and to cable and telephone providers that want to shed regulations.

“The current FCC net neutrality rules are working and these consumer protections should not be changed,” said Michael Beckerman, president of the Internet Association, a group with members including Alphabet Inc.'s Google, EBay Inc., and Microsoft Corp.

Pai's objections have centered around the FCC's decision to classify broadband as a telecommunications service to be regulated under a section of law known as Title II. That gives the FCC “unilateral authority to regulate internet conduct,” Pai wrote in 2015.

Pai, in a speech Wednesday in Washington unveiling his proposal, said he wanted "to reverse the mistake of Title II and return to the light-touch regulatory framework that served our nation so well.”

The other Republican on the FCC, Michael O'Rielly, spoke at the same event in favor of Pai's initiative.

Democratic Commissioner

Commissioner Mignon Clyburn, the FCC's sole Democrat, said later that she was opposed.

“Broadband providers should not be in the driver's seat, determining how you use the internet, controlling what content you view or dictating what kind of services you can use,” Clyburn said at a Capitol Hill news conference.

She was joined by Representative Frank Pallone, a New Jersey Democrat, who said the FCC was "trying to jam this through before the American people find out about it."

Pallone called net neutrality "an essential foundation of free speech" and said Pai's proposal would "Let the broadband companies choke off dissenting views."

Clyburn wouldn't say if she would skip agency meetings to stall action by denying the three-vote quorum. The FCC has five commissioners when fully staffed but just three now after two left following the U.S. elections in November.

The FCC turned from a looser regulatory classification to Title II after courts said it lacked authority for its net neutrality enforcement. Supporters say Title II puts the FCC's rules on a firm legal grounding.

“It is hard to imagine any way for the FCC to establish enforceable rules without using its Title II powers,” Gene Kimmelman, president of the Public Knowledge policy group, said before Pai's speech.

A court last year upheld the FCC's decision to apply Title II, ruling for the agency in a lawsuit brought by Comcast, AT&T and other broadband providers.

--With assistance from Susan Decker and Caroline Hyde

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net.

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, Laurie Asseo