What a Biden FCC means for social-media and web regulation

The Federal Communications Commission is one of the most powerful agencies in the United States, with extensive powers to regulate some of the largest corporations in America. A stalled Congress could prevent President-elect Joe Biden from advancing his economic agenda through legislation an epicenter of policy making for the next four years.

Who will be the next FCC chairman??

Biden’s decision to run the agency will be crucial in how aggressive it will be in the years to come. The most obvious candidates include Mignon Clyburn, former FCC commissioner and acting chairman, and Jessica Rosenworcel, a current FCC Democratic commissioner.

Cameron Kerry, Brookings Fellow and former acting secretary of the Commerce Department, told MarketWatch that the agency’s power makes it unlikely that the Senate will quickly appoint a new commissioner.

“We’ll see for a while what is likely to be a 2-2 commission,” he said after Senate Republicans confirmed Nathan Simington in the current session of Congress on lame ducks and the body with two members from each party had left. A key argument as to why Republicans made this a priority was that Democrats would not have the power to “get to work right away,” as a Wall Street Journal editorial warned them not to endorse.

A key variable here is the Georgia Senate runoff elections: if Democrats can get two Senate seats in this contest, Biden can endorse his nominees with the groundbreaking vote of Vice President-Elect Harris, provided his party can avoid defects in an evenly split upper chamber.

Net neutrality

A likely goal for a democratic FCC, especially if a Democratic majority delivers Biden his ideal choice for chairman, is the return of so-called “net neutrality” rules, which prohibit Internet service providers from discriminating against certain content by making it available to consumers at different speeds or by charging content producers – Netflix Inc. NFLX, + 1.25% or Walt Disney Co. DIS, -0.02% – for the right to deliver their product to consumers.

To reintroduce such rules, the FCC would have to reclassify Internet Service Providers as a Telecommunications Service “Title II”, which gives the Agency extensive regulatory powers over them.

Net neutrality has been hotly debated for years, especially after the FCC implemented the rules in 2015 under President Barack Obama, only to change those rules and the Title II classification they approved in 2018 under President Donald Trump and the current one Repeal FCC Chairman Ajit Pai.

Pai has defended its decision, arguing that broadband speeds have increased over the past two years and that consumers have not seen a decline in the quality of their internet experience. “The American people can still access their favorite web sites,” he said in October. “You don’t pay extra to avoid the slow lane.”

Internet service providers have done well under the new rules. Pure-play broadband provider Charter Communications Inc.CHTR, -0.46%,
Altice USA Inc. ATUS (+ 0.83%) and Cable One Inc. CABO (+ 0.29%) have significantly outperformed the S&P 500 index since the beginning of 2018, according to FactSet.

FactSet

Other major broadband providers Comcast Corp. CMCSA, + ​​0.17%,
Verizon Communications Inc. VZ, -1.03% and AT&T Inc. T, -0.70% did less well, but their struggles cannot be attributed to their broadband businesses.

“The only reason you’re seeing a downturn for them is because larger conglomerates have sometimes taken a dip on their media properties,” said Matt Wood, video president for politics and general counsel at Free Press, a non-partisan group that campaigns for affordable Services uses Internet access.

Wood argued that the reason consumers did not see any significant deterioration in the service after the net neutrality was lifted is that service providers are still under threat from government regulation and that companies such as charter operate under merger terms that continue to prevail Net neutrality like regulations.

The digital divide

Indeed, the industry itself has urged Congress to pass new laws that would cement the rules for net neutrality without the need for the FCC to reclassify broadband as a Title II service – a move that opens the door to a much stricter one Regulation as would open price controls.

“The industry fears Title II will open the door to care-style regulation,” said Wood. While he doesn’t think the FCC should get involved in setting tariffs, he argued that the Title II designation is essential to ensuring that all Americans have access to affordable high-speed internet.

One way to close this “digital divide” that leaves tens of millions of Americans without high-speed internet is to force broadband Internet providers to sell wholesale cable access to competitors at reasonable prices, which increases competition in an industry In which monopoly markets are common, said Wood. According to the Institute for Local Self-Reliance, 77 million Americans only have one choice of broadband Internet service providers.

ISPs are unwavering against such regulations, saying it would deter companies from spending money building and upgrading their networks. “ISPs have built their businesses for decades, investing billions of dollars with the promise that they will not be under the heavy yoke of Title II,” Michael Powell, President and CEO of the Internet and Television Association, told Congress last year.

The controversial nature of Title II regulation could lead the FCC to try other methods to bridge the digital divide, especially if the congressional deadlock divides the commission evenly between the parties.

“I anticipate a period of net neutrality and Title II neutrality in the face of the realities facing the administration, the FCC and Congress,” said Brookings’ Kerry. He added that a compromise position would be to expand and make more generous the FCC’s Lifeline program, which provides subsidies to lower-income Americans to purchase Internet access.

Section 230

In the meantime, the debate about the law giving social media companies liability protection for most of the materials posted by their users, or Section 230 of the Communications Decency Act of 1996, has been central to the public imagination.

“Some of the attention people in Washington have been paying attention to net neutrality over the past few years has shifted to tech platforms and things like Section 230 and privacy and antitrust,” said Paul Gallant, former FCC attorney and chief executive at Cowen & Co.

President Trump drew attention to the problem over the past few months, arguing that social media companies like Facebook Inc. FB (+ 0.16%) and Twitter Inc. TWTR (+ 2.37%) are in the market because of an alleged anti-conservative tendency Your company should be exempted from liability protection. He plans to veto a recently passed defense spending bill as it does not contain a repeal of Section 230, White House press secretary Kayleigh McEnany said Tuesday.

President-elect Biden has also spoken out in favor of the abolition of Section 230, but it is not entirely clear what both parties want to achieve by repeal other than limit the distribution of content they find unpleasant.

FCC General Counsel Thomas Johnson argued in October that the commission had legal authority to amend Section 230 as part of the regulatory process, and outgoing Commissioner Pai announced that the FCC was making efforts to “clarify” the meaning of Section 230 will push forward. however, would have a greater ability to change the law.

“Congress will try to get a 230 bill passed, but the parties start in two different places. I would be surprised if it actually passed,” Gallant said. “Stricter self-regulation proposals instead of laws are more realistic.”

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