Federal Communications Commission Chairman Tom Wheeler and Republican Commissioner Ajit Pai took their ongoing agency boxing match before a Senate Appropriations subcommittee Tuesday, where the two sparred over net neutrality and the FCC’s 2016 budget increase request.
The commissioners’ joint appearance before the Senate Appropriations Subcommittee on Financial Services and General Government marks the latest in a series before both the upper and lower chambers, where they discussed a slew of agency proposals that have divided Republicans and Democrats at the agency and in Congress.
Those issues include the agency’s 3-2 partisan vote earlier this year to reclassify and regulate Internet service providers (ISPs) as public utilities, as well as a budget increase request to facilitate moving agency office space, fee increases for companies, funding for new programs and reallocating wireless spectrum.
“This year the FCC is requesting an increase of $73 million dollars —  percent more than it received in fiscal year 2015,” Republican committee Chairman John Boozman said in his opening statement. “In a disappointing move, the FCC’s budget proposes to paper over part of that increase by transferring $25 million dollars from the Universal Service Fund to augment the FCC’s operating budget.”
“The Universal Service Fund is intended to ensure that all Americans have access to telecommunications services — it’s not intended to be a reserve fund to pay for the FCC’s operating expenses.”
Wheeler argued that the agency’s $413 million 2016 budget — its largest ever — is lower than last year’s, outside of his proposal to move the agency’s office space and pay for “a few unfunded mandates.” Wheeler added that the budget will be offset by FCC fees, and includes a reduction in full-time employees and contractors, the closure of 16 of 24 field offices across the country and $190 million in savings from what the agency currently pays for its offices in Washington.
Pai maintained his opposition to the budget, believing the funds would be better spent on freeing up wireless spectrum, expanding broadband access to rural communities, investigating companies’ fraudulent use of the FCC’s Lifeline program (which provides subsidies to providers in exchange for granting cheaper service to low-income Americans) and increasing 911 accessibility and response time.
“I have not been asked to participate in the development of the agency’s budget request, and after reviewing this proposal, I am unable to support it,” Pai said. “That is dramatically higher than it has been at watershed moments in the agency’s history. For instance, the agency’s baseline budget, after adjusting for inflation, was $277 million (or 33 percent less than this budget request) when it faced the monumental task of conducting 80 separate rulemakings to implement the Telecommunications Act of 1996.”
Not least among his reasons for opposing the budget increase were Wheeler’s new net neutrality rules.
“Congress should forbid the commission from using any appropriated funds to implement or enforce the plan the FCC recently adopted to regulate the Internet,” Pai told the committee in his prepared remarks. “The implementation and enforcement of these new rules will not only impose significant burdens on the nation’s 4,462 Internet service providers and harm American consumers, they will also consume substantial FCC resources.”
According to Pai, the agency has diverted significant funds and time to what he described as initially a “discretionary project.”
“I’ve often said that net neutrality was a solution in search of a problem,” Pai said in response to a question from Boozman about the resources the agency is spending on the rules. “The Internet wasn’t broken before the FCC tried to fix it.”
“Nonetheless, the agency has spent an inordinate amount of time producing what ended up being over 300 pages of regulations, which are going to have to be implemented and enforced in coming years. It’s going to have to litigate those issues in the courts, and that has detracted from the core purpose of the FCC under Section 1, which is to realize the promise of communications services for every American.”
“Unfortunately, net neutrality has been a diversion,” Pai said.
Oklahoma Republican Sen. James Lankford approached the topic by asking Wheeler why a legislative solution wouldn’t have been preferable, given the range of issues and notable number of nuanced exceptions and caveats contained in the rules.
“There seems to be so many exceptions, it looks like a round peg in a square hole in some place, when there was a congressional conversation about some of these same issues and how to resolve it,” Lankford said. “Why do it through a rulemaking and try to adapt, rather than wait on Congress to be able to respond to it?”
“Legislation has been proposed in both houses, as you know,” Wheeler answered. “That is the prerogative of the Congress, and we would certainly bow to whatever decision the Congress makes.”
Such legislative solutions include a bill currently being drafted by Senate Commerce, Science and Transportation Committee Chairman John Thune, which would ban ISPs from throttling or segregating Internet traffic and setting up “fast lanes” of traffic with Internet content providers, but stops short of reclassifying ISPs as public utilities under Title II of the 1996 Telecommunications Act. Thune and others are currently working to secure bipartisan support for the bill.
A collection of legislative reforms in the House target the FCC itself, and include forcing the agency to publicly release draft proposals of rules before a commission vote and publishing the rules in their completed form immediately after. The reforms, which come from both Republicans and Democrats, go before the Energy and Commerce subcommittee on Communications and Technology next week, and are aimed at increasing agency transparency.
In response to a question from Chairman Boozman to Commissioner Pai about whether or not the rules allow the FCC to regulate the rates ISPs charge for Internet service, Wheeler insisted the agency would not enforce its power to do so, and that he hopes for the opportunity to establish such a precedent.
“I hope somebody files with this,” Wheeler jumped in. “Because if they do, I hope we will be able as a commission to take an action that makes it clear that ex ante rate regulation is not what we’re after, and that we will produce a decision that makes it clear that’s not what we’re trying to do here.”
Pai went on to point out that though the open Internet order states the FCC won’t engage in ex ante regulation, or setting rates ahead of time via tariffs and other regulatory tools, it gives the FCC the ability to review and determine if the rates charged by ISPs to consumers are “unjust or unreasonable,” as well as the rates charged to companies for interconnection.
“Our goal is not to have rate regulation,” Wheeler reaffirmed. “Some people have said that this gives us some kind of ex post authority. I would like to be able to make it clear that it is not a rate regulation tool.”
“Either consumer or interconnection?” Boozman asked.
“That we need it specifically for consumer rate regulation,” Wheeler responded. “As we look at interconnection, I think we need to make sure that we make decisions based on what the facts of the situation are.”
Boozman than asked Wheeler for his response to Congress hypothetically prohibiting the FCC from regulating broadband interconnection rates.
“If Congress wants to come along and say, ‘That’s off the table for the next commission too,’ I have no difficulty with that,” Wheeler said.
Despite headlines focusing on their vastly differing positions in recent months, Wheeler and Pai traded compliments and came together on several issues, such as improvements to public safety communications and quicker access to 911 across the country.