Powell Expects Deal on Net Neutrality
The new FCC Title I approach to net neutrality is likely to get widespread support and reduce the risk of legal battles, ex-FCC Chairman Michael Powell told an Internet Innovation Alliance (IIA) panel Tuesday. The FCC seems to be moving toward a resolution that would remove the regulatory uncertainty over broadband, said Powell, who chaired the FCC 2001-2005. Open Internet has universal support and is a common vision shared by many major operators, Powell said. Broadband infrastructure is critical to solving national challenges, he said. But “we have been stuck in the never ending debate over net neutrality,” he said: Enormous amounts of time and money have been spent, but the gain is modest, and it’s time to move on.
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If current FCC Chairman Julius Genachowski holds to the scaled-back net neutrality plan, he would substantially diminish the risk of litigation, Powell told us later. “I have rarely seen a major issue at the FCC that isn’t followed by lawsuits eventually.” Genachowski has a unique opportunity, particularly if the major broadband companies can live with the rules, he said. “I can’t remember any major FCC actions in the last two decades that haven’t had lawsuits,” IIA co-Chairman Bruce Mehlman told us. While the major players prefer no regulation, they still agree that the proposal seemed reasonable, he said: “I don’t think the big operators will be the ones filing lawsuits.” Issues in the final proposal that would matter the most include whether there’s a wireless exemption and endorsement of tiered pricing and on the details of network management, Powell said.
A deal on net neutrality could go awry if Commissioner Michael Copps pushes for stricter rules, Powell said. (See separate report in this issue.) “Mr. Copps has to ask himself, are you gonna be the guy who blows it all up?” Powell said. “On balance, in there somewhere, is the chairman getting this done?” There shouldn’t be Internet regulation unless there’s clear and compelling evidence of market failure, he said. This is more about innovation and less about politics, he said.
Powell doubted that Republican lawmakers, who generally oppose net neutrality rules, would block a deal if phone and cable carriers supported the FCC’s Title I proposal. “I don’t believe the new majority is going to undo a deal the majority of investors and carriers have said they can live with,” Mehlman said. Telecom traditionally hasn’t been the point of the spear in partisan warfare, he said.
Investors are relieved that the FCC seemed to be moving to rules they could be comfortable with, said analyst Craig Moffett of Bernstein Research. Some of the net neutrality negotiations may be intertwined with commission review of Comcast’s plan to buy control of NBC Universal, he said. Regulation matters to investors, but isn’t high on their list, said James Ratcliffe of Barclays Capital. He said investors’ primary concerns are macro conditions like employment, competition and usage of capital.