The WasteWatcher: The Staff Blog of Citizens Against Government Waste

Fixing the FCC

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


The peaceful transfer of power to a new administration has been a key part of the nation’s history.  This is particularly important when there is a change in parties at the White House. 

President-elect Trump is making it clear that there will be many changes made to how federal agencies work, including significant streamlining of regulations in order to generate economic growth.  At or near the top of that long list is the Federal Communications Commission (FCC), which has acted more as an activist arm of the White House over the past eight years than an independent technical body. 

The first and most important step to take within the first 100 days of the Trump administration would be to roll back the Title II reclassification of the internet that occurred in the FCC’s February 26, 2015 Open Internet Order (OIO).  The OIO enabled the FCC to start treating internet service providers (ISPs) like old wireline phone companies.  In their November 2014 study, Kevin A. Hassett and Robert J. Shapiro projected that as a result of the OIO, total ISP investments would be reduced by $28.1 billion over the next five years.  Wireline investments would be 17.8 percent to 31.7 percent less than expected prior to Title II reclassification. 

In addition to stifling innovation and investment, the reclassification of the internet under Title II gave new authority over internet privacy protection and enforcement to the FCC and took it away from the Federal Trade Commission (FTC).  The FTC continues to have enforcement authority over online edge providers on the internet, such as Facebook, Google, Microsoft, and Twitter.  Rather than harmonize its rules to maintain continuity with the FTC’s enforcement protections, the FCC created an entirely new set of rules for ISP privacy, creating a confusing mishmash of consumer privacy protections on the internet.  This is another area that must be corrected by the next administration.

Another issue that should be addressed by the incoming administration is developing a standard for basic minimum internet service requirements that can be attainable, since the FCC has provided little certainty in this area for ISPs.  In its 2015 Broadband Progress report, the FCC raised the minimum standards to 25/3 megabits per second (Mbps), which was higher than initially proposed.  As noted by Commissioner Michael O’Rielly, “Last year, as we proposed and then adopted various Connect America Fund reforms, I was told not to worry about unserved consumers because ‘virtually everyone’ has access to at least 4/1.  Based on my experience and travels throughout rural America, I knew that wasn’t the case and today’s Report bears that out.  Unfortunately, it comes a month after the Commission made certain decisions that shift some of the funding to upgrade existing service in lower cost areas rather than connecting unserved consumers in truly high-cost areas.  What is more, in many parts of the country, after six or more years, those upgrades are only guaranteed to get consumers to 10/1 service – a level that, as of today, we no longer consider to be true broadband service.”

The FCC also expanded the Lifeline program, which is financed through the Universal Service Fund, to include broadband internet subsidies for low-income families, even while there is still rampant fraud and abuse in the system in relation to mobile phones.  It is certainly not helpful that the criteria for qualifying for the phones or subsidized internet is based on the Supplemental Nutrition Assistance Program (SNAP) eligibility, which Commissioner O’Reilly noted is “riddled with waste, fraud, and abuse.”  On June 6, 2016, the Government Accountability Office released a report on the SNAP program, which found improper payment rates ranging from 5.2 percent to 3.2 percent of all payments.  The report noted that while some policy changes may have decreased the incidence of improper changes, other policies (both state and federal) may have caused the rate of improper payments to increase. 

Fortunately, one of the FCC’s egregious examples of regulatory overreach by the agency was overturned.  The FCC’s February 26, 2015 preemption of state laws relating to municipal broadband under Section 706 of the Telecommunications Act of 1996 was rejected by the U.S. Court of Appeals for the Sixth Circuit on August 10, 2016.  The court found that there is no statutory authority under Section 706 or anywhere else for the FCC to supersede the state laws.

On top of adopting numerous burdensome regulations, the FCC failed in most cases to obtain a cost-benefit analysis prior to voting on proposed rules, notably including the OIO.  Members of Congress have requested, but not received, a cost-benefit analysis on the proposed set-top box rules that have yet to be approved by the commission. 

Finally, the agency has been notoriously opaque about its rulemaking.  Both the two Republican commissioners and members of Congress have complained, without much effect, that FCC Chairman Wheeler is not providing sufficient notice or information about proposed rules before the commission votes.

While the burdensome regulations and convoluted administrative process can be addressed in the Trump administration, there is another problem with the FCC:  The laws under which it operates are antiquated, to say the least. 

The Communications Act of 1934 was last overhauled in the Telecommunications Act of 1996.  Much has changed since that time:  The internet was opened to the public in 1998, followed by the blossoming of e-commerce and internet search engines, which fueled even greater job creation, and wireless communications have dramatically expanded, resulting in faster and better services for consumers.  These dramatic advances occurred with the internet under a light touch regulatory regime, until the FCC went wild.  The regulatory legacy left over from the outgoing administration will have serious consequences if these matters not addressed quickly by the incoming administration. 

In building his transition team, President-elect Trump has selected Jeffrey Eisenach, managing director of National Economic Research Associates, Inc., and Mark Jamison, director of the Public Utility Research Center at the University of Florida to provide strategies relating to the telecommunications issues that the new administration will be facing.  Both Eisenach and Jamison have been outspoken critics of the FCC and Chairman Wheeler’s signature regulatory strike, the OIO.

The Trump transition team has a large task ahead of them.  Among the questions that Eisenach and Jamison should be asking is whether just reining in the agency will be enough.  Perhaps, the agency’s overall mission should be reviewed, restructured, and the extraneous infrastructure repurposed or eliminated. 

Whatever the administration decides about the fate or future of the FCC, it is clearly time for the Communications Act of 1934 and the Telecommunications Act of 1996 to be modernized to attune existing law with the technologies of today and the future.

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