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Wheeler's final months

Throughouthis tenure, FCC Chairman Tom Wheeler has reiterated one guiding mantra:"Competition, competition, competition."

Criticsof the chairman, however, have suggested he will be remembered for otherthings.

Thecable industry, for instance, has said Wheeler's years at the FCC have been marked by"regulation, regulation, regulation." And members of Congress havewarned that he will leave in his trail a legacy of “litigation, litigation,litigation.”

At arecent Senate committee hearing,Sen. Bill Nelson, D-Fla., said he feared the FCC's current set-top box marketcould lead to a "decade-long fight" in court, much like the industryhas seen with net neutrality.

"Nomatter how good intentioned a proposal, if consensus can't be reached, thenit's not likely going to be a success," Nelson said.

With a new administration approaching and Wheeler's tenurewinding down, SNL Kagan reviews the major regulatory orders that will definehis legacy, and considers which, if any, is likely to survive.

Open Internet order

PerhapsWheeler's most significant achievement was the adoption of the order in 2015. Thecommission had been trying for years to implement net neutrality rules, butkept having its efforts overturned in court.

Inearly 2015, a divided FCC gave net neutrality its last and best try. The order,approved in a 3-2 vote, reclassified broadband providers as common carriersunder Title II of the Communications Act, giving the FCC the regulatoryauthority it needed to apply and enforce its net neutrality rules. Inparticular, the commission established three bright-line rules against blocking,throttling and paid prioritization.

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TheOpen Internet order was quickly challenged; but unlike previous FCC attempts,this time the order was upheld. The U.S. Court of Appeals for the D.C. Circuitissued a 2-1 rulingin which it found Congress had delegated "the power to regulate broadbandservice" to the FCC. And the net neutrality rules, the court said, fall"squarely within the bounds of traditional common carriage regulation."

Yetthe fight over the order is far from over. Several groups representing fixedand mobile broadband service providers have already asked the full D.C. Circuitto re-examine the legality of the FCC's net neutrality rules in an en bancreview.

Moreover,Republicans have promised to fight the order as part of their 2016 partyplatform, arguingthat the Open Internet order, "imposes[s] upon the internet rules devisedin the 1930s for the telephone monopoly."

In2014, Donald Trump described net neutrality as "Obama's attack on theinternet" and compared it to the Fairness Doctrine, a former FCC policythat required broadcasters to give equal air time to opposing views oncontroversial issues.

Democrats,meanwhile, pledged intheir own 2016 party platform to oppose "any effort by Republicans toroll back the historic net neutrality rules that the [FCC] enacted lastyear."

Andin June, Hillary Clinton promised to defend the net neutrality rules in courtand to enforce them. "These rules now ban broadband discrimination,prohibit pay-for-play favoritism, and establish oversight of 'interconnection'relationships between providers," she said in a factsheet.

Someopponents of the order argued reclassification would stall broadbandinvestment. But Wheeler told the Senate on Sept. 15 that slowdown has notoccurred. "We have seen increased investment in broadband networks. Wehave seen a 13% increase in fiber — this is all since the Open Internet order,"he said, adding that there has also been an increase in venture backedactivities online and in internet usage.

ButJoelle Phillips, president of AT&T Inc. Tennessee, said in a with SNL Kagan, anoffering of S&P Global Market Intelligence, that it was hard to gauge thetrue impact of the order in terms of what might have otherwise been."There's certainly an overhang," she said. "Business lovescertainty and so there's always a little bit of chilling effect from any typeof new decision."

Privacy proposal

Whenthe FCC reclassified broadband service providers as common carriers, it madethose operators exempt from Federal Trade Commission jurisdiction, essentiallycreating a regulatory vacuum.

Tofill that hole, Wheeler put forward a privacy proposal that delineates betweenthree types of personal information: data provided during the sign-up process;information used by broadband providers to market communications-relatedservices, which would be subject to opt-out approval; and all other data, whichconsumers would have to opt in to share.

Thisregime is a bit different than that of the FTC, which continues to regulateedge providers like GoogleInc. and FacebookInc., leading some critics to argue that the FCC's proposal wouldcreate an uneven playing field. Whereas the FTC similarly relies on an opt-inand opt-out approach, it focuses more on consumer expectations based on datasensitivity and company promises.

In aMay filing, the FTC described this difference as "not optimal."

Acoalition of eight associations — including the National Cable &Telecommunications Association, American Cable Association, CTIA, USTelecom andMobile Future — sent a letter on Sept. 15 asking the Senate Committee on Commerce,Science, & Transportation to explore the discrepancy between the FCC andFTC approaches, warning that any departure from the historic FTC regime wouldbe "radical and undermine the dynamic Internet economy."

Alsoof concern is the impact on smaller operators. ACA President and CEO MatthewPolka said in July that in order to comply with the proposal, smaller operatorswould have to develop and implement new data security controls and websitepolicies, hire and train dedicated privacy and data security staff, and retainattorneys and consultants for such activities as regulatory analysis, riskmanagement assessments and preparing required forms and audits.

"Itis an undue burden on smaller providers," Polka said in an interview."To now switch from more of an opt-out system that has worked to an opt-insystem … and then you add on top of that the requirements for risk managementassessments" and "the requirements for the appointment and hiring ofa chief privacy officer to review the privacy aspects of the ISP to certify itscompliance."

Atthis point, it remains unclear whether the FCC will agree to exempt smalleroperators or how it will incorporate feedback from the FTC. As recently asSept. 15, Wheeler said the commission was in talks with the FTC over theproposal, but he still remains confident final rules will be ready "laterthis year."

Ofcourse, if the Open Internet order is ultimately overturned or if Congressmoves to eliminate the common carrier exemption in the FTC Act, the privacyproposal would become moot.

Set-top box proposal

Amongthe more contentious items from Wheeler's tenure is the . The originalversion of theproposal called for pay TV providers to share discovery and securityinformation as well as programming with third-party device manufacturers andapp developers. But that version raised a number of security and copyrightconcerns, and the FCC ultimately changed course.

Morerecently, the FCC has been weighing a revised proposal that promotes anapps-based approach, whereby any operator with more than 400,000 subscribersmust offer a free app that provides access to all the programming consumerswould otherwise receive through a leased set-top box.

Thenew proposal, however, has also attracted opposition from a multitude of cableoperators and content owners, especially with regards to the role thecommission will play in the licensing process under the proposal.

Wheelerhas indicated that he is open to revising the proposal, but has emphasized thatthe commission will fulfill its congressional mandate to open up the set-topbox market sooner rather than later. The proposal is set to be voted on at theFCC's Sept. 29 meeting.

Cablecompanies have already hinted that if the licensing question is not addressed,a lawsuit is likely. "Heavy-handed government technology mandates have along history of failure. The chairman's approach would likely meet the samefate," ComcastCorp. said in a September statement.

Spectrum Frontiers order

In arare bipartisan move, the FCC voted 5-0 in July to open up nearly 11 GHz ofhigh-frequency spectrum for flexible, mobile and fixed use wireless broadband.At the same time, the commission advanced a related proposal that seeks toapply the same flexible use service and technical rules to another 18 GHz ofspectrum.

Wheelertouted the vote as avictory for the U.S. wireless industry, noting that with the order, the U.S.had become the first country in the world to open up large swaths ofhigh-frequency spectrum for 5G applications.

BothDemocrats and Republicans have expressed support for opening up more spectrumto facilitate the deployment of next-generation technology, like 5G. Clintonsaid she will work to speed up the process of identifying underutilized bands,including ones now used by the federal government, and she pledged to focus onthe full range of spectrum use policies, "including new allocations forlicensed mobile broadband, as well as unlicensed and shared spectrumapproaches."

Trumphas not spoken specifically about 5G or spectrum, but the GOP platform says theparty intends to "facilitate access to spectrum by paving the way forhigh-speed, next-generation broadband deployment and competition on theinternet and for internet services."

Business data servicesproposal

Relatedto 5G, the FCC moved in April to survey the current business data services, orspecial access, marketplace to determine which areas are more competitive. Innoncompetitive markets, the FCC is considering a tailored set of rules toprotect against unfair price inflation and certain tying arrangements.

Wheelerexplained that business data services offer the dedicated access that wirelessproviders need to connect cell towers and antennas to their networks.

"Toseize the opportunities to increase the deployment of mobile networks and to movetowards 5G connectivity, we're going to need a lot more backhaul to handle themassive increase in data traffic," he said, adding that a lack ofcompetition the BDS market "threatens to delay the buildout of 5G networkswith its demand for many, many more backhaul connections to many, many moreantennas."

Cableoperators have argued against the proposal, saying they are relatively newentrants in the BDS market and now stand to be penalized for their investmentwith stringent regulations. In particular, the NCTA has objected to theproposed application of a single regulatory framework to all BDS providersregardless of their market power.

Instead,the association has put forward an alternative proposal that would impose regulation onlyon census tracts where there is a single provider with BDS-capable facilities.This would limit regulation to "markets characterized by monopoly powerthat are unlikely to become effectively competitive in the near future,"NCTA said.

Wheelerhas said that the "time has come for action" in the BDS market,noting that reform is supported by most of the nation's leading wirelesscarriers and his “goal is to conclude this proceeding no later than the end ofthis year.”