Tom Wheeler FCC

CES 2014: Tom Wheeler says commission will act if markets get out of balance

Speaking at the 2014 Consumer Electronics Show, FCC chairman Tom Wheeler offered cautious but clear support for Net neutrality.

When Consumer Electronics Assn. topper Gary Shapiro, who interviewed Wheeler onstage Wednesday, wondered if Net neutrality rules might become unnecessary, Wheeler framed the issue in terms of results, not rules, and warned the FCC would act if markets veered in directions that discourage competition and innovation.

“I’ve always — well, for 60 days,” he quipped, noting his short time on the job, “I’ve been talking about what I call the regulatory seesaw. If there are good things happening the marketplace, if there is competition, then the commission doesn’t have to do much. But it can (tilt) as well.”

The current Open Internet Order, he said, “is designed to encourage competition, is designed to be different for wireless than from wire, and it makes it clear that if there are untoward things impacting things to the network, undermining innovation, then the commission should move.”

Wheeler framed his thinking in terms of the new realities of regulation. “The old regulatory model was ‘We pretty much know where things are going. There are few hothouses that produce advancements, like Bell Labs; we can track those and fit those into policy.’ It was a very proscriptive model.” But now, he said, changing is happening so fast, “Even the wisest and best intentioned people can’t sit around being proscriptive. But what you can do is say you want to have an environment that encourages innovation and holds true to a set of values and maintains authority to deal with protection of those values.”

One of those values, he said, is what he calls the “Network Compact,” the relationship between networks and users, with the assurance that users can rely on networks. He said, “We’re pro-innovation, we’re pro-competition, and we want to protect both.”

Wheeler’s thoughtful and expansive style was a considerable change from the cautious, buttoned-down approach of his predecessor, Julius Genachowski, though in many areas their message is the same, notably the FCC’s support for reallocating spectrum, a topic that took up much of the hourlong conversation.

“If we are going to be able to expand the use of spectrum going forward we are going to have to think creatively,” he said. “We are looking at incredibly well intended, incredibly appropriate at the time, decisions, that today, in a new digital environment, result in a government-mandated misallocation of spectrum.”

Wheeler noted there has not been a spectrum auction since 2008, but three scheduled are now scheduled for the next 12 months. The big one for broadcasters and the FCC alike, however, is the incentive auction scheduled for this fall. Wheeler compared it to a Rubik’s Cube, where on one side are broadcasters selling auction back to the government, on one side are the spectrum buyers, and in the middle is FCC staff working on re-banding “almost in real time” as broadcasters drop some channels and move to others.

Shapiro noted that National Assn. of Broadcasters topper Gordon Smith was in the audience and asked Wheeler what Smith should tell his membership: “There never has been a time of greater opportunity for America’s broadcasters,” answered Wheeler. “I’m a great believer in the great national public service that broadcasters provide, period.”

“I think there has never been a more risk-free opportunity for an incumbent service provider to morph into the new digital reality than what the spectrum incentive auction offers,” Wheeler said. “I hope broadcasters begin to see that.”

Wheeler was noncommittal on the issue of spectrum caps in the incentive auction. Asked whether AT&T and Verizon would be allowed to bid, he chose his words carefully: “Congress was very specific in saying that no one, no one, can be precluded from participating in the auction. They were also very specific in saying the manner in which the auction is designed has flexibility for the commission.” He said Gary Epstein, who is organizing the incentive auctions, is working on the issue of spectrum caps and others.

Wheeler said one of the top priorities on his agenda is making progress on the transition from analog communications networks to all-IP networks, which would handle all voice, video and data in the same fashion as the Internet. He said he hopes to have protocols in place soon to let companies start trials, but he said those trials need to focus on the Network Compact, specifically making sure that users can rely on the new networks in the same way they rely on today’s analog networks.

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