Put aside for the moment whether you think that the FCC should reclassify the Internet as a regulated, phone-like utility — a change that would give regulators clear authority to establish tough net neutrality rules. As a political act, President Obama made a brilliant move this morning when he called on the five regulators led by Chairman Tom Wheeler to take what used to be called the “nuclear option” and incur the wrath of cable and phone companies.
In doing so, the president fulfilled a promise from 2007 when he campaigned as “a strong supporter of net neutrality.” It’s an issue that’s especially close to the hearts of young people, whose lack of enthusiasm last week contributed to the Democrats’ drubbing in the midterm elections.
And he’ll probably get his way at the FCC. Today’s announcement might have undercut Wheeler’s effort to rally support for a so-called hybrid approach to Open Internet policy: reclassification over the connection between content providers and ISPs, but not over the connection between the ISPs and consumers. His two fellow Democrats at the commission already have said they favor full reclassification. They already were under pressure to dig in their heels. Helped by a hilarious and surprisingly effective call to action by HBO’s John Oliver, more than 3.7 million people urged the FCC to get tough on the issue, a record number of filers at the agency. It’s hard to imagine that Wheeler’s Democratic colleagues will accept a watered-down version of net neutrality now that the White House has gone all the way.
Republicans will find themselves in an unenviable position if they rise to the defense of Comcast, Verizon and other broadband providers. “If there’s one institution that’s less popular than Congress, it’s cable companies,” says public interest media policy advocate Andrew Jay Schwartzman. Republicans already are characterizing reclassification as a government intrusion into the private sector. “‘Net neutrality’ is Obamacare for the Internet; the Internet should not operate at the speed of government,” Texas Republican Sen. Ted Cruz said today in a widely mocked tweet. House Speaker John Boehner, R-Ohio, vowed that Republicans “will continue our efforts to stop this misguided scheme to regulate the Internet.”
But the corporate community won’t unite around them. Google, Netflix and others will be quick to defend regulation as needed to protect independent content providers’ speech and commerce against the business machinations of the cable and telco oligopoly.
Congress also has surprisingly few options to thwart the FCC if it supports reclassification. Lawmakers could use the Congressional Review Act to try to overrule the regulators. They also could pass an appropriations rider. But Obama could then veto either bill.
Broadband providers will do their part to fuel opposition. AT&T already has said that it will sue if the FCC supports reclassification. Anything could happen in court. In the political arena, though, the strongest argument that cable and telco companies wield is that a major policy change would frighten investors. It’s a variation of “Do what we want, or the dog dies.” Earlier today, Comcast pointed to the drop in cable stock prices as evidence of the chilling effect reclassification might have on investor willingness to supply capital to Internet upgrades.
Yet these companies won’t allow their stocks to wallow. They’ve already said that they accept the principles of net neutrality, making it unclear why they’re so vehemently opposed to reclassification. Sooner or later — probably sooner — Wall Street and banks will be back to shoveling cash into the Internet, still one of the economy’s great growth engines.
So what happens now? A lot depends on Wheeler, who’s caught in the middle. He appears to be miffed by the president. Earlier this year the FCC chairman said that he did not want to reclassify the Internet because it’s more important for the FCC act quickly to pass at least some net neutrality rules — possibly by year’s end. But now he seems prepared to wait. “Ten years have passed since the Commission started down the road towards enforceable Open Internet rules,” he said in response to the president’s announcement. “We must take the time to get the job done correctly, once and for all, in order to successfully protect consumers and innovators online.”
Wheeler’s a shrewd Washington veteran from his stints as a lobbyist for cable and wireless phone companies. But he’s already committed himself to supporting strong net neutrality. If he decides to challenge Obama on the details then, after today, I’d bet on the big guy to prevail.