Wireless Issues Toughest to Work Through as Reclassification Talks Continue at FCC

One possibility is that an agreement if reached could be codified in a declaratory ruling to be voted on at the September FCC meeting, an executive suggested. Several analysts were at the FCC for a briefing last week with commission officials, who suggested a September reclassification vote was possible, fueling speculation, industry officials said Friday.

Lazarus has held meetings with both just NCTA, Verizon and AT&T and with a larger group that also includes Google and Skype. The meetings were continuing last week. Many questions remain, such as whether they can agree on a legislative outline, industry and FCC officials said. AT&T and Verizon have pressed for a wireless exemption. Attendees seem to disagree on how much good the meetings will do. NCTA President Kyle McSlarrow seems to be the most optimistic among the core group meeting with the FCC that a deal can be reached, several industry officials said. The NCTA declined to comment.

"I think the real problem is the Bells have an overly optimistic view of their chances in fighting reclassification and that’s going to make it hard to agree to something they should agree to,” said a former FCC official.

AT&T CEO Randall Stephenson was in Washington last week to meet with Genachowski personally, in one of his regular visits to the city. “Mr. Stephenson expressed AT&T’s strong opposition to the Commission’s proposal to reclassify broadband Internet access as a Title II common carrier service,” the company said in an ex parte filing. “Consistent with AT&T’s comments in the reclassification proceeding, Mr. Stephenson emphasized that the proposal would create

significant regulatory uncertainty that would undermine investment in broadband networks.”

Notwithstanding areas of agreement on network management disclosure practices among some proponents and opponents of net neutrality rules, they're several key differences on wireline and wireless issues, executives on both sides of the discussions said. They said there’s disagreement among wireline carriers and rule proponents on whether managed services ought to be able to be given priority over other content, with some companies not wanting mandates in that area. “There’s a big disagreement on wireless,” said an executive whose company favors non-discrimination rules.

Some carriers “want to make transparent their network practices but not be subject to non-discrimination rules,” the executive said. Wireline ISPs agree the FCC can make its four net neutrality principles enforceable rules and that network management ought to be transparent, industry and pubic-interest officials said. Yet “on core issues there is disagreement, there is not consensus,” said an executive.

Some executives at the meetings would like to see any deal sent to Capitol Hill to be codified in legislation, industry officials said. For any legislation to be quickly approved, “complete unanimity” is needed because one company opposed to it could complain to the Hill and “upset the whole apple cart,” said Media Access Project Senior Vice President Andrew Schwartzman, who met with Lazarus last week (CD July 22 p13). “My own view is this is going to be very hard to pull off.” Among parties talking to Lazarus, “reaching consensus is possible, but I am much more skeptical this will be universally embraced,” Schwartzman said. “My impression is that they reached some areas of consensus but they put aside some of the more difficult things like wireless that they're still working on, and those are the harder things to come up with a framework on."

Genachowski would prefer discussions with industry bear fruit, Stifel Nicolaus said in a research note. “However, if the talks don’t conclude soon with an agreed set of principles, we see the chairman as prepared to move forward with the reclassification/forbearance order sometime this fall. We believe staff is working on preparing this analysis, though the exact timing remains in play,” the analysts said. “There is endless analysis and competing factors regarding whether it would be best to issue the order before or after the midterm elections."

"There are rumors circulating that Chairman Genachowski is planning to have the FCC reclassify broadband as a Title II service at the FCC’s September monthly open meeting,” said analyst Paul Gallant of Concept Capital. “Those rumors may well be true, but we do not believe they signal a material setback in stakeholder talks aimed at reaching a compromise that would forestall a near-term reclassification ruling by the FCC.” The discussions are continuing, Gallant said. “There remains a plausible scenario in which the discussions produce an agreement that would postpone a Title II reclassification decision by the FCC."

One FCC official said the reclassification debate is proving to be a distraction. “Real issues of import are going by the wayside … because the deep thinking is being squandered on this,” the official said.

Meanwhile, Hill staffers and industry representatives discussed network management for wireless and satellite broadband networks, in a closed-door meeting Friday. The private gathering in the Russell Senate Office Building was the House and Senate Commerce Committees and Communications Subcommittees’ fourth about updating the Telecom Act. The meeting included 23 officials representing top wireless, cable and Internet companies, and public interest groups.

In a memo to invitees, the committees asked how “differences, including those related to network management and the number of providers available to consumers, between mobile wireless and wireline/cable networks” are relevant to the FCC’s proposed legal framework for wireless broadband services. The committees asked if the answer is “different for terrestrial wireless versus satellite-based broadband Internet services,” and if the FCC’s authority under Title III of the Communications Act affects the inquiry.

Friday’s Hill meeting was a “nice, lively discussion,” said a participant: “But there are some big differences on where people are” between carriers on one side and net neutrality proponents on the other. Participants included: AT&T, Verizon, CTIA, RCA, NCTA, Sprint, Leap, Metro PCS, Clearwire, U.S. Cellular, Amazon, Qualcomm, Wild Blue, T-Mobile, Satellite Industry Association, New America Foundation, Free Press, Public Knowledge, Free State Foundation, Communications Workers of America, Cisco, Time Warner Cable and Navigant Economics.

There seemed to be widespread agreement that any legislation should be technology neutral rather than divided into service types like existing communications law, said another participant. Wireless carriers highlighted differences between wireless and wireline, including spectrum constraints, but wireline companies pointed out their own capacity limits, the participant said. Another debate was over whether legislation should take on net neutrality in a prescriptive or case-by-case manner, the official said. A divide remains between historical net neutrality supporters and foes, but the meeting felt useful, educational and “more civil than the press releases,” the official said.

The bluntness with which Clearwire and satellite providers said they would be open to a technology-neutral framework surprised another participant. No one made a strong case for treating wireless and wireline differently under the overall legislative framework, although arguments were made for treating them separately in deciding about “reasonable” network management, the person said. Talking behind closed doors likely has made the meetings more efficient for Hill staff, but about 90 percent of discussion probably could have been in the open, the participant said.