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United States: Certainties and doubts in the telecommunications sector in the era of Trump

The appointment of Ajit Pai as director of the Federal Communications Commission is a bad omen, with the absolute domination by the GOP of the federal government, the forecast is auspicious for corporations interested in deregulating various aspects of the telecommunications industry.

Silvio Waisbord*/ United States/March 2017

With the arrival of Donald Trump as the president of the United States, the eternal objectives of the GOP are back on the table – the deregulation of vast sectors of the economy, generous tax cuts for the economic and financial elite, and «law and order» policies in public security. Beyond the populist fears, erratic thinking about neoliberal truths, and complete ignorance of basic policy-making issues, Trump is the Trojan horse for old conservative obsessions.

This marriage of convenience between the Republicans and the real estate tycoon cum president is fundamental in order to understand changes in the telecommunications sector, in particular those linked to net neutrality and concentration of ownership. Although Trump’s unpredictability and narcissism make it difficult to make accurate predictions, there is plenty of evidence to justify concerns about the future of an open Internet and pluralism of content and property.

The appointment of Ajit Pai as director of the Federal Communications Commission (FCC) is a bad omen, fundamentally because it shifts the majority vote in favor of the Republican bloc. In addition, it means a key change compared to Mark Wheeler, the former director appointed by Obama, who was in favor of increasing the range and quality of connectivity. Pai served as an FCC commissioner and, among other posts, was an attorney for Verizon. He opposed policies aimed at improving access to the low-income population sector and the provision of high-speed services in schools and libraries in underprivileged neighborhoods. On several occasions, Pai offered a textbook Republican response, viewing any federal regulation for public benefits negatively, a suffocation of freedom, job creation, and technological innovation.

It is not unreasonable to think that the Open Internet Rule is on its deathbed. The Rule was approved by the FCC in 2015 in a 3-2 vote divided by partisan loyalties. It contains core principles that reflect the Democrat position over the last decade. It gives the FCC authority to maintain the network free and open, and rates the Internet as a «public utility,» which determines that service providers must be regulated. It is important to note that the Rule had two decisive elements: Obama’s sustained and public support, which underlined his enormous interest and commitment (unusual for a president) and the strong pressure from civil society sectors mobilized in favor of neutrality. Likewise, judicial support was decisive when the courts ruled against an appeal presented by the companies that questioned the Rule.

The outlook has changed substantially with the Trump government. Without the Democrats in the Oval Office, and with a majority in both Houses of Congress, Republicans have been let off the leash. Everything would seem to indicate that the GOP is willing to abandon the application of the Rule and with full presidential approval. In one of his intermittent tweets, Trump had called the Open Internet Rule an intrusion of the federal government against the “conservative media.” Added to this have been his verbal fisticuffs with Amazon and Google, both of which supported the Democrat position.

The elimination of the Rule would not only imply the end of neutrality but would also be a driving force behind the merger of companies that provide services and content. This would not be a new feature, but a continuation of policies instigated under the Obama administration, which favored the integration of large conglomerates, such as the recent merger of AT&T and DirecTV.

Faced with such potential changes, Democrats have vowed to defend Net neutrality. It remains to be seen how Silicon Valley will act, having supported Democratic positions both verbally and financially in recent years. In an editorial dated February 15, the influential Mercury News, which is based in the heart of the Valley, called on the industry to stand up and fight to defend neutrality. Its argument was that the end of neutrality will negatively affect both small companies, which would be at a disadvantage compared to giants like Google, and a third of the population that is unable to choose broadband providers.

There have been numerous speculations about possible scenarios. If the Republicans in the FCC suddenly take a different course and decide to eliminate the Rule, it is possible that a judicial appeal could reverse such a decision. If the big corporations of Silicon Valley fight back, it is difficult to see such a GOP initiative being successful, even though they have the strong support of the telecommunications companies. It is important to note that there is no solid corporate backbone behind a proposal, but there are various corporations with interests that are not necessarily on the same wavelength and which have different alliances with Democrats and Republicans.

There is also a political time issue that makes it difficult to anticipate what will happen. It cannot be assumed that the question of neutrality is a priority for Trump at the present. It would open another front, with potentially robust enemies, in the midst of the initial storm of his government shaken by scandals, leaks, and internal conflicts.

On the other hand, the concentration of ownership in the industry is likely to continue within a favorable climate. The merger of Time Warner with AT&T for US$85 billion is under way, even though Trump has come out against it, saying it would limit competition in the market. A related issue is the position that Trump can take in consideration of his public tiff with CNN, which is part of the Time Warner conglomerate and has been strongly criticizing the White House.

Beyond these contentious issues, which are certainly not robbing either the corporations or the Republican establishment of their sleep, the forecasts are favorable for this mega-merger as it does not seem to face any major obstacles in Congress. It is speculated that it could be finalized this year with the approval of the Department of Justice. Also, it is highly possible that the ownership limit of television stations will be made more flexible, responding to an old demand of the business sector interested in expanding the number of properties at local and regional level.

However, it is clear that, with the absolute GOP domination of the federal government, the forecast is auspicious for corporations interested in deregulating various aspects of the telecommunications industry and that trumpism represents the continuation of mercantilist policies hiding behind a thin populist facade.

  • Associate Director, Professor of Media and Public Affairs at George Washington University, United States.

Related links:

US Federal Court Confirms FCC Decision on Net neutrality and the Internet as a public service

New FCC president in the United States would change the net neutrality policy

... (en este espacio hay varias líneas de código de programación personalizado)