FCC’s Title II Trifecta Gamble

Scott Cleland | Chairman, NetCompetition

The FCC could not have gambled more riskily in how it implemented net neutrality. It simultaneously snubbed all three branches of the U.S. Government with its Title II utility regulation approach.

If this were a horse race bet, the FCC’s Title II gamble would be like someone betting their mortgage on a trifecta bet where the bettor only wins by guessing exactly which horses come in first, second, and third.

Right now, while this Title II net neutrality horse race is still being run, the FCC and their political backers are high-fiving everyone in their loge viewing box, because they think that their strong race start means that they have already won the race.

They imagine no other horse from the courts, Congress or the presidential election could possibly catch and beat the FCC’s “strongest possible” Title II horse.

The FCC is so confident that it can’t lose its proverbial home mortgage Trifecta bet on its Title II horse, that it is rejecting any discussions with their gracious Hill proprietors who don’t want the FCC to lose their home mortgage over such a risky bet.

In other words, the FCC is so confident that nothing could ever go wrong with its Title II utility regulation approach to net neutrality — legislatively, judicially or electorally — that it isn’t willing to even entertain the idea of bipartisan net neutrality negotiations with their congressional overseers.

The congressional offer on the table is that the FCC and net neutrality supporters get the FCC’s desired net neutrality authority to enforce bright line rules of no blocking, throttling or paid prioritization in permanent law, in trade for no FCC authority to regulate the Internet like a 1934 public utility.

Why is the FCC’s Title II trifecta bet so risky?

First, the FCC is betting its proverbial home mortgage that the president will be successful this fall in not allowing a House appropriations rider, that would defund the FCC’s ability to implement Title II Internet regulation of the Internet, to become law as part of the annual omnibus spending bill for the whole government.

Anyone with Hill experience knows that’s a risky bet.

That’s because a Continuing Resolution will have literally dozens of objectionable policy riders or spending shortages to which the President objects, spanning the government from health care to climate change to immigration to minimum wage to education to entitlements to foreign affairs, etc.

Normally a veto threat from the president results in the removal of only about 3-6 of the most objectionable Congressional provisions from a Continuing Resolution.

Second, the FCC also is betting its proverbial home mortgage that the courts will completely uphold the FCC’s asserted Internet regulation authority, despite the fact that the FCC has lost twice before on this issue in 2010 and again in 2014.

Anyone following the FCC’s legal case knows that is a risky bet as well.

The four different congressionally-confirmed FCC Chairmen that preceded the current one, including two Democrats and two Republicans, all concluded that the law and precedent legally precluded the FCC from doing what this FCC has done.

The FCC also is betting big that the FCC will enjoy sweeping administrative “Chevron Deference” from the court, despite no less than three Supreme Court precedents in the last year that substantially limit the amount of court deference an administrative agency can expect.

Third, the FCC is betting its proverbial home mortgage that a Republican will not be elected president in 2016.

Anyone that follows politics knows betting which party will win the White House twenty months before the election is a risky bet.

So what are the cumulative trifecta odds the FCC will win its home mortgage bet on Title Two?

Remember to win a sequential successive trifecta bet requires guessing exactly which horses will come in first, second and third in the horse race.

To simplify generously here, assume the FCC first has a 50 percent chance of losing its Congressional funding to implement Title II.

Then assume the FCC second has a 50 percent chance of losing its asserted Title Two legal authority in court.

Finally assume the FCC third has a 50 percent chance of a Republican president being elected in 2016 that would enable a new 2017 Republican FCC to reverse this FCC’s Title II Order.

An odds maker would tell you that .5 x .5 x .5 = .125 (12.5%) or 8-1 odds against the FCC’s proverbial home mortgage, Title II Trifecta gamble, becoming a winning bet for the FCC.

So why are the FCC and its powerful political supporters claiming they have already won this race, when in fact they face long 8-1 odds of beating Congress, the Courts and the electoral process “horses” in perfect order?

The only way such an 8-1 odds bet makes any rational sense here is if the FCC and its supporters know that net neutrality is really a political bait-and-switch ruse for what they really want.

That would be the “strongest possible” government control over the Internet, because the medium is the message, and who controls the medium controls the message.

Scott Cleland served as Deputy U.S. Coordinator for International Communications & Information Policy in the George H. W. Bush Administration. He is President of Precursor LLC, a research consultancy for Fortune 500 companies, and Chairman of NetCompetition, a pro-competition e-forum supported by broadband interests.

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