While Americans digest the stunning victory of Donald Trump (including yours truly), understandably, almost no thought has been given to the probable effect on telecom regulation. However, with Republicans poised to take control over all three branches of government for the first time since 1928, telecom regulation will almost surely be profoundly impacted. And most of the changes are likely to benefit the large ILECs/ISPs, as Congress and the new FCC will almost assuredly seek to undo many of the highly-politicized decisions of the current Commission.

Most importantly, we can expect Republicans to quickly update the 1996 Telecommunications Act.  As we’ve discussed before, the problem with the Act is that it was written at a time when circuit-switched networks dominated, and it has little to offer about today’s fiber-based broadband Internet networks. Thus, each year the Act becomes less relevant in the quickly evolving telecom industry.

Any rewrite of the Act would likely address issues such as net neutrality, privacy rules for ISPs, and regulation of the broadband data services (BDS) market. All of these decisions were highly controversial and were (or will be) made on a 3-2 partisan basis over the objections of the two Republicans.

There is little doubt the new Congress will overturn the FCC’s Open Internet rules.  Importantly, the current “Bright Line” rules of no blocking, throttling or paid prioritization of Internet traffic will likely stay in place. Those were the major net neutrality points of dispute that led to the Commission’s 2015 Order, and are now   generally accepted principles in the industry. However, the updated Act would almost certainly eliminate Title II regulation for ISPs including any FCC attempts to regulate Internet pricing. The Commission would still have the authority to ensure that ISP prices, terms and conditions are just and reasonable and are not unreasonably discriminatory. But that authority would be exercised through the complaint process rather than through global edicts.

Any investigations into zero-rated Internet services would also be ended. ISPs seeking to offer novel services would be encouraged rather than have to pass through an FCC gauntlet.

The new Act is likely to eliminate the legitimacy of the FCC’s recent Order mandating stricter privacy rules for ISPs than for edge providers. Once ISPs are no longer classified as common carriers and regulated under Title II, they would again fall under the jurisdiction of the Federal Trade Commission (FTC) and would be subject to the FTC’s privacy rules for edge providers ensuring the same rules for all Internet players. 

The FCC’s proposed rules for the BDS market including special access and Ethernet are scheduled to be approved at the Commission’s November 17, 2016 meeting.  Even if those rules become effective in 2017, an Act rewrite may forbid the large price cuts for ILEC DS1 and DS3 special access services scheduled to occur. A rewrite would also likely eliminate the impending reinstatement of price cap regulation for ILECs. Even if a rewrite doesn’t include new rules for the BDS market, the FCC would likely revisit this issue on its own in 2017.

ISP interconnection is another area an Act rewrite could and should include. Currently carriers seeking to interconnect their networks must follow the rules in section 251 of the 1996 Act. However, these rules apply to circuit-switched interconnection only.  If a new Act contains rules for broadband it certainly should include broadband interconnection. However, small CLECs need to be very leery here.  The only existing FCC statement about broadband interconnection is that carriers must negotiate in good faith.  In a new deregulatory Republican world, that may continue to be the only requirement.  If so, this would hurt CLECs as they are almost always in a negotiating disadvantage with the large ILECs.

Along with a rewrite of the Telecommunications Act, the other most significant impact of a Trump presidency for the industry will occur at the U.S. Supreme Court. The new president will have the opportunity to nominate a ninth justice that would likely be quickly confirmed by an all-Republican Congress. This new justice is expected to be conservative and suggesting he or she would favor free market solutions rather than regulations. ILEC opponents may find that any appeals of FCC decisions during the next several years may not be viewed favorably by a new Supreme Court. Moreover, with many aging liberal justices, President Trump may have the opportunity to nominate several justices over the next few years, ensuring a conservative Supreme Court for a generation.

Of course the impact on telecom of a change in political parties would not potentially be so great had the current FCC not jammed through its pro-regulatory decisions time after time on a partisan basis.  For the last few years almost every significant FCC decision was approved on a 3-2 basis with Republicans dissenting. We continually warned here that use of such power could easily backfire if the Democrats ever lost power. Shockingly, that time is rapidly approaching.  It looks like that old adage may continue to be true, if you live by the sword, you die by it.  ILEC opponents may soon find themselves the victims.

By Andy Regitsky, CCMI