Net neutrality acquires a powerful new foe

BY SEEMA SIROHI| IN Digital Media | 02/03/2017
Trump’s FCC chair Ajit Pai proves his critics right by backing corporate interests and opposing net neutrality
SEEMA SIROHI reports from Washington DC

Ajit Pai at the FCC 


Is Ajit Pai, the new chairman of the US Federal Communications Commission (FCC), a mole for the industry or a far-sighted man for the times?

An Indian-American lawyer by training, some say he is a dream officer for corporate lobbyists, listening to and acting in their interest. He opposes strong online privacy rules and subsidies for the poor to access the Internet but supports media consolidation.

President Donald Trump named Pai, a Republican commissioner on the FCC since 2012, as chairman in a widely anticipated decision. The appointment, made in late January, sparked a flurry of reports about Pai as a foe of net neutrality and therefore of consumers.  Democratic Party senators worried he was more industry-friendly and less people-friendly.   

His latest statements remove all doubt. Pai told the Mobile World Congress in Barcelona this week that the FCC had made a “mistake” in 2015 when it adopted landmark rules for net neutrality and declared the Internet a public utility.

The decision “injected tremendous uncertainty into the broadband market,” he said at the world’s largest mobile show. To exploit future possibilities such as 5G, new infrastructure has to be built and net neutrality stands in the way because broadband providers don’t want to invest in the face of existing regulations.

"Pai told the Mobile World Congress in Barcelona this week that the FCC had made a “mistake” in 2015 when it adopted landmark rules for net neutrality and declared the Internet a public utility."

Net neutrality in simple terms means that Internet providers must treat all data equally and enable access to content without discrimination. They should not favour some or block others. The rules have been upheld by a federal appeals court.

Perhaps expecting his appointment as chairman, Pai declared in December that the “days are numbered” for net neutrality rules. Soon after his appointment, Senator Al Franken, a Democrat, wrote to him saying it was his responsibility to “protect Americans’ access to diverse information sources.”

Franken said Pai’s strong opposition to net neutrality had raised serious concerns about his “commitment to honoring the First Amendment” which protects freedom of speech. 

A month into his job, Pai is proving his critics right. A flurry of orders issued by him in the name of deregulation and promoting “innovation” in the vastly expanding communications industry take aim at helping the industry while dumping the costs on consumers. On the side, he is trying to throw the poor off the internet.

Among his first acts was to drop an FCC investigation into “free data offering” by Verizon, Comcast, AT&T and T-Mobile – all major providers – to determine whether the companies were favouring certain music and video services over others.

The suspicion was that dominant service providers were using anti-competitive methods to create dominance by some. The investigation was launched by Pai’s predecessor, Thomas Wheeler, a Democrat and a fierce advocate of net neutrality.

Pai, while assuring the companies an inquiry-free future, said closing the investigation showed his agency was moving in a new direction. He said that these free-data plans were popular among consumers, especially among low-income groups.

But Pai struck a blow at those very low-income Americans when he reversed another decision by Wheeler and blocked nine companies from a federally subsidized programme called Lifeline to provide broadband to families below the poverty line. He claimed that Lifeline was losing $476 million in fraud and waste, a figure strongly contested by Democrats.

Frank Pallone, the top Democrat on the House Energy and Commerce Committee, said last year the figure was “baseless” and relied on “unfounded assumptions and bad data.”

Somewhere between Pai’s high figure and the Democrats’ denunciation lies the truth because last year the FCC did fine a company $51 million for listing tens of thousands of fake and duplicate customers.

Around 900 companies are part of the Lifeline programme and the fear is Pai’s whip will crack on more of them.

In yet another pro-industry and particularly heartless move, Pai announced he would no longer defend the FCC’s decision in court to cap the exorbitant costs of telephone calls from prisons. 

The prison telephone industry is a thriving business where families of inmates can be charged up to $25 for a 15-minute collect call. A class action suit was filed against the runaway pricing by companies nearly two decades ago by families of prisoners. A judge brought the FCC into the picture in 2015, seeking advice.

The FCC under the Obama Administration decided to put a cap on a runaway system. The prison phone companies sued the FCC, saying it had no authority to set rates.

Now Pai has taken the FCC out of the battle although other parties are still in court fighting for a cap. The back story of how predatory companies rode on the backs of a desperate and literally captive audience is heartbreaking. In short, the prison phone companies have rigged the system against the consumer in collusion with state authorities. They bid for contracts with state prisons not on the basis of high and low bids but on a kick back system of returning a percentage of their profits back to the state. Some companies promise as much as 90% of revenue back to local governments.

The system evolved in the 1980s when anti-trust moves broke AT&T into smaller companies. Meanwhile, the prison population was ballooning, opening new possibilities for penetration. Soon dedicated providers came into the picture to respond to the massive need from prison inmates desperate for that once-a-month contact with family and the outside world. And price gouging started, bringing about a lawsuit.

Pai had dissented on the FCC’s decision to put caps on prison calls even as commissioner, saying it exceeded the agency’s mandate. As chairman, he has taken another step and given the phone industry a victory.

Craig Aaron, president of a non-profit Free Press that fights for net neutrality and against corporate domination, told tech website The Verge, “Pai has been an effective obstructionist who looks out for the corporate interests he used to represent in the private sector.”

Pai was a counsel for Verizon between 2001-03 and has also worked as a lawyer for the government.


Seema Sirohi is with the Gateway House Indian Council on Global Relations in Washington  DC. 



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