Telcos Celebrate Spring Thaw in Washington as GOP Scraps Rules

Some of Washington’s most persistent lobbyists are racking up big wins, as regulators, members of Congress and even President Donald Trump embrace priorities expressed by the biggest communications companies.

Internet-service providers are on the verge of shedding limits on handling subscribers’ information, broadcasters are near to gaining renewed freedom to grow through mergers, and telephone providers are poised to dodge rate caps. Each step reverses policies from the Obama era.

“It’s spring in Washington, D.C., and the temperature is getting warmer and more friendly,” said Roger Entner, a communications industry analyst at Recon Analytics LLC. “What a nice turn around.”

Cable, telephone and broadcast companies -- collectively among the biggest spenders on political campaigns -- are winning both in Congress and before the Federal Communications Commission. Wall Street has noticed: indexes that track stocks of broadcast and cable companies have outstripped gains in the already lofty market since Trump’s election.

The biggest recent win came in Congress on March 28 as the House voted 215-to-205, with all "yes" votes coming from Republicans, to kill an online privacy rule passed last year by Democrats at the FCC. The measure would have required internet service providers to get subscribers’ permission before using sensitive information such as web browsing history and app usage.

AT&T Inc. and Comcast Corp. argued that it was unfair that they be subjected to rules that don’t apply to web companies such as Facebook Inc. and Google, which are beyond the FCC’s jurisdiction.

“In truth, companies that collect and use the most customer information on the internet are not the ISPs but other internet companies, including operating system providers, web browsers, search engines, and social media platforms,” Bob Quinn, AT&T’s senior executive vice president of external and legislative affairs, wrote in a blog Friday. “And the FCC rules had nothing -– literally nothing –- to do with these companies or their practices.”

The Senate earlier approved the same measure to rescind the privacy rule, and the resolution now awaits Trump’s signature. White House spokesman Sean Spicer on Thursday said the president would sign it as a step against “federal overreach.”

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The trend’s not universally admired.

“This is back to business as usual -- this is back to the swamp," said Gigi Sohn, an aide to Tom Wheeler, the Democratic FCC chairman who left office after Trump’s election victory.

The argument shows how communications issues have become increasingly partisan as Washington politics polarize.

“There’s a real divide here between the content providers, which tend to be tech companies, which are pretty strongly in the Democratic coalition, and the telecom service providers who seem to be pretty strongly in the Republican coalition,” said Lee Drutman, senior fellow in the political reform program at the New America policy group.

At the FCC, new Republican Chairman Ajit Pai is moving briskly. Since he was named in January, the agency has suspended part of a privacy rule, cleared mobile providers to exempt in-house video from monthly data caps, and eased scrutiny of some combinations of TV stations.

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“It’s pretty simple, really,” said Randolph May, president of the free-market policy group Free State Foundation. “It’s because the Wheeler commission overreached.”

Pai, an agency member since 2012, didn’t need Senate confirmation and could begin acting almost immediately.

“He used his years as a commissioner not only issuing dissents to the interventionist policies of his predecessor," James Gattuso, a senior research fellow at the Heritage Foundation, said in a March 9 report for the group. "But also articulating the case against those policies.”

The new chairman has had help in setting the predicate for his acts. Since New Year’s, telephone companies and their trade groups have contacted the FCC at least 79 times to discuss policy, and cable interests have made 29 contacts, according to disclosure filings at the FCC.

Campaign Donations

Elsewhere in Washington, the communications industry flexes muscles little matched outside of heavyweight Wall Street firms. Communications and electronics companies comprised the
fourth-largest group of political donors over the past two years, giving $297 million to rank behind finance but ahead of health care and defense, according to the Center for Responsive Politics. In lobbying expenditures, AT&T, Google owner Alphabet Inc., Comcast and the NCTA cable trade group rank among the top 20, according to the group.

“They just pour incredible resources into lobbying. And those resources do pay off,” Drutman said. “They’ve got all the justification and the legal backstopping ready to go as well.”

Pai in an interview Thursday said he focuses on “results for the American consumer.”

“I am pro-competition and pro-consumer. And I think that’s pretty clear," Pai said. He pointed to initiatives approved in his initial weeks to spread broadband in New York state and in rural America.

The list of rule rollbacks is steadily growing. On Thursday, Pai proposed reversing an FCC decision last year to tighten the TV-station ownership cap, and stepping away from imposing rate cuts upon owners of high-capacity broadband lines for business.

Net Neutrality

Pai cast those steps as part of his goal to spread broadband, and along with it the benefits of the digital economy.

“The FCC needs to make it easier for companies to build and expand broadband networks,” Pai said in a posting on the web site Medium.com. “We need to reduce the cost of broadband deployment, and we need to eliminate unnecessary rules that slow down or deter deployment.”

Pai hasn’t said when the FCC may take up the net neutrality rule that was adopted with Democratic votes over his objection. Republicans in Congress have been hostile to the rule, which requires broadband providers to treat all web traffic equally, and may seek to overturn it through legislation.

Lighter regulation that quells bad behavior with “targeted action” is preferable, Pai said. “I favor a free and open internet, and I oppose the imposition of these heavy-handed economic regulations.”