Image courtesy of Andrew Hart Creative Commons

FCC Chief Says Net Neutrality Has Curbed Infrastructure Spending

March 6, 2017
Ajit Pai said that investment on wireless infrastructure is falling under the weight of overly strict regulations, such as net neutrality rules.

Ajit Pai, the Republican chairman of the Federal Communications Commission, said that investment on wireless infrastructure is falling under the weight of overly strict regulations. Those include net neutrality rules that prevent internet service providers from blocking or throttling internet traffic.

Pai, the newly-appointed chief telecom regulator, vowed that the United States would increasingly use “light-touch” regulation. He said that a free-market approach would encourage wireless carriers to invest in new equipment, improving service to rural areas and pushing the industry toward 5G.

During a keynote speech at the Mobile World Congress in Barcelona, Mr. Pai said that he would pare back regulations that he believes are curbing investment into millions of small cells and miles of fiber optic cable that represent that internet’s circulatory system. The event is an annual gathering for the telecom industry. 

He said that incentives to build infrastructure is also vital for 5G, which several companies are trying to start offering before 2020, when the final standard is expected to be finished. Industry executives say that the technology will flow out of 4G.

“5G could transform the wireless world,” Mr. Pai said. “But 5G will require a lot of infrastructure.”

Mr. Pai’s statements illustrate how his approach to regulation would differ from the agency's former chief, Tom Wheeler, a Democrat who pushed through the net neutrality before stepping down. Pai, a former Verizon lawyer, became an FCC commissioner in 2012 and President Trump promoted him in late January.

Net neutrality has been one of the agency's most controversial policies, but one that has found consumer and legal support. Last year, a federal appeals court fully upheld the rules, which Pai and his fellow Republican commissioner Mike O’Reilly had voted against and vowed to revisit.

In his recent speech, Pai said that the policy stemmed from categorizing broadband as a utility like electricity and water. He said that the rules had injected uncertainty into the market, which had discouraged companies to invest in new infrastructure and jobs.

“In the months to come, we also need to remove outdated and unnecessary regulations,” Pai said in a December speech. He added: "the regulatory underbrush at the FCC is thick. We need to fire up the weed whacker and remove those rules that are holding back investment, innovation, and job creation."

He has quickly taken steps to curb regulations. Last month, the agency dropped an investigation into zero-rating plans, in which carriers don't count usage of their own websites and services against a customer’s data plan. Pai said that would let carriers like AT&T and Verizon offer unlimited data plans.

He said that there would be regulations going forward, but he defended a light-touch approach as a solution to the lagging business performance of internet service providers. Pai said that last year spending on wireless infrastructure declined for the first time outside of a recession.

"We were not living in a digital dystopia," he said, hinting at consumer groups that opposed repealing net neutrality. "Our new approach injected tremendous uncertainty into the broadband market. And uncertainty is the enemy of growth."

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