Pai Seen as Having Near Perfect Resume to Quickly Take Charge at FCC

Even for an experienced commissioner, making the leap to chairman is never easy, industry officials said. As a commissioner, Pai had three legal advisers and a few assistants and interns to supervise. Now he will direct nearly the whole agency staff. It will be his job to develop an agenda for the agency beyond reversing some of the more controversial actions of the FCC under Democrat Tom Wheeler, officials said.

As a starting point, in a September speech in Cincinnati, Pai laid out some proposals as part of a “digital empowerment agenda.” They included creation of “gigabit opportunity zones” for the nation’s most economically challenged areas and a push for better mobile broadband in middle America. Industry observers have said since November the new chairman’s focus will likely have to be, in part, on jobs and helping some of the rust belt areas that put Trump over the top in the general election (see 1701100064). Pai has shown a consistent interest in broadcasting and broadcast issues, and many officials in that industry told us they see his ascendancy as an opportunity.

News Friday that, as many expected, Pai would be named chairman was greeted positively by many, while Free Press and others raised concerns. There was no formal announcement we saw from the White House Monday as Trump started his first full week as president.

“This afternoon, I was informed that @POTUS @realDonaldTrump designated me the 34th Chairman of the @FCC,” Pai tweeted Monday. “It is a deeply humbling honor.” Commissioner Mike O’Rielly released a statement congratulating Pai. “His thoughtful approach, deep knowledge base, and sense of humor have been great assets to the Commission, and it makes sense that President Trump hand-picked him to carry out the new Administration’s broad vision for the agency,” O’Rielly said. Pai is "bright, driven and committed to bringing connectivity to all Americans," said Democratic Commissioner Mignon Clyburn. "I am hopeful that we can come together to serve the public interest by supporting competition, public safety, and consumer protection.”

Numerous groups, including the major trade associations, released statements praising Pai after his designation as chairman became official. “No one is more prepared to reframe the agency to address the needs of this rapidly changing marketplace,” said Bob Quinn, AT&T senior executive vice president-external and legislative affairs, in a blog post. Sen. Maria Cantwell, D-Wash., was less enthusiastic. “Pick to head @FCC is a critic of #NetNeutrality which supports millions of #jobs & contradicts #Trump's pledge to grow the #economy,” Cantwell tweeted Monday. CTIA, NCTA (here) and USTelecom (here) were among the groups issuing statements. NCTA President Michael Powell was the last sitting commissioner to be elevated to permanent chairman, 16 years ago.

The Codebreaker website posted an interview Monday with former Chairman Tom Wheeler in which he said Pai had refused opportunities to meet with him. Wheeler said he met for an hour every other week with all of his other colleagues, but for the past two years, Pai canceled every one-on-one meeting. “It’s hard to work together when you cancel meetings to talk together,” Wheeler said. A Pai spokesman told us Wheeler’s comments were “blatantly untrue.” The FCC's Outlook archives "contain the copies of each and every one of his cancellations," Wheeler responded in an email. "There are no alternative facts here.”

Transitions are “rarely easy,” but Pai’s should be “among the easiest,” said Fred Campbell, director of Tech Knowledge. Campbell was an aide and later Wireless Bureau chief for the last commissioner to be permanently elevated, former Chairman Kevin Martin. Pai’s “experience in the general counsel’s office and as a commissioner mean he’s well-versed in the agency’s procedures, the applicable laws and policies, the issues that are currently before the agency, and the capabilities of career staff,” Campbell told us. “His development of a digital empowerment agenda while serving as a minority commissioner also indicates he’s already given considerable thought to the agency’s future policy direction.”

Long Experience

“Ajit will be one of the most experienced and knowledgeable chairs in the agency's history,” said Robert McDowell, who served with Pai on the commission and is now at Cooley. “Not only has he been a commissioner for nearly five years, but he served in the Office of General Counsel for four years before that and worked on the Hill, at Justice Department and in industry as well. His breadth and depth of the issues facing the FCC are unparalleled and he knows how its machinery works.”

Pai’s digital empowerment agenda “addresses the digital divide and the new technologies and services that are supposed to be a prime focus of the FCC per Section 7 of the Communications Act,” said Richard Bennett, free-market blogger and network architect. “Improving mobile broadband in rural America is especially important. Not only does it reward a demographic that turned out for change in the recent election, it will help improve food security for the entire nation. Pai’s optimism will be a refreshing change at an agency that’s been obsessed with doom and gloom for much too long. It’s going to be easy for him to assemble a top-notch staff.”

The new chairman “has a deep understanding of the institution and has thought long and hard on the policies that will drive innovation,” said Doug Brake, telecom policy analyst at the Information Technology and Innovation Foundation. Pai is likely to move quickly to undo the reclassification of broadband as a Title II service under the Communications Act in the 2015 net neutrality order, Brake said. “But Pai has also been a vocal advocate of a more bipartisan approach at the FCC,” he said. “I’m also hopeful he can shepherd a legitimate middle ground solution on net neutrality that will stand the test of time.”

Consumer protection "has to be high on the new chairman’s agenda,” said Jeff Chester, executive director of Digital Democracy. “The public, including those that support the president, want to have affordable broadband access, their privacy protected, including for their kids, have choice in the marketplace for cable TV. If Chairman Pai develops an agenda that is a give-away to the digital swamp of big cable and telephone lobbyists, it will discredit the FCC and undermine the promises made by Mr. Trump.” Pai should move quickly to demonstrate “he hears what the public is saying,” Chester said. “We need regulations that ensure lower prices, competition and fairness in the market. If he does this right, he will serve the country well. If he embraces ‘alternative facts’ which don’t truly protect digital consumers, Mr. Pai’s stewardship will result in a major public backlash.”

Broadcast allies see an opportunity. “He is going to be a chairman who cares about radio,” said Wilkinson Barker broadcast attorney Howard Liberman, referencing Pai’s longtime advocacy for AM revitalization. With Pai as chairman, rule changes that could make things easier for radio will likely have an easier time, Liberman said. Along with revitalization, radio/newspaper cross-ownership rules could be relaxed under Pai, broadcast industry officials said. In a September speech, Pai proposed the creation of a new class of FM license (see 1610130055).

Broadcasters Hopeful

Broadcast attorneys also see the Pai administration as likely to be more sympathetic to the issue of pirate radio enforcement, an issue the Wheeler administration was seen as not concentrating resources on. “We are hopeful that Chairman Ajit Pai will make enforcement against illegal pirate operators one of his top radio priorities,” said New York State Association of Broadcasters President David Donovan. Pirate radio enforcement can become a daunting problem unless the FCC devotes resources to it, Donovan said. Though the new administration has been seen as advocating a smaller, stripped down agency, enforcing the rights of licensed spectrum holders is such a fundamental FCC function that it’s unlikely it would be handed off to another entity, a broadcast industry official said.

Pai’s ascendancy also adds weight to the wide perception in the industry that this FCC will seek to roll back broadcast ownership rules (see 1612020048), lawyers said. In speeches and remarks in rulemakings, Pai has consistently said the same things about the video market that broadcasters do, said a broadcast attorney. Pai characterized broadcast ownership rules as outdated and not indicative of the competition broadcasters face in the video market, the attorney said. He specifically criticized the commission’s retention of newspaper/broadcast cross ownership rules in an October speech (see 1610110021).

“Commissioner Pai has been an avid supporter of the news media industry, recognizing the importance of investment in journalism,” said David Chavern, News Media Alliance CEO, in a release. In that same October speech, Pai said the U.S. needed to “get moving” on approving ATSC 3.0, also seen as favorable to broadcasters. “Ajit Pai is a known quantity who brings integrity, good humor and a fierce intellect to the Commission,” said NAB Friday. “We look forward to working with him and his colleagues on a pro-growth FCC agenda that benefits tens of millions of Americans who rely on free broadcast radio and TV for the most popular content, credible news, and lifeline local emergency alerts.”

Pai also gave a speech at the Free State Foundation in December (see 1612070040) outlining priorities for process reform, noted Daniel Lyons, associate professor at Boston College Law School. “Pai endorsed the notion that ‘market failure’ should be a threshold inquiry to justify future agency regulations, and that the agency should avoid approving new rules unless it shows the benefits outweigh the costs,” Lyons said. “I would not be surprised to see these two inquiries become more standard practice during a Pai chairmanship.”

Better Relationships?

Pai also highlighted “the need for greater openness and transparency, both among commissioners and between the agency and the public,” Lyons said. “Given well-publicized stories about the treatment of minority commissioners under Chairman Wheeler, I would expect the Pai chairmanship to focus first on ways to improve openness and transparency and return to a more collegial, less partisan agency.”

As chairman, Pai will need a “set of leadership and managerial skills that go beyond those required of the other commissioners,” said Randolph May, president of the Free State Foundation. “Based on Ajit’s time at the commission, including in the General Counsel’s office, he obviously understands how the agency works operationally. Above all, a successful leader, one that is also a change agent, needs to have a grounding in fundamental principles that will guide him. And, on this score, after observing Ajit closely since he joined the agency as a commissioner, I don’t have any doubts.” May, a former FCC associate general counsel, called Pai's proposed digital agenda “a way for the commission to exhibit a high degree of regulatory modesty, in its deeds, not just its words, consistent with promoting consumer welfare, more broadband investment, and more innovation. I expect that this is what Chairman Pai wants to do, and I’m hopeful he will succeed.”

Pai should start his chairmanship with a renewed commitment to bipartisan cooperation, said Rob Frieden, professor-telecom and law at Pennsylvania State University, Monday in an open letter to the chairman. “I hope you will take every effort to achieve consensus which used to be the usual outcome of matters before the FCC,” Frieden wrote. Previously, most votes were unanimous, he said: “No one had to overreach, or grandstand. No one had to write 50 page dissents. No one dared resort to smugness, righteous indignation and arrogance.”

Adonis Hoffman, chairman of the for-profit Business in the Public Interest, sent us part of an opinion piece he was writing for The Hill. “While he is prone to a bit of gimmickry from time-to-time, Pai’s legal analyses are masterfully reminiscent of Justice [Antonin] Scalia in terms of rationale, approach and style,” wrote Hoffman, former aide to FCC Democrat Mignon Clyburn. That might have something to do with Pai’s Chief of Staff Matthew Berry, “a former law clerk to Justice Clarence Thomas and a legal heavyweight in his own right,” Hoffman said. But Hoffman wrote Pai faces challenges: "Pai has been an outspoken champion of such issues as diversity in media ownership and low-cost communications programs for rural and inner-city Americans. These positions have won Pai respect as a voice of reason, but are not necessarily mainstream Republican. In a highly charged partisan political environment, Mr. Pai will have to reconcile these and other competing interests.”

“We need an FCC that protects consumers, promotes competition, and spurs innovation,” said Sen. Edward Markey, D-Mass., in a Friday statement. “I will vigorously oppose any efforts by leadership at the FCC to undo net neutrality and broadband privacy rules, undermine E-Rate, or roll back any fundamental consumer protections.”