FCC Chairman Wheeler sees his legacy as consumers first

FCC Chairman Tom Wheeler wants consumers to know he has their backs as he makes a final push to get new rules in place to protect online privacy and open competition in the cable set-top box market.

In a commentary published Wednesday on CNET, Wheeler ticked off several consumer-friendly policies and rules his agency has adopted since he took office in November 2013. From protecting the internet with the 2015 Open Internet order to forcing wireless operators to unlock cell phones to negotiating settlements with wireless and broadband companies that have deceived consumers, Wheeler said the FCC under his watch has "consistently pushed a series of initiatives to promote transparency in the telecom sector" and "works aggressively on a variety of fronts to make sure consumers are treated fairly and get what they pay for."

The commentary comes as the FCC issues a report Wednesday detailing Wheeler's achievements in protecting consumers the past three years. With only a few months left in office, Wheeler, who seems to be trying to establish his legacy as a pro-consumer and pro-innovation FCC chairman, is also in the midst of a major push to get two controversial sets of regulation approved by the full FCC by the time he leaves office.

But critics say Wheeler's policies could end up hurting consumers as they're likely to lead to less investment by wireless and broadband companies, which will ultimately lead to higher prices for consumers.

"Every major policy proposed by Mr. Wheeler tuned down the returns to investing in broadband," said Hal Singer, an economist who is a senior fellow at the George Washington Institute of Public Policy. "The cumulative toll of his tweaks is now manifesting itself in a flight of capital. This unfortunate outcome is the Wheeler legacy."

Singer says the most recent network investment data shows that capital spending by wireless and broadband providers is down 8.1 percent in the first six months of 2016 compared with the first six months of 2014. That was the last year before internet service providers were regulated as common carriers, a change that was the result of the FCC's 2015 net neutrality rules.

Singer says these policies have made it difficult for broadband and wireless companies to find new streams of revenue, which makes it difficult to justify spending money on building out their networks.

The FCC will vote on its new privacy rules later this month. The new rules, introduced in March and revised last month, would establish the strongest set of privacy regulations that has ever been in place for internet service providers.

The most controversial portion of the rules would require that customers actively choose to allow their personal data to be collected by an ISP rather than be automatically enrolled in such programs. This approach is different from guidelines set by the Federal Trade Commission, which governs how companies like Amazon, Google and Facebook handle your personal data.

Critics have said having two different privacy standards could confuse consumers and hamstring broadband and wireless providers trying to get into the advertising market to compete against Google and Facebook. But Wheeler has argued that consumers have a unique relationship with their internet service providers. While they may have options with search engines or social networks, consumers often have little choice when it comes to the company providing access to those services.

Still, to address concerns, the FCC earlier this month amended its rules to follow the FTC's approach, but it raised the bar in terms of what companies may consider as "sensitive data" to include things such as information about what websites you visit, which supporters of the proposal say is important.

Groups, such as broadband companies, say the revisions still go too far in restricting the data that internet service providers can collect.

"We are concerned...that the commission, which has no expertise with regard to determining the content of speech, is now attempting to redefine what consumers may regard as sensitive," Walter McCormick, president of the USTelecom advocacy group, said in a statement.

The FCC's "Unlock the Box" proposal, introduced in February, has also been sharply criticized. It was originally pitched as a way to give consumers cheaper and more innovative alternatives to the set-top boxes available from their cable companies. But critics, such as the cable companies and Roku, a maker of streaming-video devices, argued an FCC mandate on set-top boxes could add costs, threaten consumer privacy and hurt smaller content producers.

The FCC revised its proposal in early September, mandating all pay-TV providers offer an app on devices like a Roku, Apple TV, Xbox One, smart TVs, or iOS and Android phones or tablets. The idea is that for consumers who already use one of these devices to access internet streaming services like Hulu or Netflix, they could also use a variety of devices to view cable TV with no monthly rental fee.

But critics said the new proposal could still give the FCC too much involvement in licensing programming.

The FCC pulled the item from its September agenda at the last minute. But Wheeler has said he is still committed to doing something to give consumers more choice when it comes to set-top boxes.

Berin Szoka president of TechFreedom a nonprofit Washington, D.C.-based technology think tank, said it's hard to say now how history will judge Wheeler's FCC. But for a chairman who was once seen as a shill for the industry due to his past as head of both the cable TV and wireless trade groups, he says Wheeler shifted too far to the other extreme.

"Wheeler's real legacy won't be known for years after he leaves office," he said. "In his obsession with not being remembered as a 'dingo,' he's played fast and loose with the FCC's authority."

Updated Friday October 21 11:30 a.m. PT: This story was updated to include the FCC's rationale for imposing internet privacy and set-top box regulations.