CTIA's Baker: Title II Will Mean Substantial Decrease in Investment

CTIA president Meredith Attwell Baker says that the significant regulatory overhang of the FCC's Title II decision will definitely reduce the wireless industry's investment in their networks.

That was her message to a Media Institute luncheon crowd Thursday, according to a copy of her prepared remarks. CTIA is a new member of the institute, a nod to the growth of mobile video. Baker said video is the largest component of the mobile business, with traffic up 1,200% over the past five years.

FCC chairman Tom Wheeler has disputed the characterization that the new rules would stifle investment in mobile broadband, and Baker conceded that the industry isn't going to stop investing. "[B]ut we will invest less," she said, because of the significant regulatory uncertainty, and that means investment in the faster networks Wheeler has been pushing through other mechanisms, like raising the definition of advanced telecommunications in the Sec. 706 report to 25 Mbps.

Baker said she did not know the order of magnitude of the decrease, but said investment would be "substantially less."

That regulatory uncertainty includes the FCC's new case-by-case approach to zero rating plans and other business models, through which it will respond to complaints, or even initiate its own investigations, of business models that raise concerns about a non-neutral net.

Baker suggested that will reduce innovation. "As we enter an age of experimentation in business models for mobile video with new technologies like LTE Broadcast and new service options like zero rating, the FCC’s decision to subject all new offerings and options to a vague, innovate-at-your-own risk structure is the wrong policy at the wrong time of our development. I worry about the chilling effect on disruptive services that would otherwise be launched."

She said that with Verizon, AT&T, Sprint and T-Mobile, as well as regional and rural operators, all fighting for subscribers, the FCC has just made it harder for them to differentiate their services.

For example, she said, 74% of Americans would be more likely to try a video startup with a zero rating options — an option not to count that video service toward bandwidth limits. "The FCC needs to quickly clarify that pro-consumer developments like zero rating, sponsored data and Music Freedom are not only permitted but encouraged," she said.

Baker put in a plug for Congress to step in and clarify the FCC's authority and said she hopes a bipartisan solution materializes. So far, a Republican bill, which would block Title II reclassification and limit the FCC's authority under Sec. 706, has drawn no Democratic takers and is unlikely to in that form.

The FCC Thursday released the final order in the Title II decision, which Baker has promised to challenge in court.

While Baker took the FCC to task over Title II and its impact on investment, she assured the FCC her members would be investing big bucks in the upcoming spectrum incentive auction.

"With respect to the broadcast auction, rest assured whenever the FCC holds that auction, the wireless industry will show up with billions," she said.

"So, as broadcasters evaluate their own business opportunity with respect to that auction, they should have full confidence that the wireless industry is ready for another successful auction."

Another was a reference to the AWS-3 auction, which drew almost $45 billion in bids, far outdistancing pre-auction estimates and the FCC's reserve price.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.