How to Understand the FCC’s Thinking in the Trump Era

It’s nearly impossible for most people to digest the flood of news issuing out of Washington since the inauguration of President Donald Trump and keep their day job. So it’s no surprise that his pick for Federal Communications Chairman, Ajit Pai, flew mostly under the radar.

But Pai’s FCC will be at the center of many important tech and media battles in what is already shaping up to be a uniquely contentious presidency. Perhaps the thorniest issues will be media and telecom mergers, of which there are several in the wings (AT&T and Time Warner, Verizon and Charter, etc.). President Trump has not been shy about his dislike for certain media properties, nor has he been shy about using his virtual bully pulpit to fire broadsides at companies and individuals he dislikes.

At a minimum, Pai will have to weigh not simply the competitive and economic benefits of these mergers, but potentially fend off political pressure from the White House. One industry player, in particular, also raises a glaring conflict of interest: Comcast owns NBC, which produces the Celebrity Apprentice, which President Trump executive produces and has a financial stake in.

Beyond the media, Pai will almost certainly roll back net neutrality regulations. Pai was highly critical of net neutrality during his tenure as an FCC commissioner under the Obama-appointed Chair Tom Wheeler. When Trump won, Pai promised to “fire up the weed whacker and remove those rules that are holding back investment, innovation and job creation.” Other Wheeler-era FCC initiatives, like opening up the market for set-top boxes, are also bound for the scrap heap.

Those are the particulars. But to understand a Pai-era FCC, it may help to cast our conceptual nets a bit more broadly and consider the ideology that appears to animate the incoming chair. Pai is a proponent of “permissionless innovation”—the idea that businesses should be free to introduce products without submitting to regulatory oversight (aka “asking permission”). In this freewheeling approach, the argument goes, new businesses like ride-sharing can blossom quickly rather than die a slow death at the ponderous hands of government regulators and incumbent interests. Indeed, permissionless innovation is often pitted against another ideology, the precautionary principle, that advocates in favor of first ensuring a given business or innovation is safe before releasing it on the public (the European Union’s famously expansive regulatory apparatus operates on the precautionary principle).

Like most belief systems, permissionless innovation isn’t monolithically harmful or beneficial. On the plus side, such a regulatory principle can foster new businesses and products quickly—with the attendant employment and productivity gains and potential improvements to human welfare. It also protects startups from entrenched incumbents, which tend to have more lobbying clout in Washington and thus more power to strangle emerging rivals in the crib. It means (in theory, at least) fewer lawyers and regulators and more engineers and marketers.

But permissionless innovation has stark downsides. For one, the security and safety issues around technology have only grown more pressing as technology has grown more pervasive. We have, for instance, a market flooded with insecure Internet of Things devices precisely because, as security expert Bruce Schneier has noted, there’s no market advantage to adding in costly security if none of your competitors are forced to do the same. The risks are not trivial. Hacked devices have been leveraged in botnets that have temporarily crippled sizeable portions of the world’s Internet infrastructure. As Internet of Things devices control more and more pieces of critical infrastructure in our homes (lights, thermostats, windows, doors, etc.), their insecurity carries potentially devastating consequences.

Given President Trump and Commissioner Pai’s view of regulation, we’re likely to see an era of unbridled permissionless innovation. Whether it will spur the job growth and investment gains of the prior administration remains to be seen.