Many wireless executives are expecting Donald Trump’s administration to pursue business-friendly initiatives in a move that would mark a break with long-held regulatory policies in Europe. And FCC Chairman Ajit Pai is likely to highlight some of those contrasts during next week’s Mobile World Congress in Barcelona.
Pai will join European wireless executives and a representative of the European Commission during a one-hour keynote discussion hosted by CNBC’s Karen Tso. The panel, titled “Building the 5G Economy,” will explore how policymakers are working to address the fast-moving wireless market and strike a balance between protecting consumers and spurring growth as carriers prepare for the emergence of next-generation technologies.
The U.S. and Europe were largely on the same regulatory page during the Obama administration, but many expect Trump’s White House to move on tax reform and to demonstrate a far lighter regulatory touch.
A very different FCC under Pai
Pai, who succeeded Tom Wheeler at the helm of the FCC, has certainly signaled his intentions to pull in the reins on some of the key items of his predecessor’s agenda. Earlier this month, Pai killed the commission's probe into carriers’ zero-rated data offerings, which have quickly gained favor among operators but have drawn criticism for violating net neutrality principles. That move came just a week after he moved to exempt internet service providers with no more than 250,000 subscribers from Title II regulations (PDF). And in a December speech (PDF), he described the Title II Order as an example of “public-utility regulation that was a solution that wouldn’t work for a problem that didn’t exist.”
So it’s easy to understand why industry trade groups and carriers were quick to praise Pai as Trump’s pick to lead the FCC.
That stands in contrast to the European Union, which has passed laws that both telecom executives and politicians have described as stronger than the FCC’s rules. Governments such as the Netherlands and India have gone a step further, restricting operators from zero-rating content from Facebook and other online businesses.
Pai may use a heavier hand, however, to help streamline policies for deploying small cells. The small-cell market has been stymied by a lack of a uniform process for rolling out smaller transmitters on both public and private property, and last week CTIA once again pressed the FCC to adopt proposals that would simplify deployments at local and state levels.
Loosened reins beyond the FCC?
Even more impactful during Trump’s reign might be areas beyond Pai’s purview. Tax reform played a big role in his campaign, and he suggested earlier this month that a cut in corporate taxes will be included when his administration offers up more details of its plans in coming weeks. A more laissez-faire stance at other federal agencies could also prompt some major mergers and acquisitions both within the wireless industry and between carriers, content providers and distributors.
Indeed, shares of T-Mobile and Sprint have risen since Trump’s victory on hopes that a tie-up between the two carriers may finally get a green light from federal regulators. Whether that kind of consolidation might ultimately benefit consumers is a matter of heated debate, of course. But the discussion underscores the fact that many industry insiders believe that U.S. regulatory policy will no longer be in lockstep with rules in place in Europe and elsewhere.
And U.S. carriers seem almost giddy about it.
“Our business always had a lot of moving pieces, but with the new administration taking office, there is even more to think about this year,” AT&T CFO John Stephens said during the carrier’s quarterly earnings call recently. “It’s just too early to call the impact of several issues. Tax reform has been a hot button, and it makes sense for a company of our size, with the taxes we pay, (we) would clearly have an opportunity to benefit from the change in tax rate. We’re also staring at a potentially better regulatory environment. Positive change in both of these areas would help us deliver faster on plans to innovate and grow our business.”