Federal Communication Commission

New FCC chairman's thinking comes into (slightly) sharper view

December 3, 2013: 3:05 PM ET

Tom Wheeler seems to be OK with regulation, as long as it fosters competition.

FCC chair Tom Wheeler

FCC chair Tom Wheeler

FORTUNE -- Now that he's in office, Federal Communications Commission Chairman Tom Wheeler is only slightly less inscrutable than he had been in the months leading up to his nomination by President Obama and approval by the Senate. That's probably as it should be: It's unwise for a regulator to get too specific on particular issues before handing down actual rulings.

But we can draw some insights from his first big policy speech, given Monday at Ohio State University. In it, Wheeler lived up to the reputation he gained during the nomination process as a policy wonk and a tech nerd who is supremely careful about regulation. In a nutshell, he's not against imposing rules on the communications industry, but he seems hesitant to do so unless those rules are meant to foster more competition, and hence more choices and lower prices for consumers.

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That might mean telecom giants AT&T (T) and Verizon (VZ) will have to give up some of their hegemony over wireless markets when the government auctions off spectrum next year. That's good news for the second-tier players, T-Mobile (TMUS) and Sprint (S). Wheeler referred approvingly to the Justice Department's April filing that urged the FCC to conduct the auction in such a way as to ensure that AT&T and Verizon Wireless would not be able to snap up too much low-band spectrum (below 1 gigahertz). "A key goal of our spectrum-allocation efforts is ensuring that multiple carriers have access to airwaves needed to operate their networks," Wheeler said.

He also noted that after the FCC and the Justice Department challenged AT&T's planned acquisition of T-Mobile in 2011, causing AT&T to back away from the deal, both T-Mobile and Sprint began to amass "significant investment capital to build out their networks and increase competition."

Those remarks seem to challenge the arguments made by some in Congress who oppose restricting the bigger carriers from using their existing market power to buy up spectrum, leaving smaller competitors out in the cold.

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At the same time, Wheeler said, "I have zero interest in imposing new regulations on a competitive market just because we can." On that score, Wheeler said he's not necessarily opposed to Internet service providers charging higher prices for heavy usage by so-called "data hogs" such as online gamers. "We are seeing the market evolve in such a way that there will be variations in pricing [and] there will be variations in service," he said. Such an evolution is strongly opposed by consumer groups who believe that usage-based pricing puts too much power in the hands of ISPs over how much and what kinds of content people receive. The big ISPs, mainly cable companies, say it's only fair to charge more to users who take up more bandwidth.

While Wheeler said he will enforce his agency's Open Internet rules governing net neutrality, he also seemed to indicate that he has a liberal interpretation of that concept. "I am a firm believer in the market," he said. "I think we're also going to see a two-sided market where Netflix might say, 'Well, I'll pay to make sure that my subscriber receives the best possible transmission of this movie.' I think we want to let those kinds of things evolve, and we want to observe what happens from that and we want to make decisions accordingly. I go back to the fact that the marketplace is where these decisions ought to be made, and the functionality of a competitive marketplace dictates the degree of regulation."

There's that inscrutability again. If Netflix (NFLX) is paying more to, say, Comcast (CMCSA), for better service, the question becomes: More than whom? More than, say, NBCUniversal, which is owned by Comcast?

In other words, we still don't have a clear idea of what Wheeler might do.

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