Trump's FCC moves quickly to upend internet, media rules

Reddit co-founder defends net neutrality
Reddit co-founder defends net neutrality

Ajit Pai may go down as one of President Trump's most effective, and controversial, regulators.

Pai, the chair of the Federal Communications Commission, has moved fast to eliminate regulations for large internet service providers and broadcast media conglomerates.

In the process, Pai, a former lawyer for Verizon (VZ) who was appointed to the FCC job by Trump, has earned the praise of the telecommunications industry and the contempt of tech companies and consumer advocacy groups.

Related: Trump administration sends mixed messages on big media

"Every single thing they're doing is for incumbent telephone cable and media companies," Gigi Sohn, a counselor to Obama administration FCC chair Tom Wheeler, told CNNMoney earlier this year. "Pai wants to make the big bigger and the rich richer."

Concerns about Pai's deregulatory agenda grew as the FCC unveiled significant policy proposals in the final days before the Thanksgiving holiday.

Net neutrality

On Tuesday, Pai unveiled his plan to repeal Obama-era net neutrality protections intended to ensure that all content online is treated the same.

The net neutrality rules, approved by the previous FCC administration in 2015, prevent internet providers like Comcast (CCVCL) from deliberately speeding up or slowing down traffic from specific websites and apps.

Related: Trump FCC chair unveils plan to repeal net neutrality

The full proposal was published online Wednesday and is expected to pass on a party-line vote at the FCC's meeting next month. Pai said in a statement that repealing the rules will free the internet from micromanaging by the government.

Critics say the repeal threatens to fracture the internet into fast lanes and slow lanes, and let internet providers offer preferential treatment to companies that are willing to pay more. The plan could also make it harder for upstart online services to compete against incumbents.

As if the actual repeal weren't enough of a lightning rod, there's also controversy around the process itself. The FCC received 22 million comments from the public during a review period, but millions of those comments turned out to be fake.

New York Attorney General Eric Schneiderman said Tuesday that his office has spent six months investigating "a massive scheme to corrupt the FCC's notice and comment process," but he said the FCC has so far refused to provide a "substantive response."

Schneiderman didn't say which side the fraudulent comments favored, but cited studies showing that the "overwhelming majority" of authentic comments were in favor of the net neutrality rules.

The FCC pushed back in a statement Wednesday. "This so-called investigation is nothing more than a transparent attempt by a partisan supporter of the Obama Administration's heavy-handed Internet regulations to gain publicity for himself," the statement said.

Media consolidation

The outcry over net neutrality overshadowed another major FCC proposal on Tuesday.

Pai announced plans to review existing rules that prevent broadcast companies from owning TV stations that reach more than 39% of all TV households in the United States. The vote will take place at the same monthly meeting, on Dec. 14.

Related: Sinclair's influence grows, thanks to Trump

It's just the latest proposal from the FCC that paves the way for greater media consolidation.

Earlier this year, the FCC voted to reinstate the "UHF discount," which allows broadcasters to understate the reach of their stations. Shortly after, the conservative-leaning Sinclair Broadcast Group announced plans to acquire Tribune Media in a deal that would push the total TV stations it owns above 200 nationwide. Without the discount, Sinclair's reach would easily exceed the 39% cap.

Nearly two dozen Senate Democrats sent a letter to Pai in late September expressing "grave concerns" with his move to upend the media landscape.

"Moves to repeal the media ownership rules threatens to create a world of corporatized, nationalized content being force fed to consumers under the guise of local news and public affairs programming," the senators wrote.

The outcry did not slow Pai. Earlier this month, the FCC voted to eliminate a longstanding rule that prevented entities from owning a radio or TV station and a newspaper in the same market. The FCC also loosened restrictions to make it easier for a company to own more than one TV station in one market.

These moves allowing for more media consolidation come at the same time that Trump's Justice Department is trying to prevent greater media consolidation by suing to stop AT&T (T) from buying Time Warner (TWX), CNN's parent company.

Internet access for low-income homes

This month, the FCC also voted to begin scaling back a federal program intended to help low-income U.S. households get access to the internet.

The decades-old program, called Lifeline, offers discounted phone and internet service in poorer communities.

Now the commission is about to limit the recipients who can receive a $25 subsidy intended for homes on tribal lands by restricting it to rural areas only.

The FCC is also considering a spending cap for the program's budget as well as preventing certain internet providers from offering Lifeline support, which might mean some in the program can't stay with their current providers.

--CNNMoney's Selena Larson contributed to this report.

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