Morning Consult

President-elect Donald Trump’s pick for commerce secretary, Wilbur Ross, testified before the Senate Commerce Committee, touching on tech subjects ranging from wireless spectrum to broadband deployment. The Commerce Department has broad responsibilities in the tech field, including jurisdiction over the federal government’s airwaves, the US Patent and Trademark Office and national science labs. Most notably, Ross said he would push to get government agencies to free up unused spectrum, a longstanding goal of Commerce Committee Chairman John Thune (R-SD). “We need more spectrum in the private sector, and I will try my best to help convince those government agencies that have spectrum and don’t really need it to permit it to be commercialized,” he told the committee.

Ross also said he would work to balance privacy protections and data protectionism in data-transfer agreements such as the EU-US Privacy Shield pact. Later, he said there would need to be a balance between national security and freeing up airwaves. He also said government airwaves could “help extend broadband to more rural communities and other segments that are underserved.” Transition of the Internet Assigned Numbers Authority will remain in place, Ross said. “As I understand it, there is no real alternative on the table to the ICANN situation. So, for the moment, there’s nothing else to consider,” Ross said. Sen Ted Cruz (R-TX), who was opposed to the transfer of power, pressed Ross further on the issue. Ross said that if he found “a realistic alternative,” he would explore it.

The Secretary of Commerce in the next administration will be responsible for a data-sharing agreement with the European Union that is worth billions to the US tech industry. President-elect Donald Trump’s choice for that post, Wilbur Ross, said he would uphold the deal, but he hinted that it might change in the future. There should be a “balance” between data protectionism and privacy, he said.

His comments at his confirmation hearing came the same day that an electronic privacy group requested that the next administration strengthen the privacy protections in the deal, fearing that US intelligence activities will hinder the free flow of data between the two continents. The United States currently has an agreement with the EU, dubbed “Privacy Shield,” that allows US-based businesses to send data to Europe without fear of running afoul of stronger European privacy laws. Privacy concerns continue to loom over it, however. At his hearing before that committee, Ross said he would commit to keeping Privacy Shield intact because it already exists and then added a cryptic comment about the future of balancing privacy and data localization laws.

The House passed two bills on unanimous voice votes Jan 10 — one that would waive certain transparency requirements for small internet service providers and one that encourages data efficiency in the federal government. The Small Business Broadband Deployment Act (HR 288), would exempt ISPs with fewer than 250,000 subscribers from transparency requirements that were mandated under the Federal Communications Commission’s controversial Open Internet order. An identical bill passed the House in March before it stalled in the Senate. Both measures were introduced by House Commerce Committee Chairman Greg Walden (R-OR). The Federal Communications Commission had a temporary exemption for ISPs with fewer than 100,000 subscribers, but it expired in December after commissioners failed to agree on an acceptable threshold for the waiver. The requirements won’t take effect until Jan. 17 due to a delay at the Office of Management and Budget. Republican FCC commissioners have promised small providers that the agency won’t enforce the requirements once they take over the FCC on Jan. 20.

The House also passed the Energy Efficient Government Technology Act (HR 306). Sponsored by Rep Anna Eshoo (D-CA), it would require federal data centers to employ energy efficient technologies. That bill also passed the House in March but was not taken up by the Senate. In a statement, Chairman Walden said he hopes the Senate will “expeditiously” act on these bills.

[Commentary] It’s been more than 60 years since President Dwight D. Eisenhower, fresh from World War II Europe and its front-row seat to the efficiency of the German autobahn, vowed to create our nation’s interstate highway system. Now, President-elect Donald Trump is pledging to invest upwards of $1 trillion in a long-overdue upgrade of U.S. infrastructure.

A new administration and Congress present an opportune moment to take a fresh look at how we build for the future. This includes determining what from the past we must let go. Many believe a major push on infrastructure holds out the greatest hope for meaningful, bipartisan progress. It is essential that this push include broadband. Shoring up aging brick-and-mortar infrastructure is essential to maintaining our country’s safety and economic health. But only by smartly connecting the dots between this largely analog effort and U.S. digital infrastructure can we achieve national outcomes that are truly transformative.

[Jonathan Spalter is president and CEO of USTelecom, the nation’s leading trade association representing broadband service providers and suppliers for the telecom industry.]

As Republicans prepare to take over the Federal Communications Commission in 2017, don’t expect them to make a quick, clean break with the agency’s 2015 network neutrality rule. Two commission officials said that procedural hurdles and related programs may make scrapping the Open Internet order more complicated than GOP rhetoric suggests. The commission is still required to issue a proposed rule, which typically takes months to craft, and the comment period spans about two months.

Political precedent will weigh in. FCC Commissioner Ajit Pai will likely be acting chairman starting on Jan 20, and he will have to balance any desire to move quickly on Title II with some deference to the administration’s pick for chairman. That nomination could take months to finalize. Perhaps most importantly, the two commission officials separately noted that a rule to roll back net neutrality could face scrutiny in the courts. A federal appeals court upheld the net neutrality rule in June, and the decision relied on evidence of how the broadband market changed over the previous 10 years, making it difficult for Republicans to argue for a rollback now.

The US Supreme Court denied review of a case that leaves intact a Colorado law forcing retailers without a physical presence in the state to turn over customer purchase data to state tax officials. The court’s denial of Direct Marketing Association v. Brohl gives the green light for other states to impose laws mandating the collection of consumer purchase data from online retailers, making it more difficult for customers who buy products online to avoid state sales taxes. It may also presage an examination of a 1992 Supreme Court ruling in Quill v. North Dakota that prohibits states from ordering out-of-state retailers to directly collect sales tax from their customers.

A reconsideration of that decision has already been suggested thanks to a separate 2015 high court ruling in the same case, where the justices unanimously agreed that the Direct Market Association had the standing to sue. In that ruling, Justice Anthony Kennedy also wrote a concurring statement emphasizing that the court should take another look at its 1992 decision. Kennedy noted that the amount of forgone taxes resulting from the decision is now many orders of magnitude greater than in 1992, when Internet commerce was not yet viable. He urged the the court to reconsider the decision at the earliest opportunity.

Senate Commerce Committee Chairman John Thune (R-SD) has essentially given up on a floor vote for Federal Communications Commissioner Jessica Rosenworcel’s confirmation for a second term.

He said that a vote before her term ends on Dec. 31 is extremely unlikely despite FCC Chairman Tom Wheeler’s conditional pledge to Senate Minority Leader Harry Reid (D-NV) to step down immediately if it would expedite her reconfirmation. Chairman Wheeler is required by law to step down as chairman of the commission when President-elect Donald Trump takes office on Jan. 20, but his term as a commissioner doesn’t end until June 2018. Before this week, he hadn’t been specific about his plans under the next administration. But his promise to stop down is being viewed as too little, too late. “If in fact he has made those representations, we’re just finding out about them now,” Chairman Thune said, adding that it seems Chairman Wheeler “wasn’t in any hurry to get out of there.” “My sense is that we’re kind of up against the clock now,” Chairman Thune said. “And it’s going to be very hard, even if Wheeler was agreeable to stepping down, to be able to get all this done between now and the time we go out.” “Even if they clear this, this is going to take a cloture vote,” Chairman Thune said, referring to a procedural maneuver that would bypass the objection of a senator or senators and takes several days. “A lot of our members are probably going to object to this.”

Without Senate confirmation for a second term, Rosenworcel’s tenure at the agency will conclude at the end of December. Chairman Thune said it’s still possible Commissioner Rosenworcel could be nominated again in January 2017, perhaps as a part of a deal to reconfirm Republican FCC Commissioner Ajit Pai.

Rolling back network neutrality rules and replacing them with legislation that establishes the “rules of the road” for internet service providers will be a priority for House Republicans in 2017, Rep. Marsha Blackburn (R-TN) said.

Rep. Blackburn, a member of President-elect Donald Trump’s transition team and a candidate to lead the House Commerce Committee’s Communications and Technology Subcommittee, said Republicans are intent on reversing Obama-era net neutrality rules that reclassified broadband companies as common carriers under the 1934 Communications Act. That move allowed the Federal Communications Commission to regulate internet service providers the same way as traditional phone companies. “I think you will see us address a net neutrality fix early in the next Congress,” Rep Blackburn told an audience at a Free State Foundation event. “I also believe you are going to see a legislative solution as opposed to a regulatory solution for this issue.” Rep Blackburn added, “A legislative fix is going to give you in the industry the certainty that you need so that you know what the rules of the road are for standards for internet conduct.”

The Federal Communications Commission’s network neutrality rule is “the worst kind of crony capitalism” and is likely to be weakened or dismantled in the next administration, according to Jeffrey Eisenach, one of President-elect Donald Trump’s top telecommunications advisers. Eisenach also said that one of the two Republicans currently on the commission “will be designated chairman, because that’s the way the world works.”

President-elect Trump will have the opportunity to name a Republican chairman of the FCC in 2017, and Eisenach, who’s head of Trump’s transition team for the agency, is expected to play a key role in determining who the White House places on the commission. Eisenach noted that the net neutrality rule is tangled up in federal court and seems likely to end up on the Supreme Court’s docket. Eisenach also suggested that a new Republican-led FCC would curb its own power, saying 1980s-style deregulation “absolutely” can happen.

Federal Communications Commission Chairman Tom Wheeler has laid out an unexpected roadmap through which the FCC could directly regulate the security of Internet-connected devices. In a letter to Sen Mark Warner (D-VA) dated Dec 2 and released by Sen Warner on Dec 5, Chairman Wheeler proposed an FCC-mandated cybersecurity certification process for “Internet of Things” devices. The proposal would also require consumer cybersecurity labels for IoT devices and associated services.

Chairman Wheeler is set to step down on Jan 20, but the new framework could be used to support legislation enhancing the FCC’s ability to regulate IoT devices. Chairman Wheeler’s letter responded to a set of questions that Sen Warner sent to the FCC four days after an Oct 21 cyberattack directed through IoT devices knocked popular websites offline for several hours. Chairman Wheeler that he shares Sen Warner’s concern “that we cannot rely solely on the market incentives of ISPs to fully address the risk of malevolent cyber activities.”