Even After House Victory, FCC Reform Act has Bleak Outlook

Rep. Walden Brings an FCC “Data Dump” to the Table--Literally

The Federal Communications Commission Process Reform Act (H.R. 3309) headed to the House floor on Tuesday, March 27, 2012. The so-called FCC Reform Act passed the House Energy and Commerce Committee 31-16 earlier this month and continued its winning streak with a 247-174 victory in the House. The bad news (or good news, depending on your views) is that H.R. 3309’s star has probably burned out. The bill is not expected to pass in the Democratic-controlled Senate, and the Obama Administration has already expressed that it does not approve the legislation—and this was before the House vote occurred. Nevertheless, D’s and R’s waged war for several hours on Tuesday about whether or not the bill would be a “straightjacket” on the FCC’s authority.

The FCC Reform Act has stimulated interesting reactions from government and industry. In anticipation of the House vote, bill sponsor Representative Greg Walden (R-OR) published an opinion piece in the March 27 issue of Politico. Walden opened by arguing that the FCC would be “well-served” to follow the old adage “If it ain’t broke, don’t fix it.” Walden is referring to the booming telecom and technology industry, where “landline, wireless and cable providers have invested $66b in broadband infrastructure in 2010,” and “the U.S. is leading in cutting-edge technologies.” Walden asserts, “Before the FCC interferes in that marketplace with regulation, it should find compelling evidence that something is broken and that its remedy will likely improve the situation.”

The FCC Reform Act would require the FCC to conduct cost-benefit analysis on all regulations and identify definitive market failures before imposing new rules. Among other proposals, the FCC would also have to release the full text of rulemakings to the public 30 days prior to voting. The FCC, Walden argues, is broke and “does need fixing.” From the opposing side, Representative Henry Waxman (D-CA), argued that the H.R.3309 “would turn the FCC watchdog into a lapdog for industry.” The debate went back and forth along party lines in this style with very little compromise or bipartisan agreement. Although the debate strayed into some farfetched territory at times, some issues were close to home for the rural telecom industry.

Take the USF/ICC Transformation Order—we don’t need to remind you what it was like for those three weeks between when the FCC voted on the Order (a “press release,” according to Walden) and when the 750-page Order was actually released. Walden furthermore expressed considerable frustration with the FCC’s “data dump” of thousands of pages of documents just days before the FCC approved the unseen Order. Walden and other supporters of H.R. 3309, like Representative Lee Terry (R-NE), argued that only companies with a “house full of lawyers” could possibly process all of that information in such a short period of time. “Rural Nebraskans don’t have that opportunity,” said Terry. Walden brought dozens of heavy-duty notebooks containing thousands of pages of data to the House floor to illustrate just how much information the FCC expected the public to digest in 48 hours. Terry and Walden believe that the FCC Reform Act could effectively fix some of these pervasive transparency issues at the FCC, and Terry called the legislation “fairly practical and necessary.”

One point of contention in H.R. 3309 is the proposal to limit the FCC’s ability to impose merger conditions—this may be an area where rural telecom industry supporters of the legislation will stumble. Merger conditions are intended to promote the public interest in some way or another, and that often includes concessions like build-out requirements and rural market attention (just consider what might happen if the Verizon-SpectrumCo/Cox deal is approved without any conditions, or if AT&T-T-Mobile had been approved without conditions). Bloomberg BNA explained in a March 28 summary of the House vote, “As stipulated in the bill, merger conditions must be ‘narrowly tailored to remedy a harm that arises as a direct result of the specific transfer or specific transaction.’ The FCC also would not be able to accept any ‘voluntary commitments’ from merging companies that are outside the scope of its statutory authority,” which would “alter the ability of the FCC to impose conditions in the public interest,” according to Representative Anna Eshoo (D-CA). The Comcast-NBCU merger was brought up repeatedly, and although “what’s done is done,” voluntary commitments like the low-income broadband adoption program might not exist in world where the FCC Reform Act is the law of the land.

In reality, it is unlikely that this bill will even reach the Senate floor. Bloomberg BNA reported that “Democrats on the Senate Committee on Commerce, Science, and Transportation have expressed no intention of taking up the measure. In addition, President Obama has come out strongly against the bill.” Regardless of the bleak outlook, the telecom industry is largely supportive and optimistic. The Hill’s Hillicon Valley reported reactions from the industry on March 28. NCTA president and former FCC chairman Michael Powell commented, “The regulatory framework envisioned by this reform legislation will ensure that private enterprise can continue to invest and innovate with more consistent and precise federal government oversight.”

What can we in the independent telecom industry learn from the H.R. 3309 debate? Even if the bill doesn’t go any further, it has at least brought attention to the FCC’s transparency and process defects. The rural telecom industry did not hold back its feelings about the last-minute USF/ICC Order data dump or the 3 weeks of pure panic between the vote and the release of the Order—clearly some members of Congress heard our concerns, which is reassuring at least.