News

Thinking Alike

1/11/2008 7:00 PM Eastern

Carmel Group chairman and CEO Jimmy Schaeffler saved his best for last as moderator of a 2008 International Consumer Electronics Show panel last Monday that included representatives from the biggest cable and telephone companies.

“[What’s] the one thing … at the FCC that you would like to change?” Schaeffler asked, looking in the direction of Comcast’s vice president of external affairs and public policy counsel, Joe Waz.

“You’re asking a cable guy?” Waz said, jumping right in as the audience laughed. “I’d like to hit the delete button on the last 12 months.”

Waz was referring, of course, to cable’s rocky 2007 with Federal Communications Commission chairman Kevin Martin, who slapped cable with set-top box technology mandates, cut cable leased-access rates by 75% and voided exclusive cable contracts with apartment-building owners. Extension of the program-access rules for five more years was another Martin-directed cable hit. All four will involve cable-led fights in federal court.

Schaffler’s question, however, was not designed to reprise Martin’s cable-bashing record. Instead, his intent was to explore whether the FCC needed a stem-to-stern overhaul.

“I’d like to see some process improvements,” Waz added. “I think the FCC has lost its way in its ability to get good, solid factual decisions done on a timely basis and with the openness that you need for an entity that’s responsible for hundreds of billions of dollars in our economy.”

The cable industry isn’t alone in wanting the FCC’s pulse to quicken.

“The FCC is structured about broadcast, cable and telephone. That isn’t the world we are living in, and it isn’t the world we are going to. The FCC has to be overhauled for the Internet world,” said Verizon Communications executive vice president of public affairs, policy and communication Tom Tauke.

Under Martin, the FCC had been decidedly friendly toward AT&T — a tilt that hasn’t gone unnoticed by cable-industry leaders. Yet AT&T senior executive vice president of external and regulatory affairs James Cicconi agreed that the FCC’s role had to change to reflect current trends.

“I would like to see Congress take a fresh look at the entire mission of the FCC,” Cicconi said. “Rather than approach prescriptive regulation of intra-industry relations, I think it ought to be restructured around consumer protection. I think there is a role there. I think we ought to be thinking about the FCC’s role vis-a-vis consumers, not vis-a-vis refereeing between industry players.”

In an election year, discretionary legislation that addresses the performance of a single independent regulatory body is difficult to enact. But Martin’s stewardship of the FCC has been so suspect that the House Energy and Commerce Committee has launched a broad investigation into the fairness and openness of his management.

Rep. Joe Barton (R-Texas), the most senior Republican on the Energy and Commerce panel, said he wouldn’t dismiss the idea of an FCC reform bill gaining traction in the House.

“I’ve already talked to Markey and Dingell about an FCC reform bill. Without getting into the specifics, I think they are interested. That could be something we might do on a bipartisan basis later this year. But first we got to have our oversight hearings,” Barton said.

The FCC’s inability to process some mergers in a timely fashion has become an issue under Martin.

The agency has an informal, 180-day merger review deadline, but Martin’s FCC needed 404 days to conclude its review of Comcast and Time Warner Inc.’s joint acquisition of bankrupt cable operator Adelphia Communications, which bled nearly 500,000 subscribers while the FCC dragged out its review. Liberty Media’s effort to acquire News Corp.’s 38.4% ownership interest in DirecTV has sat at the agency for 322 days.

FCC reform proposals come and go, garnering headlines but not much else.

After passage of the Telecommunications Act of 1996, former Reps. Jack Fields (R-Texas) and Billy Tauzin (R-La.) took a stab at realigning the FCC, noting that Congress had reformed the law, but not the industry’s national regulatory body.

Fields, joined by Rep. John Dingell (D-Mich.), got so angry at then-FCC chairman Reed Hundt over 1996 Act regulations, he co-sponsored a bill that would have banned Hundt from traveling “more than 50 miles from the District of Columbia while on official business.”

Barton has different ideas about FCC reform.

“I just think it’s time to take a complete review of the FCC — not political, just pure structural reform,” he said. “We are in the 21st century now. What do we need to do to make it more effective, open and transparent — things like that.”