Policy

Status Quo? Think Again

What Obama's Victory Means for Communications Policy 11/11/2012 7:00 PM Eastern

WASHINGTON — At first glance, the outcome of last week’s multibilliondollar election produced the status quo: The White House and Senate stayed in Democratic hands, while the House remained Republican.

But for cable operators and others in the communications industry, the status quo means anything but, as Washington tries to cope with sea changes in distribution of video content that implicate business models, privacy and even national security.

At its root, the election means President Obama will get another four years to advance what is essentially an all-broadband communications agenda.

That may or may not occur under Federal Communications Commission chairman Julius Genachowski, who most Washington observers expect will exit his post sometime early next year, though Genachowski has not officially sent that signal.

“Chairman Genachowski is focused, and plans to remain focused, on an ongoing agenda to unleash the benefi ts of broadband, driving economic growth and opportunity for all Americans, and helping ensure that the U.S. maintains the global leadership it has regained,” an FCC spokesman said.

Whoever is FCC chairman, the goal will remain to regulate or deregulate cable and other ISPs to the degree that it helps spur broadband deployment and buildout.

For the administration to date, that has meant new regulations on Internet access in the form of the FCC’s network-neutrality rules, as well as conditions placed on Comcast’s deal for control of media giant NBCUniversal. But it has also meant some deregulatory moves, including removal of the basic-cable encryption ban, allowing exclusive programming contracts and easing regulations on pole attachments and rights of way to speed the rollout of broadband plant.

DEFINING OVER-THE-TOP

On the FCC’s to-do list will have to be coming up with a definition of multichannel video programming distributor that takes into account the proliferation of so-called over-thetop Internet-based video delivery services. The FCC has not weighed in, and likely won’t until sometime next year. But the agency will have to make such a call if, at the same time, its pro-broadband adoption policies are pushing video and other content onto the Web.

Another administration goal remains to free up 300 Megahertz of licensed and unlicensed spectrum by 2015 and 500 MHz of spectrum by 2020, part of the president’s State of the Union pledge to deploy high-speed wireless to 98% of the country within five years.

Genachowski, or a chairman to be named later, is also likely continue reforming the Universal Service Fund, moving its subsidies from phone to broadband by changing the contribution side of the equation.

An Obama victory means that the network-neutrality rules could become a whitehot issue once again.

If a federal appeals court currently hearing a telco appeal of those rules throws them out next spring, the FCC’s plan B could be to classify Internet access under Title II regulations that would allow it to mandate nondiscriminatory access.

Genachowski has kept that “nuclear option” on the table, refusing to close the docket in which it was proposed as one of several options. If the FCC goes that route, there would be major congressional pushback. Even some Democrats were not comfortable with Title II.

“Since Congress will be deadlocked on this issue, it will be up to the new FCC chair to ensure that the agency has the authority to protect broadband consumers should the court rule against it,” Gigi Sohn, president of Public Knowledge and a veteran of the net-neutrality wars, said in a blog post (see Access). “And given what happened in Congress when the current chairman proposed doing so, one should expect no less of a battle royale should the new chair attempt to do the same.”

If Genachowski does exit by next spring, Larry Strickling, head of the National Telecommunications & Information Administration, and current Democratic FCC members Jessica Rosenworcel and Mignon Clyburn are all considered possible replacements. And Genachowski would make sure his successor was lined up so that he did not leave the commission split at 2-2.

GRIDLOCK CONTINUES

Don’t expect a sea change in the gridlock in Congress, which continues to be as divided over communications policy as it is on almost everything else.

With the House remaining Republican, there will likely be a renewed push by key oversight committee Republicans for FCC reforms that failed to pass in this Congress. But a Democratic Senate means any effort to apply cost-benefit analyses to new regulations or shot clocks on decision-making are likely to fail again, particularly given that the Senate added some new liberal Democrats even less likely to go along with House Republican deregulatory proposals.

Both sides of the aisle agree that the Communications Act needs reforming to take broadband into account. That is a process that could take years, but there will likely be bipartisan support for launching this effort.

One potential big player on the telecom scene is Sen. Amy Klobuchar (D-Minn.). A Democratic lobbyist speaking on background said Klobuchar is expected to make waves. Pay attention to her margin of victory in last Tuesday’s election, he said.

Klobuchar won re-election decisively with more than 65% of the vote and is already being talked about as a possible 2016 presidential candidate.

“It will put her on the map immediately as a national powerhouse, maybe even the most popular elected official in the U.S.,” the source said. “She also just happens to be the only senator who is a member of the Judiciary Committee, Commerce Committee, and [is] a former telecom attorney. I think Sen. Amy Klobuchar will emerge from this election as one of the most impactful players in Congress on telecom issues if she chooses to wield that power.”

Klobuchar has backed legislation that would make online streaming of pirated TV online a felony, and, along with Sen. Herb Kohl (D-Wisc.) was able to extract a promise from Comcast CEO Brian Roberts during Hill vetting of the NBCU deal that NBC shows like Saturday Night Live and The Office would not migrate to a cable/ online subscription model like TV Everywhere.

CYBERSECURITY BATTLE

Another issue that isn’t going away, gridlocked Congress or not, is cybersecurity. Cable operators have backed a Republican bill that focuses on information sharing rather than government setting cybersecurity guidelines. But Senate Majority Leader Harry Reid (DNev.) has pledged to bring up a Democratic “guidelines” bill in the lame-duck session.

If that does not pass — it likely won’t, given Republican opposition — the president has threatened to mandate the guidelines via executive order.

Now with four more years to be responsible for the nation’s cybersecurity, Obama is likely to follow through on that threat, particularly given that administration officials have likened cyberattacks to Pearl Harbor and 9/11.

Online piracy and privacy will continue to be hot-button issues for which there is bipartisan call for some action, though no consensus as to what that should be.

Online privacy is an issue that affects legislators personally — they also are tracked and hacked and have kids whose online activities are cause for concern.

Piracy continues to be a battle royale between Northern California (Silicon Valley) and Southern California (Hollywood) and will get even more attention as cable operators and others move content to a multiplatform TV Everywhere model.

Advocates of the anti-piracy bills that failed in this Congress — the Stop Online Piracy Act (SOPA) and Protect Intellectual Property Act (PIPA) — will likely push for new versions in the next one.

Chris Dodd, the former Connecticut Democratic senator who now chairs the Motion Picture Association of America, sounded hopeful in a statement last week that the administration would be a partner in intellectualproperty protection, something Congress was not able to be in the last session.

“President Obama has demonstrated a great understanding of the importance of intellectual property to the fundamental strength of the American economy,” he said. “In an era of partisan discord, there is bipartisan agreement that protecting American creativity and innovation is critical to our competitive edge in the global marketplace.”

CAMPAIGN CASH FLOWS

One thing the president’s re-election means is that, unless the Congress steps in to boost disclosures, the next presidential campaign will bring even more ad dollars to cable and broadcast outlets. With Obama a lame duck, the eventual Democratic and Republican nominees in 2016 are both likely to face bruising primary battles.

“There is absolutely going to be way more money spent [by the campaigns] in 2016,” said Bill Allison, editorial director of the Sunlight Foundation, which tracks money in politics.

The Obama campaign spent $377.7 million dollars on media, according to the Center for Responsive Politics, Allison said, while the Romney campaign spent $169.5 million. And that’s not even counting SuperPAC or party spending.

He expects that whether the big Democratic contender is Vice President Joe Biden, Secretary of State Hillary Clinton or someone else, it will be a long haul in the 2016 Democratic primaries. Same goes on the Republican side, whether it is New Jersey Gov. Chris Christie, Sen. Marco Rubio of Florida or someone else.

“The Republican bench is pretty deep, “ he said. “ I think that you will see an awful lot more candidates, primaries going on a lot longer, plus all that outside money if nothing is done about Citizens United,” which he doesn’t see happening since the Congress remains divided.

Citizens United was the Supreme Court decision that allowed direct corporate and campaign funding of electioneering ads in the run-up to elections.

ITU WATCH

One issue that would not have changed regardless of who won is U.S. resistance to governance of the Internet by the International Telecommunications Union.

Next month, a telecom treaty conference is being held in Dubai, and the Obama Administration is strongly against a push by China, Russia and some Arab states to expand telephone interconnection authority to include broadband connections.

The threat is that the ITU could start trying to charge for connections to Internet sites to replace the dwindling payments for international interconnections of traditional telecom. That would build an Internet toll road U.S. companies don’t want to travel, and provide those countries with an opportunity to censor the ’Net.

Republicans and Democrats are standing together against that effort, a picture that should be captured for posterity since it is one of the few issues, particularly when it comes to communications policy, that puts both sides of the aisle in the same frame.

House-Keeping … and Losing

WASHINGTON — The key leaders of the House Communications Subcommittee kept their seats last week, and the lower chamber remained in Republican hands. But a couple of GOP subcommittee members will be heading home, with the fate of a third still in doubt at press time. Veteran House Communications Subcommittee member Mary Bono Mack (R-Calif.) lost a close race to Democratic challenger Raul Ruiz, while Charles Bass (R-N.H.) was unseated, and Brian Bilbray (R-Calif.) was trailing by less than 700 votes in a race with provisional ballots still to be counted.

Bono Mack has been a strong advocate of Internet privacy and cybersecurity, as well as an opponent of government regulation of the Internet. She was a driving force behind the resolution championing the current multi-stakeholder model of Internet governance.

Though generally a deregulatory-minded, pro-business Republican, Bono Mack has been tough on the online advertising industry for not doing enough to give consumers control over how targeted ads use their personal information.

Bilbray reportedly worked with Rep. John Dingell (D-Mich.) to help ensure that broadcasters along the Mexican and Canadian borders are not marginalized in the spectrum incentive auctions.

Bass backed tougher retransmission-consent rules, so his loss will be felt by cable operators.

Rep. Greg Walden (R-Ore.), chair of the House Energy & Commerce Committee’s Communications Subcommittee, was re-elected by a wide margin in Oregon’s 2nd District, while Republican Lee Terry of Nebraska, vice chairman of the subcommittee, will also return to Congress.

Elsewhere, Connecticut’s Linda McMahon, former CEO of World Wrestling Entertainment, was again unable to wrest a Senate seat from Democrats, losing to Democratic Rep. Chris Murphy in a bid for the seat now held by Independent Sen. Joe Lieberman.

McMahon also lost a Senate bid in 2010 to then-Connecticut Attorney General Richard Blumenthal, in a contest for the seat vacated by Christopher Dodd, now head of the Motion Picture Association of America.

— John Eggerton

March