A Matter of Trust


When I saw Sanford Bernstein’s Craig Moffett at an FCC panel at The Cable Show, he was scrunched down in his seat, and joked he could use a baseball cap and big sunglasses - inside the room.

FCC general counsel Austin Schlick was onstage deciphering the chairman’s recent decision to reclassify broadband under more stringent Title II common-carrier restrictions. The change came as a result of a court decision that said the FCC had limited authority over broadband. Just days earlier, the Wall Street analyst had downgraded cable stocks over that very change, and sure enough, he was effectively called out on the carpet.

“If anyone in this room believes you’re going to a world of regulatory certainty under the current regime to a world of regulatory uncertainty under the approach I’ve been discussing … I think you’re wrong,” Schlick said emphatically.

Ouch. Moffett, who calls ‘em like he sees ‘em and at times speaks the popular but silent opinions, wasn’t surprised or repentant. There is a very real and valid concern on the part of cable operators that even if Chairman Genachowski has vowed that rate regulation and unbundling are off the table he can’t control what the next administration does.

The timbre of these talks is a world away from the days of former chairman Kevin Martin, which were marked by high anxiety from cable operators fearful of his wrath. This chairman has gotten high marks for his seeming authentic concern for the unintended consequences of over-regulation.

Indeed, the agency’s most powerful tool is one that allows it not to act on the stricter parts of the Title II regulations (known in D.C. jargon as forbearance).

When I spoke with NCTA president Kyle McSlarrow after the panel, he spoke in empathetic terms of Genachowski and said the industry could warm to the idea of forbearance. But, he noted, “We have to lock this down.” He, like everyone in the cable industry, and on Wall Street, and in life, for that matter, wants certainty.

Now the chairman declared that rate regulation and forced unbundling of services are off the table, and said the FCC has never reversed forbearance. That’s the most certainty cable operators can expect to get.

There is an old saying that to make a man trustworthy, you have to trust him.

Can the cable industry trust the new chairman?