Last week, President Obama announced he would nominate his good friend and venture capitalist Tom Wheeler to lead the Federal Communications Commission (FCC). Wheeler will replace another Obama good friend and venture capitalist, Julius Genachowski, who leaves in his wake an agency more embattled than ever.
In announcing the nomination, the president noted that Wheeler is “the only member of both the cable television and the wireless industry hall of fame. So he’s like the Jim Brown of telecom or the Bo Jackson of telecom”; Wheeler was president of the National Cable Television Association (NCTA) from 1979 to 1984, and CEO of the Cellular Telecommunications & Internet Association (CTIA) from 1992 to 2004. He is currently managing director of Core Capital Partners, a venture-capital firm, and he has been a prolific fundraiser for the president. By all accounts Wheeler—one of the very few FCC nominees who is not a lawyer—has been a successful businessman. But the larger question is: Can he make good on the president’s early promises to make the U.S. a 21st Century digital nation that reflects the diversity of our country?
The FCC is the key federal agency for our digital age. It regulates all wired and wireless communications service, including how all of us get Google and Facebook and everything else we call the Internet. Founded during the early progressive era, it is tasked with getting the powerful corporate interests that dominate the media and telecommunications industries to act in the public interest. Since the Reagan administration, determining just what is in the public interest has too often been confused with finding the middle ground between competing business interests.11. The spectrum giveaway to television broadcasters is a prime example: It cleared spectrum coveted by the wireless telecommunications companies while allowing broadcasters to make the transition to digital without paying the full price. All the while the supposed public-interest obligations of digital television broadcasters (which justified the giveaway), remain undecided.
Many of us in the progressive community hoped President Obama would establish an FCC that would advance vigorous local competition, hold accountable local broadcasting and telecommunications companies, and promote both the diversity of local voices and greater ownership opportunities for women and minorities. The Genachowski FCC promised to pursue these goals; like other federal agencies led by Obama appointees, it was going to be data-driven. Instead, progressive regulation has stalled or regressed over the past four years.
In juggling the competing interests of industry groups—the NCTA, the CTIA, and the National Association of Broadcasters (NAB)—the FCC has failed to advance media diversity and to enforce net neutrality. Chairman Genachowski failed, in other words, to keep candidate Obama’s two key promises.
Encouraging Media Diversity
During the 2008 presidential campaign, Senator Obama promised to "encourage diversity in the ownership of broadcast media, promote the development of new media outlets for expression of diverse viewpoints, and clarify the public interest obligations of broadcasters who occupy the nation's spectrum."
In November 2012, the FCC released a long-awaited tabulation of broadcast ownership. Of the 1,348 full-power commercial television stations in the U.S., women owned 91 (6.8 percent), and racial minorities owned 30 (2.2 percent). As Representative John Lewis and many other members of Congress have written the FCC, the data on broadcast ownership “does not reflect our nation's growing diversity,” calling the numbers “shockingly low.”
Instead of proposing rules to increase diversity, the Genachowski FCC defended his Republican predecessor’s deregulatory and pro-consolidation proposals in court. The Third Circuit Court of Appeals chastised the agency for not conducting the research necessary to promote greater diversity in media. Despite the court ruling, the FCC proposed to loosen its cross-ownership rules (allowing mergers between broadcast and newspaper operations in the same market) in the now-overdue 2010 media-ownership review.
Representatives Anna Eshoo (California), Mike Doyle (Pennsylvania), Edolphus Towns (New York), and Bobby Rush (Illinois) wrote to Genachowski that they were "deeply concerned" with the FCC's proposal. "It is the commission's job to protect and promote this localism and diversity in our marketplace of ideas," they wrote. Forty-four House Democrats also sent a letter in opposition, as did Senators Maria Cantwell, Frank Lautenberg, and Bernie Sanders. The reaction from Congress forced Chairman Genachowski to delay changing the media cross-ownership rules, and to delay issuing the 2010 media-ownership report. But the research on promoting women and minority ownership called for by the Third Circuit has yet to be performed.
In a special outreach to Silicon Valley and the high-tech industry, candidate Obama made the following promise: “I will take a back seat to no one in my commitment to network neutrality. The Internet is the most open network in history. We have to keep it that way. I will prevent network providers from discriminating in ways that limit the freedom of expression on the Internet.”
In one of his first speeches as Chairman of the FCC, Genachowski seemed ready to make good on the president’s word. “I am convinced that there are few goals more essential in the communications landscape than preserving and maintaining an open and robust Internet.”
Around 2000, the term “common carrier” was out and the term “net neutrality” was in. Even when bandied about by the Republican leaders of the FCC, net neutrality certainly sounded good: Internet service providers should not prevent users from accessing lawful content, applications, or services, nor should they prohibit users from attaching non-harmful devices to the network. But despite the strong language, net neutrality was a policy—not a regulation. In other words, while it was a shiny new catchphrase, it had no teeth. Net neutrality simply did not provide the same protection as the old (and far too effective) laws requiring all telecommunications companies to act as common carriers with public-interest responsibilities.
There were more word games: What was once called advanced telecommunications service would be marketed as “broadband.” Then Powell decided to rename—to “reclassify”—broadband. It would no longer be a telecommunication service, it would be an information service. With this small but bold act, over 50 years of hard won telecommunications regulation was dodged. The Ninth Circuit thought this was a stretch too far. But the National Cable and Telecommunications Association (Powell now leads the NCTA) took the case to the Supreme Court. The Court ruled that if the FCC wanted to call telecommunications services “information services” instead, it had the right to do that.
It didn’t take long for the telecommunication (or broadband or information) companies to begin to argue that even the net neutrality policy was too much government oversight. One of their most consistent talking points was that it was a policy in search of a problem—that, in other words, no telecommunications company would ever possibly interfere with traffic over their networks. But soon, more than a few violations of net neutrality were discovered. As Genachowski noted in 2009, “We have witnessed certain broadband providers unilaterally block access to VoIP applications (phone calls delivered over data networks) and implement technical measures that degrade the performance of peer-to-peer software distributing lawful content. We have even seen at least one service provider deny users access to political content.”
The Genachowski FCC attempted to enforce the net neutrality policy ruling that Comcast was in violation for blocking a peer-to-peer file sharing application called “BitTorrent.” But the D.C. Circuit Court of Appeals vacated the FCC’s order because (wait for it) ... the FCC did not have sufficient legal authority over an “information service.” In other words, Congress gave the FCC the authority to oversee telecommunications services; the court ruled that Congress did not give the FCC authority over information services. But, without public explanation, Genachowski has refused to reclassify Internet service.
Genachowski deputies held closed-door meetings with major Internet service providers (such as Comcast and Verizon) and Open Internet Coalition (which included Google, Skype and others) in search for a compromise but those talks were called off. Genachowski’s chief of staff, Eddie Lazarus, issued the following statement:
We have called off this round of stakeholder discussions. It has been productive on several fronts, but has not generated a robust framework to preserve the openness and freedom of the Internet—one that drives innovation, investment, free speech, and consumer choice. All options remain on the table as we continue to seek broad input on this vital issue.
By shrinking from reclassifying broadband as a telecommunications service, the Genachowski FCC’s authority to protect the public interest by regulating advanced telecommunications services is now on very shaky ground. The D.C. Court of Appeals is now considering arguments made by Verizon Wireless and MetroPCS that the FCC does not have the ability to regulate broadband Internet providers.
The Genachowski FCC has been so careful to avoid offending the competing industries, it has left no industry happy. More important, it has been so attentive to the interests of the industries, it has neglected the public interest. The Genachowski FCC has not only has failed to further its purported goals to increase women and minority participation in the communications industry, it has failed to establish its authority over the media service of the future: the Internet.
If the FCC under Tom Wheeler is to keep President Obama’s promises, Wheeler must commit to conducting the relevant research on diversity in the digital age. This includes research into the access the diverse public has to robust advanced telecommunications networks that adhere to the principles of net neutrality. The research should focus on the critical needs of the public, rather than the interests of the lobbying groups Wheeler has represented in the past. The goal of a data-driven agency is a good one if the data does not only come from the industry the agency is supposed to regulate. The FCC needs to gather data and fund research that is truly independent and rigorous. Perhaps Wheeler can fund researchers to analyze the needs of the public with the same rigor his business-market analysts apply to his business investment decisions for his clients. This research should help Wheeler find the right policy solutions to the pitiful numbers reflecting a lack of diversity now seen across all media industries, and this research should clarify why diversity matters. Perhaps he can begin to think of the public as his client.
If Wheeler is to protect the ability of the FCC to enforce net neutrality, he must not shrink—even in the face of the inevitable howls of his former clients—from reclassifying advanced telecommunication service as, well, telecommunications service.
The FCC is an increasingly important government agency ever-embattled and now adrift. Tom Wheeler will wield enormous power over the direction of a powerful and dynamic communications industry. Let us hope that the former lobbyist is brave enough to stand up to his former clients, and use his power in the public interest. And keep the president’s promises.
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