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McDowell: FCC Process Doesn't Need Major Surgery

Despite complaints, McDowell says FCC works smoothly... most of the time 12/20/2007 05:51:00 AM Eastern

FCC Commissioner Robert McDowell says he doesn't think Congress needs to do any "major reconstructive surgery" on the FCC, but he also said he wasn't opposed to the commission or Congress looking into improving the process.

 Senator Daniel Inouye (D-Hawaii) has said he would work with Senator Jay Rockefeller (D- WV) on a review and revamp of FCC processes stemming from criticisms inside and outside the commission.

 McDowell, in a press conference with reporters Thursday, said he thought the building blocks were in place for a "healthy independent administrative agency." As to suggestions there was plenty of friction on the FCC's Eighth Floor (where the commissioners dwell), he said that given the number of contentious issues, "that can create a more tense atmosphere at times." But he said that since he has only been there 18 months, "this is the only FCC I have ever worked for, so for me this is the status quo."

 He did say that process complaints stemming from those contentious issues "should be examined thoroughly by my fellow commissioners and Congress," but added that the "vast majority of the time, things work pretty smoothly."

 McDowell took issue with the run-up to the aborted FCC finding that cable had reached a 70/70 threshold (70% coverage of the nation, 70% of those subscribing to cable, which could have triggered, or at least served as the underpinning for, regulation of the cable industry, having complained before about how the item was handled.

 But the commissioner said that the process of voting the newspaper-broadcast crossownership item was generally handled appropriately and that there was sufficient opportunity for comment. Senators and Commission Democrats had complained that FCC Chairman Kevin Martin had given only four weeks comment on his proposal, which he had published in the New York Times.

 While he conceded that waiting 90 days, rather than four weeks, to vote, as the Senators had called for, would have "at least taken away the argument" about insufficient comment time. But saying he was calling them as he sees them, he said that "I thought the chairman at the meeting did a pretty good job of laying out his responsiveness to process, either suggestions or complaints."

 Martin pointed out that there had numerous public meetings and studies, directly in response to criticisms of the lack of input on the earlier rule rewrite in 2003.

 McDowell also said he thought the crossownership decision would withstand a court challenge substantially intact.

  Asked whether he thought the cable industry had gotten a "full and fair hearing" before Chairman Kevin Martin, McDowell said the cable industry had "certainly been kept busy by the chairman," and been given the opportunity to comment on a lot of items. Asked if the industry had gotten "full and fair outcomes," he was silent on the fair issues, but did say that "they've been full outcomes... They've been full of something."

  Commissioner McDowell did say he thought the crossownership ban item was handled well, that there was sufficient public comment and that the decision had "an excellent chance of being sustained by the court."

 Despite loud protests from Democrats, and a few Republicans, over that crossownership decision, McDowell said that he thought that because the decision was "much more modest...I don't sense at all the same political backlash from it as the last go-around."

 In its 2003 deregulatory rule rewrite--before McDowell joined the commission--the changes included modifications to the local TV and radio caps, and a much more extensive lifting of the ban. "This is a much meeker, milder and more modest order," he said.

 McDowell opposed a vote Dec. 18 by Martin, joining with the two commission Democrats, to reimpose a 30% cap on cable's subscribers. He was less sanguine about that ruling's chances before the D.C. Circuit, which remanded the rule back to the FCC, saying Thursday that reporters should "bet the farm" that the D.C. federal court will overturn that ruling.

 McDowell said he did not know what was holding up the FCC's decision on the sale of Clear Channel, saying “I prefer to get things done, especially transactional approvals.”

 On the status of the XM/Sirius merger: "I don't have a fully formed view just yet," said McDowell, who says how the Justice Department defines the audio market will help inform that decision. But he suggested he looks at a market beyond satellite radio when he talks about audio. "I'm a free over-the-air radio listener," he said "I'm too cheap to subscribe to XM or Sirius." And he said that, if you're under 30, you are listening to an MP3 player in your car or wherever. "So that is the audio market in general."

 But he was not endorsing that market view necessarily, either. "There are other public policy implications, either going from two to one in that kind of business or reversing prior commission policy." The commission indicated when granting the two satellite licenses to Sirius and XM that both licenses should not be held by one company, though FCC Chairman who presided over that decision, Reed Hundt, recently came out in support of the merger, saying that his goal behind approving satellite radio was to spur competition to terrestrial broadcasting, and that XM and Sirius had not been able to do that as separate companies.

 McDowell said he is still "asking questions" about what the audio markets is, and what is national vs. local. Broadcasters argue that the competition is not a two-way street, and that while XM and Sirius compete with them for audience, individual stations cannot compete with their national footprint.

 FCC Chairman Kevin Martin has twice put a spectrum leasing item on the agenda, only to pull it both times. The proposal would allow digital broadcasters to lease excess digital spectrum to designated entities, like minorities and women to give them a de facto TV station without the high entry costs of buying or building one. Those "stations" would also get the same must-carry rights as full-power stations. It was initially to have been part of, if not the centerpiece, of a package of diversity items the commission approved at the Dec. 18 meeting.

 Commission Democrats are opposed, calling it a "spectrum sharecropping" proposal. McDowell gave a good indication of why it hasn't made it to a vote, saying he doesn't support it. "I don't think it is legal or constitutional," he said.

 McDowell weighed in on a number of topics:

 He said he thought the FCC would likely not be taking any action on indecency complaints or issues. "I think that what happens [in the two major court challenges to the FCC's indecency findings] is really going to determine the course of action that this or other commissions take on the issue.

 On proposed DTV consumer education mandates, he said he thought that, as written, the proposal would have "at least three votes," he that he had not yet decided how he would vote. He said that given that it was prescribing specific language in a specific manner, he wanted to look at the "legal and constitutional implications."

 On the Third Periodic Review of DTV rules, which broadcasters are eagerly awaiting. He said that they were not ready for the Dec. 18 meeting, and had still needed refining, but also said he expected them to be released soon. "The commission and industry were still in discussions as to how to refine the item better. From my perspective it was not ready for the meeting agenda," particularly given the focus on the media ownership items.

 On Complaints that Comcast was interfering with peer-to-peer traffic, he said that there had been some constructive dialog between networks and the peer-to-peer community, and strongly encouraged those to continue as they looked for ways to resolve their differences. But he also said that "what gets lost in the debate" is the confusion of the term discrimination vs. anticompetitive. He said that discriminatory conduct can simply be reasonable network management (his former job was for an association representing competitive local exchange carriers). “So, if you are prioritizing some bits over others to keep the network running efficiently, that is a good thing for consumers. But if you are doing it in a way to harm competitors, that is a bad thing.” He says he believes the FCC has sent that message.

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