Reelection Campaigns Likely to Stall Telecom Legislation

Ownership, spectrum, indecency should, however, be on 2012 docket 1/02/2012 12:01:00 AM Eastern

With all of the House and a third of the
Senate seeking re-election in 2012, there
won’t be enough time or energy on Capitol
Hill for any major rewrites of telecom legislation,
despite that fact that it’s been talked about for years
and with renewed volume in the wake of the network
neutrality rulemaking. However, as we look into the
inside-the-Beltway crystal ball, media ownership, spectrum
legislation implementation, major court actions
on indecency and network neutrality are all on tap,
according to communications lawyers, lobbyists and
government officials polled, many on background.

There has been a lot of hand-wringing and big stickwaving
about Federal Communications Commission reform
legislation, including putting shot clocks on rulemakings
and requiring cost-benefit analysis of any new
regulation. But that’s more
hat than cattle: With at least
two-thirds of the open Senate
seats being Democratic,
that Republican-backed reform
effort almost certainly
would not muster the necessary

One possible exception
would be peeling off and
passing one element of the
reform package, allowing
more than two FCC commissioners
to have a discussion
outside of the monthly
public meeting. That has
bipartisan support, but it’s
probably a long shot as well.

Privacy legislation will continue to be the subject of
hearings, but comprehensive legislation on that front
is also a likely victim of the political divide. While
Reps. Ed Markey (D-Mass.) and Joe Barton (R-Tex.)
have come to a meeting of the minds on a do-nottrack
bill, the Obama administration has signaled that
self-regulation with the continued threat of stronger
government action is the way to go. But Randolph
May, president of the Free State Foundation, says a bill
could move if spurred by “some major untoward privacy
slip-up” that sounds alarm bells with the public.

“I do think privacy is heating up,” says Dan Brenner,
an attorney with Hogan Lovells. “The enormity of trying
to create the rules is never-ending, which may be
the same for any major bill.”

Some form of spectrum reclamation bill will almost
certainly make it to the president’s desk, so the FCC is
going to have to fi nally give broadcasters a better sense
of how it will move and repack stations. The commission
will also have to give Rep. John Dingell (D-Mich.) and
the National Association of Broadcasters a better answer
on how the border issues with Canada and Mexico will
be resolved, allowing for enough spectrum for continued
broadcast TV service in cities such as Detroit and Buffalo.

“If legislation passes and is signed into law, we could
have a lot to do on spectrum auctions,” says FCC commissioner
Robert McDowell.

Don’t look for the FCC to do any major remake of
retrans, however, at least through the front door. The
rulemaking proposal could lie fallow; but if there are
any big retrans impasses that occur over the holidays,
that may prompt the sort of letter-writing campaign
from Capitol Hill to the FCC that would incite action.
“I don’t really see them doing nothing,” says one top
communications attorney. At most, it will likely be
nibbling around the edges, clarifying what constitutes
good-faith bargaining.

The FCC has already circulated a notice of proposed
rulemaking on its media-ownership rules. The commission
is overdue for its quadrennial rulemaking
review per congressional directive, but it was waiting
for a court decision out of the Third Circuit, which it
got last July. Now, with broadcasters appealing that
decision to the Supreme Court, broadcasters’ ongoing
uncertainty over their status vis-à-vis local station
ownership and cross-ownership will continue at least
into the middle of 2012. That is likely the earliest the
FCC could adopt new rules, though it may go longer
if the Supreme Court takes the appeal.

One possible way to get at retrans reform without
actually refereeing the disputes would be through
that media ownership item, which tees up the issue
of whether shared services agreements, which can include
negotiating retrans, are a way for owners to skirt
the station limits. Another question is whether local
marketing and news-sharing agreements should be
factored into local limits

Also up for decision in the courts is the fate of the
FCC’s network neutrality rules which, similar to the
media ownership rules, have been attacked by both
sides. In one corner is Verizon, which believes it was
unnecessary overregulation; meanwhile, some public
interest groups argue the rules were insufficiently regulatory,
particularly as they are not applying some of the
regs to wireless broadband.

Then there are the FCC’s indecency regs, which have
been in a state of legal limbo for years. The Supreme
Court will weigh in on whether the FCC’s approach
has been unconstitutionally chilling on speech.

McDowell says that whatever the outcome of that
indecency case, the FCC should then be freed up to
“uncork” that bottle and process what amounts to a
backlog of more than 1 million indecency complaints,
some of which are tied to license renewals.

“Depending on how the D.C. Circuit decides Verizon’s
net neutrality appeal, the FCC’s jurisdiction to
regulate broadband services could be substantially
curtailed,” says May of the Free State Foundation.
“And the Supreme Court’s decision in the indecency
case could, but probably won’t, put all electronic
media on the same First
Amendment footing. It’s
more likely to be a narrower
decision holding
the FCC’s new indecency
policy unconstitutional
on vagueness grounds.”

This month, there
could be two new FCC
commissioners, just in
time for a vote on implementing
the IP closedcaptioning
portion of the
Video Accessibility Act,
which is how broadcast
and cable operators and
others will make online
versions of their programming
available to the disabled.

Studios are pushing for a longer timetable for captioning
all that archival video content, up to eight years, but
are also suggesting a holistic approach rather than one
based on when a show with captions aired. But whatever
the FCC decides about implementing the rules, it has
to do so by a Jan. 12 congressional deadline, although
the industry will have a year from that date to comply.

McDowell says he will be focused on reforming the
contribution side of the Universal Service Fund. The
FCC already approved a revamp of the payouts from
that fund, which has subsidized phone service and will
now be redirected to—what else—broadband. But the
other side of the coin is how the money is collected.

Some legislators have pointed out that companies in
their states contribute far more than they get back in
subsidies. That will be the case in some instances because
it is a cross-subsidy. But they are looking for a more
equitable system. FCC chairman Julius Genachowski
has pledged to put that contribution mechanism reform
on the priority list.

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