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The Art of the Possible - Broadcasting & Cable

The Art of the Possible

In her first wide-ranging interview since becoming the newest Democratic commissioner of the FCC, Jessica Rosenworcel talks spectrum auctions, retrans, consumer protection and the road to the digital revolution
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The pictures on the wall of Jessica Rosenworcel's FCC office include shots of the first Apple computer, the first radio and telephone operators in Times Square. The last is there, she says, "because that is what ‘women in communications' used to mean."

Today, it means helping to decide the fate of all those media as one of five FCC commissioners trying to keep up with, and at the same time shape, a communications revolution.

Dick Wiley, communications "super lawyer" and former FCC chairman, says of Rosenworcel: "She has the intellectual capacity and experience to be a very effective commissioner. She is generally well-respected on both sides of the aisle." That experience includes helping Sen. Jay Rockefeller (D-W.Va.) craft the Senate side of the incentive auction legislation that will ultimately reshape the future of broadcasting.

Rosenworcel joined the commission in May from her previous post as senior communications counsel to the Senate Commerce Committee (Rockefeller is currently chair). But it is also a homecoming. She served as legal adviser to former FCC commissioner Michael Copps, whose seat she took over. "Michael Copps is a terrific person," Rosenworcel says. "He has grace and smarts in spades, and it was a great privilege to work with him."

And though she has a Copps-like passion when it comes to issues such as retrans impasses and their impact on consumers, Rosenworcel is definitely her own person-and commissioner. She believes the commission should move faster on license renewals and simplify rules when necessary, but also stay in the business of reviewing mergers.

In her first wide-ranging interview since becoming the newest Democrat on the commission, Rosenworcel says of the incentive auctions-arguably the FCC's most imposing issue over the next several years-that the FCC has a duty to minimize broadcaster disruption, but that broadcasters have a responsibility to fairly assess the opportunities the auctions afford them to create new business models and revenue streams.

Before answering questions from legislators last week about spectrum, Rosenworcel weighed in with B&C Washington bureau chief John Eggerton on that topic and much more. An edited transcript follows.

What is your regulatory philosophy?

I've had the privilege of looking at communications issues from several different seats. I've sat in the private sector, in the trenches at the commission and up on Capitol Hill. That's a range of perspectives in law, business, policy and politics. I think that helps when I assess the issues before my office and the agency. I've got a deep practical streak and a healthy respect for the art of the possible. Communications markets are changing at a rapid clip. In an instant, innovation can upend what we think we know. But with so much change, I think there are some values in the law that are constants. Public safety is always a priority. Competition promotes innovation. Universal service means providing first-rate communications opportunities across the country. And of course, consumer protection is essential. At the same time, I think you can pare this down to a question of confidence. How do we make sure that companies have the confidence they need to invest in communications infrastructure and services? And how do we make sure that consumers have the confidence and information they need to secure, and make full use of, the expanding array of services that are remaking the way we connect in the 21st century? I think those two questions are essential for the agency and vitally important for growing our digital economy.

There is constant chatter that chairman Julius Genachowski may exit next year. Do you have any interest in the big chair?

That is above my pay grade and not for me to decide. But I can say that it's an absolute privilege to be here and I am grateful to the president and the United States Senate for this opportunity.

What is the future of broadcasting?

Broadcasting has long had a special place in our media landscape and our local communities. After all, broadcasters can deliver local news and entertainment into our homes in a way that no other medium can. No one can deny that media markets are changing and that these are transitional times. But there are new opportunities for broadcasting on the horizon. Incentive auctions are, above all, voluntary. But for those who wish to participate, there will be new ways to develop channel-sharing agreements and new abilities for revenue to help strengthen and grow station services and content. We also need to keep an eye on what other countries are doing with digital television. I'm especially intrigued by the effort to develop a single, global broadcast standard, and the opportunity this provides to bridge the gap between different signal formats and transmission systems.

You have said that the keys to incentive auctions are simplicity, fairness, balance and public safety. Talk about what fairness means in terms of broadcasting.

I think fairness has two components. First, fairness means that, for broadcasters that want to remain on the air, the commission should minimize unnecessary disruption and maximize the ability of the public to continue to receive free, over-the-air television. We have a duty to remain faithful to the statute. Congress developed a number of built-in safeguards for broadcasters choosing to stay on the air. For instance, the Middle Class Tax Relief and Job Creation Act protects UHF stations from being involuntarily relocated to VHF channels. In addition, the commission is required to make all reasonable efforts to preserve station geographic and population coverage areas. The commission also must coordinate with our international counterparts along the border. I know the agency already has engaged with our colleagues in Canada and Mexico and will need to continue to do so during this process. Second, I think fairness also requires broadcasters to assess the opportunities available to them in the incentive auction process. Broadcasters will have new opportunities for channel sharing that preserve must-carry rights. There are also voluntary incentives available for relocating from UHF to VHF. These options can lead to new ownership models and new revenue streams that broadcasters can use to support new content.

Does there need to be a spectrum inventory?

There's no question that a spectrum inventory can be helpful, to the extent that it's technically and practically feasible. I believe that this agency and our counterparts at the National Telecommunications and Information Administration, with responsibility for federal spectrum, should regularly assess how this resource is being used. And, absent security concerns, this information should be available to the public. But we need to be honest. The demand for our airwaves is going up while the supply of unencumbered airwaves is going down. We need to approach this spectrum challenge with an "all of the above" strategy. This will take studying spectrum use, considering changes in topology and spurring new technologies-all at the same time.

What should happen with the open retrans docket?

I know that the vast majority of retransmission consent negotiations occur quietly and without incident. However, it's also true that we've had some high-profile disputes when local broadcast stations and cable and satellite companies fail to reach agreement over the terms of carriage. This is not a simple issue. But it is not fair when these disputes leave viewers with dark screens on their television sets when they reach to turn on the game, their favorite show or the local news. The parties to these negotiations have an obligation under the law to negotiate in good faith, and they should be held to this standard. Above all, I do not want to see consumers caught in the crossfire and the collateral damage in these disputes.

Does the FCC need to do anything to clarify that standard, or is it OK as it is?

The majority of these negotiations occur without incident, and that's a good thing. But I think that if the number of disputes continues to increase, and the number of consumers who get saddled with dark screens for extended periods grows, we are going to have a problem on our hands and we are going to have to do something about it. If that happens, I think the agency is going to have to scour its statute and a way to use that good faith authority to prevent further consumer disruption.

What should the FCC's next move be if the court throws out the Open Internet order?

I have no legal crystal ball. I recognize that the court could rule a number of ways. For my part, the essential thing is ensuring that we balance incentives for network deployment with the incentives for the development of Internet-based services and applications.

You have advocated regulatory humility when it comes to technological change. What should the FCC's role be in an over-the-top video delivery future?

I think that the way we watch is changing. We are increasingly going to look for the content we want, when we want it-on any screen handy. All of this competition and innovation is good for consumers. It should mean more options and lower prices. The commission should not favor one technology or business plan over another. It should be up to consumers to decide which services they want! And if our rules are barriers to entry or distorting the evolution of video markets, we need to take steps to address that.

Former FCC chairman Michael Powell says the FCC should get out of the merger review business and leave that to the Department of Justice and the Federal Trade Commission.

I respect former chairman Powell's perspective. But I disagree. Consider that spectrum is a scarce resource. The commission has been directed by Congress to make sure this public resource is used in the public interest. As a result, in the Communications Act, Congress directed the commission to review applications to transfer ownership of wireless licenses to ensure that the transfer is consistent with the public interest, convenience and necessity. This is a different review standard than the antitrust assessment that guides the Department of Justice and [the] Federal Trade Commission. The purpose is different, and the issues are different. There are broader issues in spectrum licensing, for instance, that merit consideration and are outside of antitrust purview. However, I do believe that the commission needs to move faster and reach decisions on license transfers at a swifter clip. This is the Internet era, and it is time for the agency to move at the pace of digital-age demand.

Speaking of digital, what's on your iPod?

First, Guster, because I have filial duty [see "Feeling at Home," above]; Adele-I have a lot of music. When you have a musician in the family, you listen to a lot of music-Tom Waits, Rufus Wainright, Lucinda Williams, Shakira, the Pogues, Stevie Wonder, Blondie, Ray LaMontagne-he used to open for my brother- Otis Redding, Pat Benatar, Patsy Cline and Joan Jett.

What should happen with the still-open Title II docket?

Title II regulations designed for the era of basic telephony are not uniformly appropriate for the technologies and services of the digital age. 

I think the Commission's Open Internet rules are an attempt to wrestle with this, and apply basic values in the Communications Act-like nondiscrimination and service on just and fair terms-to the services of the digital age. 

For nearly a decade now, the Commission has classified broadband as an information service rather than a telecommunications service. On the one hand, there has been substantial reliance on this regime. It has been upheld by the Supreme Court. On the other hand, it has on occasion required some legal contortions. It can throw into question some important values in Title II of the Communications Act.

In the end, I do not believe the semantics should guide us. The questions are more fundamental. How do we protect consumers? How do we encourage network investment? How do we foster competition? How do we ensure universal service? And how do we provide public safety with the resources they need? We can close the Title II proceeding, but these fundamental questions need to be answered. 

Should the FCC open a separate docket on over-the-top video, or deal with it in the Sky Angel complaint?

I believe the Sky Angel complaint [related to Discovery's plan to terminate its agreement with the distributor more than four years earlier than originally agreed upon, which Sky Angel calls discrimination] is a restricted proceeding, so I can't talk about it. But I can say what is obvious, which is the way we watch is changing and this agency is going to continue to struggle to apply the laws of the present to the way we are going to watch in the future.

We have asked questions, I believe in a public notice about certain definitions in the statute, but I think that this is a big issue and we would benefit from having a broader proceeding and getting more industry input.

E-mail comments to jeggerton@nbmedia.com and follow him on Twitter: @eggerton

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