Editorial: FCC's Dereg Roll

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Federal Communications Commission chairman Julius Genachowski has consistently invoked his business background—he was head of business operations for Barry Diller’s IAC/InterActiveCorp. and advised a private equity firm, for example—to argue that he “gets it” when it comes to incentivizing private investment and not stifling innovation with too much regulation.

There have been times when that seemed a harder argument to swallow, like when the commission was imposing network neutrality regulations, or not lifting newspaper/broadcast cross-ownership regs that everyone and their sister believed should go, being no longer in the public interest.

But that has not been the case during the last few weeks. In a series of decisions that benefitted some of the country’s largest cable operators—and in some cases, smaller ones— the Genachowski-led FCC has OK’d the sale of cable spectrum from Comcast and others to Verizon; scrapped the dual-carriage/viewability regs that had required cable operators with hybrid analog/digital systems to deliver must-carry TV stations in both formats; moved to allow cable operators to scramble their digital basic tiers, which will free up spectrum and save them millions of truck rolls; and allowed cable operators to buy independent phone companies, which will help boost their footprint in the enterprise telecom space.

And then last week, the commission circulated an order lifting the prohibition on exclusive contracts between vertically integrated cable operators and their co-owned programming networks.

The difference between the pro-cable moves of the Obama-appointed Genachowski and the approach to the industry of Bush-appointed former chairman Kevin Martin are striking. Martin’s approach to cable was once described by then-NCTA president—now Comcast NBCUniversal D.C. president Kyle McSlarrow—as a vendetta. In the case of Genachowski lately, it has been V for victory.

Of course, many of those moves have served Genachowski’s larger purpose of trying to spur competition to incumbent phone companies and free up more spectrum—both high on his to-do list—but you won’t see those cable operators complaining.

Broadcasters could be forgiven for not being particularly buoyed by this deregulatory flurry, particularly since the dual carriage/viewability and scrambling decisions could cost them viewership. One conspiracy theory has the chairman throwing some bouquets to the nation’s largest cable operator, Comcast, whose executives include several big Obama supporters. Another posits that almost anything that strengthens cable also weakens broadcasters, which is OK with Genachowski, who only sees broadcasters in the rearview mirror as he drives toward a mobile broadband future.

But we hope this is, rather, chairman Genachowski’s pragmatic recognition that the market is changing, and that the FCC’s rules need to change along with it—though that realization has apparently not yet extended to the FCC’s broadband deployment report. The chairman has it in his power to prove us right and dispel at least some of the anti-broadcast bias charges.

Also circulating around the commission last week was the proposed framework for spectrum incentive auctions. The chairman has promised he sees a future for broadcasting that the auctions are not meant to foreclose. The FCC is also under a congressional mandate not to shortsheet the beds of those broadcasters who want to stay in business.

Exactly how the FCC ultimately chooses to structure those auctions—Genachowski wants to vote an order in mid-2013—and how it communicates and cooperates with broadcasters, both those who participate and those who remain behind to be repacked, will offer the proof of the chairman’s vision for broadcasting.

On the broadcast deregulatory front, the FCC likely won’t do anything before the election. But if Genachowski does decide to exit the commission next year, as many assume, he could leave on a high note by getting rid of the newspaper/ broadcast cross-ownership rules, which, like the program access rule prohibition on exclusive network contracts, were created in response to a marketplace so radically different as to now be unrecognizable.

Bottom line: The chairman has taken some positive steps, showing he recognizes that removing regulations allows industry players to be more competitive. Now he needs to share some of that deregulatory love with the free-over-the-air folks still serving millions of the consumers he says the FCC is all about serving.

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