Washington's handling of media regulation always involves a fair amount of surprise, but the arrival of Donald Trump will take unpredictability to an entirely new level.
For starters, the president-elect will get to appoint a couple commissioners to the Federal Communications Commission and reshape the Justice Department. He also plans to make cybersecurity a priority—which could mean giving the government more power over information—and to spend a trillion dollars on infrastructure, likely to include broadband.
The FCC has not historically been a big focus of new administrations. But few have made money betting on Trump to follow form or tradition.
Cutting ‘Regulatory Underbrush’
When the dust finally settles over Democratic commissioner Jessica Rosenworcel’s failed renomination bid and current chairman Tom Wheeler’s exit, many communications policy watchers predict a Republican majority looking to take a weed whacker to the regulatory underbrush, as senior Republican commissioner Ajit Pai said last month. Pai could be either interim chairman or chairman outright.
“Just as the election outcome was unexpected by many, many will not expect how deregulatory the new FCC will turn out to be,” NetCompetition chairman Scott Cleland says.
It is likely that the FCC or the Republican Congress will reverse the Title II classification of ISPs, but Congress could also reinstate the old compromise rules against blocking and throttling and paid prioritization. Cable and phone ISPs—all but Verizon—agreed to abide by those rules, and having something in place would make it easier for the proposed AT&T-Time Warner merger to pass muster.
Broadcasters also expect regulatory help on the media ownership front, either from the FCC or Congress or, likely, both — unless the commission reflects the progressive populist Trump.
Incoming House Energy & Commerce Committee chairman Greg Walden (R-Ore.) has already introduced a bill to scrap the newspaper/broadcast cross-ownership ban, and a GOP-led FCC could roll back the agency’s decision to put the ownership interests of TV joint services agreements in terms of local limits, meaning owning a TV station and selling more than 15% of ad time on another station in the market is viewed by the FCC as owning both stations.
The National Association of Broadcasters sued the FCC over not scrapping the ban or loosening other rules in the agency’s quadrennial media ownership review last summer, but has withdrawn that suit and petitioned the agency to reverse the decision given that Trump’s FCC is likely to share NAB’s view on regulation.
A big X factor for broadcasters is how the spectrum auction will reshape their business, and how soon the FCC will allow them to reshape it themselves with a new ATSC 3.0 transmission standard.
The auction phase could be over soon after the new administration takes over, but the repack will take years. Pai has already pushed for a decision on ATSC 3.0, so it is likely that a Paiheaded FCC would act quickly on the issue.
Unclear Future for M&A
Mergers and acquisitions, though, could run into more friction. During the campaign, Trump threatened to block the AT&T-Time Warner deal and suggested he would unwind Comcast-NBC Universal. But those statements appeared to be a reaction to the companies’ ownership of the news outlets he loves to hate rather than a signal of antitrust policy.
Adonis Hoffman, a former FCC official now head of research and education organization Business in the Public Interest, says he doesn’t think the AT&T-Time Warner deal is in danger.
“Big corporations are not seen as inherently bad or suspect, despite candidate Trump’s shoot-from-the-hip reactions to questions on mergers during the campaign,” Hoffman wrote in an op-ed in The Hill. “In fact, the more measured Trump will rely on big companies to lead the way in rebuilding America’s economy.”
Nonetheless, Sen. Richard Blumenthal (DConn.) said at an oversight hearing that he was taking Trump at his word that he would block it.
It will take some time for a new FCC to get seated, and even then efforts to roll back network neutrality and broadband privacy rules aren’t likely to be completed in short order. In the interim, the FCC could ramp down through lack of enforcement.
For example, while the FCC’s Wireless Bureau has warned AT&T and Verizon that their zero rating plans for online video appear to violate the network neutrality general conduct standard, a new FCC could signal that the standard was too vague, and thus chilled innovation, and decline to enforce it.
David Goodfriend, president of Goodfriend Government Affairs and a legal advisor to former commissioner Susan Ness during her time on the FCC, isn’t so sure consolidation, or even scrapping net neutrality rules, is a sure thing.
"While a Trump FCC will take the neo-conservative orthodoxy of the transition team members in many cases, some very strong voices among the populists close to President-Elect Trump are not toeing the usual line,” says Goodfriend. “ For example, Chris Ruddy, CEO of conservative website and video channel Newsmax, dined with Donald Trump on Thanksgiving and wrote in his column afterwards that Trump should make media diversity, pushing back on consolidated media and distribution companies, a top priority.
"When it comes to net neutrality, the dynamic looks a lot like Obamacare: Trump and congressional Republicans, now that they are in charge, can pull the plug. But some are asking if that would be the smartest political move. As with Obamacare, should 'replace' be part of 'repeal'?"
A Republican leaning source seconded that on background.
“I envision an extraordinary (and perhaps unprecedented) level of interchange and cooperation between Congress and the FCC, especially at the senior staff level,” Hoffman says. “We have not seen this particular alignment of one-party control of all levers in a long, long time, and never in such a divided climate. Senior staffers in the Senate and the House already know more about the inner workings of the FCC than they do about any other independent agency, and they have the green light to be a little adventurous.”