After solid perfomances in two debates, Mitt Romney’s presidential hopes are quite secure. “This race is tied,” read a campaign fund-raising e-mail one day before last week’s second televised presidential debate…and that was from President Obama’s campaign folks.
While last week’s debate may have stemmed some of the president’s bluestate bleeding, Election Night will be a nail-biter, with an attendant Republican majority on the FCC a real possibility.
And if the returns come in late on that November Tuesday and point to the former governor of Massachusetts becoming the 45th president of the United States, the first question hitting our industry will be: What will Romney do?
The answer—to quote both Facebook and Hollywood—is “It’s complicated.” What the Romney administration wants to do, and what it can get done, will depend on a number of factors, including the balance of power in Congress and the abilities of a new FCC chairman.
Generally speaking, Romney’s regulatory philosophy is driven by a desire to get investment dollars that may be sitting on the sidelines into the marketplace to, in theory, create jobs and boost the economy. He would either like to see regulatory certainty where he believes guides are needed (no retroactive conditions on auctioned spectrum, for instance) or no regulations in cases where he believes they are standing in the way of that investment (such as the FCC’s network neutrality rules).
And based on interviews with lobbyists, lawyers, former FCC officials and others, we can expect a full docket (though, admittedly, not right out of the gate) for a Romney administration. Among the items: network neutrality rules would be on the chopping block; indecency enforcement could ramp up as a nod to conservatives in the party; and there might be some hope for broadcasters to get rid of the newspaper/broadcast crossownership rules—though this last item has been a political can both parties have managed to kick down the road.
Change(s) at the Top
We haven’t seen any WWRD (What Would Romney Do?) bracelets turning up at the outlet stores, but the impact of a Romney administration on the communications sector would be felt quickly.
In the short term, a Romney win would actually mean a slower route to some major action on big-ticket items—such as revised media ownership rules, foreclosing commoncarrier regulations of the Internet or imposing deadlines on FCC actions—because of the logistics of installing that Republican majority.
That’s because general order No. 1 would be the departure of current FCC chairman Julius Genachowski. A Republican interim chairman would be named—likely Robert McDowell, the senior Republican on the commission, though it could also be new commissioner Ajit Pai. This would leave the commission split at two Republicans and two Democrats, probably for six months or so—about the length of time the FCC was at 2-2 four years ago when President Obama’s election led to Republican chairman Kevin Martin’s exit.
If the FCC remained in Democratic hands, the agency could weigh in on its long-proposed changes to broadcast ownership rules by sometime in the first half of 2013. But that would be unlikely if the commission complement is 2-2, with an interim Republican chairman needing to find at least one Democratic vote. Democratic commissioners Mignon Clyburn and Jessica Rosenworcel could block any major media ownership deregulation.
And the long-term prospects for major media ownership reforms, even under a Republican administration, might not be much better.
“We had eight years [under] George W. Bush, som times with Republican congressmen, and we didn’t get any meaningful relief on media ownership or even newspaper-broadcast cross-ownership,” said one broadcast lawyer. He also pointed out that myriad recent FCC chairmen have not wanted to touch that political hot potato, saying they were afraid of pushback from members of Congress concerned about giving more power to local media that are a politician’s lifeblood.
Once a third Republican was named to the commission, there would at least be a majority to work with, and—based on the candidate’s words—a general deregulatory mandate.
On his website, Governor Romney said he will “act swiftly to tear down the vast edi! ce of regulations the Obama administration has imposed on the economy.” But since nothing happens swiftly in Washington, Romney could try to impose what he has called a “regulatory cap of zero dollars on all federal agencies,” meaning regulations could cost no more to implement than they produce in social benefit. He would also “require congressional approval of all new ‘major’ regulations,” which—if one factors in the current pace of Congress—would be a de facto roadblock to additional regulations on the industry.
In their convention platform, Republicans took issue with the FCC over its open Internet order, saying the commission was attempting to “micromanage telecom as if it were a railroad network.” And Governor Romney has not been shy about pledging to get rid of regulations he sees as examples of government’s micromanaging of the private sector.
A New-Look Commission
The FCC in a Mitt Romney administration would almost certainly try to back away from the commission’s network neutrality rules, and would make no move to revive them in another form if an appeals court throws them out. The FCC under current chairman Genachowski has left open its option to regulate Internet access under some of its common carrier regulations—the so-called Title II docket. A Republican-led FCC would close that docket.
“I think that looking at ‘onerous’ FCC rules, surely network neutrality would be one of them, and a priority for a Romney administration,” said one former Senate Commerce Committee aide with knowledge of the campaign’s thinking.
Brian Wieser, senior research analyst for Pivotal Research Group, said he expects a lot of “pragmatic horse-trading on issues,” while pointing out that a key to any regulatory reform is the balance of power in Congress.
The House is expected to remain Republican, but there are still a number of close Senate races to be decided in this current campaign. If the Republicans can capture the Senate, that would put much more power in the hands of the new chairman of the Senate Commerce Committee, which oversees the FCC, and whose chairman and ranking members historically get White House deference on the pick of new FCC commissioners. Democratic Commissioner Jessica Rosenworcel, for example, is the former top telecom aide to Commerce chairman Jay Rockefeller (D- W. Va.).
Issues such as FCC reform and deregulating local broadcast ownership rules will likely be driven both by the FCC and the dominant voices in Congress, particularly if the Republicans are able to keep the House and overcome the relative long shot of winning the Senate.
But if Republicans did pick up enough seats in the Senate, Sen. Jim DeMint of South Carolina is in line to become the new chairman of the powerful Senate Commerce Committee, and that could be a major push for communications deregulation. He is no lock for the chairmanship, but either way, “presumably, Jim DeMint would be one of the dominant voices in a Republican Senate,” said Wieser. “That could lead to a complete rewrite of relevant regulation without much opposition.”
“There is a new world order on the Commerce Committee and his name is Jim DeMint,” added the Senate aide, who expects Sen. DeMint would have major input on naming a new FCC chairman and commissioner.
House Republicans have already proposed putting the FCC on a shot clock to limit their time on regulation decisions. But DeMint has proposed sweeping away media ownership regulations entirely, as well as the retransmission consent regime.
Romney and DeMint are in agreement, according to the aide, when it comes to the belief that the FCC needs to provide the regulatory certainty that promotes investment. “It is fair to say that [DeMint] feels [the FCC] is stuck in a very old mindset that is no longer re! ective of the way the industry or the marketplace operates,” the aide said.
Roadblocks to Revamping
But even if a Romney administration wants to ambitiously revamp the way the FCC does business—from bulldozing regulatory silos to putting shot clocks on agency actions—it faces something of a tall order.
Any sweeping deregulation, points out one veteran broadcast attorney, would take action by the four oversight committees. One former top FCC official said that a rewrite of the Communications Act—a coming consideration regardless of who wins the White House—could take years. But the attorney does not think that would extend to the kind of deregulatory chainsaw DeMint has signaled he would like to wield.
None of the officials who responded for this story, Democrat or Republican, believe either retransmission consent rules, syndicated exclusivity or network nonduplication rules would be endangered. The Genachowski FCC has taken no action on cable proposals along those lines, and a Romney FCC would be even less likely to step into retrans negotiations.
And any deregulatory push by De- Mint would get pushback from lobbyists on both sides of the issue. Broadcasters feel the same way, and they are not going to push for newspaperbroadcast cross-ownership if it is part of a package deal that includes scrapping retrans and the billions of dollars in revenue it represents.
Indeed, broadcasters could arguably get a more receptive hearing from a Romney administration, at least according to top lobbyist Gordon Smith. Romney and Smith—a former U.S. Senator from Oregon who is now president of the National Association of Broadcasters—are friends; both share the Mormon faith and the desire to clear away unnecessary regulation. Smith has personally endorsed Romney.
But, cautions NAB spokesman Dennis Wharton, “Gordon’s support is strictly personal and based on a pledge he made to Mitt Romney four years ago. It is not an NAB endorsement. Gordon is not someone who is in the business of breaking promises to friends.”
A Romney administration is expected to be friendlier to lobbyists, though no revolving door; the Obama administration has a ban on hiring lobbyists, but has made exceptions. “I think there will be a change for sure,” said David Goodfriend, CNN contributor and president of Goodfriend Government Affairs, “but it may be more subtle than simply ending the Obama policy, because that would leave a Romney administration open to attack. I think you would see a softening of the position.”
A source familiar with the Romney campaign’s transition team said they have a prohibition on registered lobbyists. He adds that while a Romney administration would not exclude lobbyists, it would not allow those that joined the administration to work on issues they had lobbied on. They would also likely impose a two-year moratorium on lobbying by staffers leaving the administration.
Don’t look for a Republican FCC to back away from the effort to reclaim broadcast spectrum for wireless, a ship that appears to have left the dock long behind. The legislation creating those auctions was bipartisan, and the Republican platform criticized the FCC for not having held spectrum auctions already.
And look for a Romney administration to push the government to give up more of its spectrum for auction to the commercial sector.
Not Naming Names
No solid names have surfaced for a possible Republican FCC chairman under Romney beyond McDowell and Pai, both of whom are said to be serious contenders for the permanent job. But that choice, and how it would be made, will set the tone for just how active a deregulator the FCC would try to be.
More than one industry watcher would like to see McDowell get the nod. He has gained the reputation of a statesmanlike conservative who can find common ground with his opposition without compromising his principles. “I do think it is fair to say that there is high regard within the campaign and the [Romney] policy team for [McDowell],” said the former Senate aide close to the transition team. “They recognize his leadership at the FCC. If Romney won, [McDowell] has a very credible chance to be chairman.”
The Republican platform talks about enforcing obscenity and pornography laws on the books, which could be boilerplate or something more stringent in terms of content. One Washington broadcast executive fears it would prove to be the latter. “Content crackdowns are an appeal to the conservative base of the party,” the executive said, “and the religious conservatives carry a big stick.”
John Crigler, a partner at Garvey Schubert Barer in Washington, agreed. “They are going to need to keep their conservative base happy, and this is an easy way to do it,” said Crigler, who has been defending broadcasters from indecency findings for over two decades. “It’s family values, keeping America safe and wholesome. I think if Romney carries the day, we’ll hear more from that side.”
But the former Senate aide said he thinks a Romney FCC would focus more on getting rid of regulations that depress investment than on getting into a down-and-dirty indecency fight.
One of the hot-button issues in Washington over the past few months has been online privacy and targeted advertising, which implicates traditional media moving their content online or supplementing their business with Web offerings. The Obama administration has signaled legislation is likely needed to backstop self-regulations.
Jeff Chester, the executive director of the Center for Digital Democracy, who already feels the Obama administration has been too eager to accept self-regulation over stronger government oversight of online marketing, paints a gloom-and-doom portrait of privacy protections under a Romney presidency—though he also suggests that will be just fine with industry.
“If Romney is elected, the FTC will become a dead letter office and the Chamber of Commerce will go into party mode 24/7,” Chester said. “Under a Romney administration, the public interest in privacy and communication and children’s rights will be skewered along with Big Bird.” Romney has now famously suggested that he would defund the Center for Public Broadcasting.
Chester is clearly not so enamored of the current administration, which he said is “too cozy” with special corporate interests. But he believes they are at least willing to listen to concerns and acknowledge that there is a serious problem.
Romney, however, would totally unleash Google and Facebook to “swallow up” consumer data without regard to any kind of protections or safeguards,” Chester suggested.
“I think any investigation into problems around vertical integration in the technology industry will be shut down,” he added. “There will be no work on respecting online privacy. Safeguards of children and teens will be disregarded and ignored.”
Goodfriend believes the issue is more nuanced. “Privacy is one of those issues, like civil liberties, where you see the left and right converge,” he said. Goodfriend points out that Reps. Ed Markey (D-Mass.) and Joe Barton (R-Texas) have teamed up to promote privacy protections. “That suggests there is something apolitical about the need for some form of privacy protection,” he said. “I think it is too simplistic to say privacy would swing hard one way or the other based on who controls the White House….This is an issue that cuts across partisan lines.”
So, in that case, what would Romney do? “They may take a less regulatory approach by an incentive-based system, or try to push parties to reach consensus agreements that may be codified,” Goodfriend said.
Romney said in the last debate that markets need some regulation. “Mitt Romney as president might say, ‘Let’s make sure the market is informed and consumers have a clear idea of how each website or network provider protects their privacy,’” Goodfriend said. “Perhaps [there would be] some form of labeling regime or different tactics, but by no means an end to government examination of privacy issues.”
A Romney administration, it is safe to say, would mean a new, strident government examination of a great many things in the industry. What remains between now and Nov. 6 is educated guessing and speculation. But that comes to an end very soon, once the people determine the future of communications policy, at least for the next four years, with their votes.
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