Stearns Seeks Telecom Act Rewrite After House Democrats Fall

Communications Subcommittee Ranking Member Cliff Stearns, R-Fla., wants to have hearings in early 2011 about rewriting the Telecom Act for the 21st Century, Stearns told us in an interview. Stearns plans to seek the chair of the full Commerce Committee if current Ranking Member Joe Barton, R-Texas, doesn’t get a waiver from GOP leadership, he said. Otherwise, he would like to be chairman of the Communications Subcommittee, and Barton has told Stearns he could have it, Stearns said.

"There’s been a lot of work put into” the net neutrality deal worked on last September by Commerce Committee Chairman Henry Waxman, D-Calif., Stearns said. But Stearns didn’t support putting a bill out without a hearing, he said. “Let’s bring that compromise up for a hearing, let’s hear the stakeholders talk about it, [and] let the American people including the FCC comment on it, and then we'll know better what to do."

Boucher’s USF bill meanwhile will be resurrected next year by Republican cosponsor Rep. Lee Terry, R-Neb. “I do plan to reintroduce the bill as there is overwhelming industry support for this legislation,” Terry said Wednesday. “I am confident this bill can move forward in Congress.” Terry said the bill “would not be what it is today without the help of Rick Boucher."

Online privacy will be a top priority for the Commerce Committee if Barton, becomes chairman, Barton said Wednesday. Barton aims to “find out if Internet privacy policies really mean anything,” he said. “Millions of people put their information into the hands of Web sites like Facebook because they believe what they're told about walls protecting their privacy. I want the Internet economy to prosper, but it can’t unless the people’s right to privacy means more than a right only to hear excuses after the damage is done."

Boucher, first elected in 1982, was upset by Republican Morgan Griffith, despite a large funding advantage and favorable ratings by political analysts. Boucher got 47 percent of the vote, but Griffith got 51 percent. The House Communications Subcommittee also lost Democratic Reps. Zack Space of Ohio and Baron Hill of Indiana, while a race between Rep. Jerry McNerney, D-Calif., and Republican David Harmer was too close to call at our deadline. Republican Charlie Bass, a former Commerce Committee members with knowledge of rural telecom issues, took back his seat in New Hampshire. Meanwhile, Subcommittee Republican Roy Blunt, a strong net neutrality opponent, was elected to the Senate in Missouri.

The losses of Boucher, Space and Hill, combined with the departures of Reps. Bart Stupak, D-Mich., Bart Gordon, D-Tenn., and Charlie Melancon, D-La., mean a huge loss of key rural Democratic membership on the House Communications Subcommittee. Boucher’s loss in particular opens a “huge void for the rural industry,” said Paul Raak, vice president of the Independent Telephone & Telecommunications Alliance. The only rural Democrat left on the subcommittee is Rep. Peter Welch, D-Vt., but Welch is currently lowest in seniority and could be forced out of the subcommittee to make room for new Republicans, Raak said.

Meanwhile, Senate Commerce Committee members up for reelection kept their seats. Sen. Barbara Boxer, D-Calif., beat out former Hewlett-Packard CEO Carly Fiorina in a race that was closely watched by the telecom and tech industries. Sens. Jim DeMint, R-S.C., Johnny Isakson, R-Ga., David Vitter, R-La., and Daniel Inouye, D-Hawaii, won their elections as expected. In other Senate races, Democratic Sen. Blanche Lincoln lost to John Boozman in Arkansas. Lincoln oversaw the Rural Utilities Service as chair of the Senate Agriculture Committee. Sen. Russ Feingold, a critic of media consolidation in the Judiciary Committee, lost to Republican Ron Johnson. Meanwhile, Richard Blumenthal, the Democratic attorney general from Connecticut who led an investigation of Google “Street View,” was elected to the Senate.

Change May Doom Net Neutrality

Net neutrality is the most partisan among all communications issues on the Hill, with Republicans generally against it and the incoming freshman GOP House members particularly so, said industry officials. They said spectrum is somewhat partisan in that the incoming Republicans who seek to reduce the deficit and government spending may be more inclined to seek a higher cut of any incentive auction revenue for the Treasury, and less for licensees such as broadcasters. Retransmission consent rules for carriage deals between TV stations and subscription-video providers aren’t partisan, industry officials said.

Net neutrality supporters now face an uphill fight. The top four Republicans seeking to be chairman of the Commerce Committee have all opposed broadband reclassification. Also, all 95 election challengers and open-seat seekers who signed a net neutrality petition by the Progressive Change Campaign Committee lost their elections. Republicans probably won’t pass a net neutrality bill, said former Rep. Albert Wynn, who was a member of the House Commerce Committee and now lobbies for Dickstein Shapiro. “The overriding philosophy of the GOP is unless there’s a clear problem, they will not introduce regulation,” he said. “Net neutrality is a classic example.”

Don’t expect Republicans to advance anything on net neutrality, agreed ITTA’s Raak. House action on the issue is still possible, but it will look very different from what the Democrats sought, said Tom Wacker, vice president of the National Telecommunications Cooperative Association. It may still be possible to find bipartisan agreement on the deal that House Commerce Committee Chairman Henry Waxman, D-Calif., tried to finish in September, said Hal Singer, managing director of Navigant Economics. The deal didn’t contain controversial price regulation, but Republicans will still have to be convinced there’s a problem that’s worth addressing with legislation, Singer said.

"Comprehensive telecom legislation is unlikely” in the 112th Congress, said communications lawyer Andrew Lipman of Bingham McCutchen. “There are several areas of consensus for specific, rifle-shot bills” including on spectrum, he said. “Both the Republicans [and] the Democrats recognize the acute need for more spectrum.” And “if there is an industrywide consensus on net neutrality, then Congress could adopt conforming legislation.”

"If someone does something bad in the marketplace, I think there will be a hue and a cry” on net neutrality and a Republican House could be more inclined to intervene, said CEA President Gary Shapiro. He sees a “bipartisan consensus” on spectrum. “There’s a new source of revenue” for the government, “and it’s spectrum,” he said. Unclear is whether the parties will differ, and by how much, on what cut of auction proceeds broadcasters should get from giving up their spectrum for wireless broadband use, he said.

Boucher’s defeat means a legislative overhaul of USF will be slowed down significantly, said John Nakahata, who was an adviser to then-FCC Chairman Reed Hundt and now is a partner with Wiltshire & Grannis. “It seems unlikely that there will be significant legislation out of this Congress,” Nakahata told us. But Boucher and Terry worked too hard to find consensus on USF for Terry to abandon legislation now, Raak and Wacker said. Terry likely would seek a new Democratic cosponsor but it’s unclear who since the bill’s other major co-sponsor, Space, also lost his election. Boucher and Terry may have differed on a few areas, but it’s unlikely Terry would risk breaking the consensus the legislators achieved, Wacker said.

GOP gains won’t affect most rural issues because they are nonpartisan, said Wacker. The split between rural and urban members will have more influence, he said. Wacker and Raak said their associations will turn to subcommittee Republicans to lead on rural issues. NTCA plans to work with Terry and returning member Rep. Greg Walden, R-Ore., Wacker said. Rep. Fred Upton, R-Mich., and John Shimkus, R-Ill., who are seeking chairmanship of the Commerce Committee, also know rural issues well, Wacker said. Meanwhile, in the Senate, rural telcos may have a new champion in Blunt, who served on the House Communications Subcommittee and comes from a rural district, Raak and Wacker said. But first he'll have to get a seat on the Senate Commerce Committee, they said.

Meanwhile, the Tea Party and other Republican’s emphasis on deregulation could be a blow to competitors seeking special access regulation and spectrum caps, said Public Knowledge Legal Director Harold Feld. CompTel plans to immediately get up on the Hill to educate new members on competitive issues, said CEO Jerry James in an interview. The GOP likely will put off many telecom issues, including a potential revamp of the Telecom Act, until later in the session, because Republicans say their focus is the economy, jobs and repealing healthcare, James said.

While much depends on committee composition, it’s unlikely there will be “Titanic shifts” in Congress’s approach to spectrum issues, said CTIA Vice President Jot Carpenter. Both parties want to free up wireless spectrum, said Mobile Future Chairman Jonathan Spalter. “With the election behind us, now is the time for policymakers to put partisanship aside, roll up their sleeves and look for ways to work together to resolve the pressing issues facing American consumers."

On spectrum, Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va., “seems intent on moving a fairly significant bill” that includes the D block and incentive auctions, said Managing Director Gregg Rothschild of the Glover Park Group, a former top Democratic House Commerce aide. If the Senate passes a spectrum bill, “presumably the House would take it up in some form and you could actually have some significant legislation pass in the 112th Congress on that topic,” Rothschild said.

On retransmission consent, it’s hard to see whether the consumer harm pay-TV providers contend come from carriage deals’ higher prices could get Republican lawmakers interested in the issue or be trumped by the party’s general distaste for regulation, industry lawyers said. “This is not a deficit issue, so consequently in the scope of the new Republicans coming into the House majority that are looking to be deficit hawks, retrans is not on that list,” said President Matt Polka of the American Cable Association, which is seeking changes to retrans rules. “Even though `the deals got done,’ now I think lawmakers see this really is a broken market and something really needs to be done."

The election may affect legislation expected to impact the satellite industry, said industry executives. For instance, the power shift could add to the polarization on issues like export control reform, they said. The space industry has long criticized the government’s stringent controls on satellite parts as detriment to the business. Another effect may be an increased role for satellite broadband as Congress looks to cut down on costs in broadband initiatives. Broadband satellite providers point to their service as an easy way to provide broadband without the heavy costs of building out terrestrial service to rural areas.

Boucher Loss Shocks Telecom

The telecom and tech community lamented Boucher’s defeat. Many cited Boucher’s fairness and immense knowledge of telecom issues. Boucher was “an extraordinary public servant and a great leader across the whole gamut of telecommunications issues,” said FCC Commissioner Michael Copps. “His dedication to broadband, his leadership to reform Universal Service to make sure the wonders of advanced telecommunications are available to all our citizens, and his uncommon ability to bring contesting parties to the table to forge workable compromises are the stuff of legend."

"Even as a member in minority, Boucher would have been a driving force on USF, spectrum, and an ally against copyright maximalism,” said Feld. Boucher is a loss in particular because he offered a “bridge” between the Commerce and Judiciary committees, as a senior member of both, said a former FCC official. That was especially important on issues like retransmission consent, the official said. Telecommunications Industry Association President Grant Seiffert said “Congress will miss out."

Tech Issues Have Bipartisan Support

Despite the harsh tone of the campaign, several tech issues enjoy so much bipartisan support that Congress should be able to pass major bills, said several technology analysts Wednesday. Cybersecurity is a good example, said former Rep. Albert Wynn, a Democratic member of the House Commerce Committee during his 16 years in Congress and now a member of the Dickstein Shapiro lobbying firm in Washington. Wynn admits he’s “more optimistic than some” but predicts Republicans and Democrats must show they can get things done during the next session. The Republican win makes passing legislation much more difficult, added Internet Security Alliance President Larry Clinton. But a lot of Tea Party-backed Senate candidates are veteran politicians who know the system, and House Republicans will feel responsible to move bills. “I don’t see complete gridlock,” he said.

Both parties view cybersecurity as an important national security issue, Wynn said. Debate will center on whether the bill should contain federal mandates for private sector industries such as financial services, and Republicans could be divided between their traditional limited government philosophy and a desire for security, he said. Spending in the bill will also be an issue, he added.

Republicans attach more importance to security issues, said Clinton, and their new majority in the House will pay more attention to it instead of signing off on what the Senate sends over. As for that chamber, Clinton predicted a stronger GOP will push for a less regulatory, more pro-market bill but that cybersecurity already enjoys bipartisan support. The fact that major cybersecurity supporter and Senate Majority Leader Harry Reid, D-Nev., barely won re-election won’t weaken his ability to get a bill done, said Clinton. “You either get elected or you don’t,” he said, predicting Reid will retain leadership.

TechAmerica lobbyist Liesyl Franz sees the status quo holding in the Senate on cybersecurity, with the same leadership and sponsors of the bills. “We expect an impetus to reintroduce bills that have been marked,” she said. Obviously, no one knows what the new House leadership will do, but cybersecurity will continue to be a major issue, she said. “I'm not sure what our starting point will be or how quickly we move on it, but it’s a matter of when and how,” she said.

Privacy is another bipartisan issue, though it isn’t at the top of the GOP’s agenda, said Wynn. Republicans take it seriously but are conflicted by the business wing of their base. Absent a major market failure in the area of privacy, the GOP will not push it, Wynn said. The defeat of Rep. Rick Boucher, D-Va., impacts the debate, said Chris Wilson, TechAmerica’s director and counsel of e-commerce and telecommunications. But the privacy issue isn’t going away, he said. Rep. Bobby Rush, D-Il., is still in Congress and will have a voice in the debate, he said. Wilson sees more action from the Senate on privacy legislation. An upcoming FTC report on the roundtables the agency held this year on privacy could come out in a few weeks and impact the debate, he said.

Intellectual property is another bipartisan issue, said Wilson. In fact, both parties have such strong interests in it that the election doesn’t change the dynamics terribly, he said.