Wheeler Pledges to Adhere to Congressional Authority if Confirmed

The Republican nominee to replace former FCC Commissioner Robert McDowell is “in process,” said Committee Ranking Member John Thune, R-S.D., in an interview at the Capitol. Some industry and Capitol Hill officials said the likely candidate appears to be longtime congressional aide Michael O'Rielly, who works for Sen. John Cornyn, R-Texas. Before signing on with Cornyn, O'Rielly worked for then-Republican Whip Jon Kyl, R-Ariz., who retired from the Senate at the end of the last Congress, said former Senate staffers. O'Rielly represented McConnell and Kyl during negotiations on the spectrum provisions of the Middle Class Tax Relief and Job Creation Act of 2012.

Traditionally the Senate minority leader makes his or her recommendation for FCC nominees to the president, who ultimately decides on a candidate. A McConnell spokesman declined to comment, and the White House had no response.

Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va., doesn’t expect Republicans to hold up Wheeler’s confirmation process, he said in an interview before the hearing. “There’s nothing in the law that says you have to pair nominees.” Pairing a Democrat and Republican is likely to ensure their confirmation, industry officials said. Rockefeller said he hasn’t heard anything from his Republican colleagues about who the GOP FCC nominee would be.

Rockefeller said the FCC’s incentive auction proceeding is “of utmost importance to me,” in opening remarks. “I feel so strongly about this and I have ever since September, 11th, 2001. ... It is a mammoth undertaking and I understand that,” he said. Rockefeller asked Wheeler if he understood the need for “sufficient auction rules for the funding of FirstNet.” Wheeler responded that he believes it is “absolutely crucial that the auction moves on an expedited basis.” Former FCC Chairman Julius Genachowski had previously set a goal of completing the auction by 2014.

Wheeler said writing incentive auction rules is like working on a Rubik’s cube. “On this side, you have to provide an incentive to broadcasters to want to [auction] their spectrum,” he said. “On this side of the cube, you have to offer a product that would incentivize wireless carriers ... to want to bid on that spectrum. And in the middle of this you have to have a band plan that is constantly changing,” he said. “That’s why this has never been undertaken before this is a monumental proceeding."

Rockefeller noted his interest in making sure the E-rate program is modernized to “make sure our schools and libraries can meet the data and connectivity needs necessary for today -- and the future. ... Too much is at stake in these proceedings not to get them right.” Rockefeller, who turned 76 Tuesday, was the original author of the E-rate program. Wheeler would support the modernization of the program “for very basic reasons: When 80 percent of E-rate schools say they are not getting the proper bandwidth for their instructional needs something has to be done,” Wheeler said. “It is not good enough to have 1996 textbooks in the classroom. I don’t think it is good enough to have 1996 connectivity in the classroom.” President Barack Obama recently sought modernization of the E-rate program to deliver super-fast broadband to the nation’s schools and libraries to connect 99 percent of American students within the next five years (CD June 7 p1).

Rockefeller offered kind words for Wheeler’s career, calling it “one of innovation, leadership and public service. I believe that as chair of the FCC you can use your experience and skills to harness the vast power of the FCC to spur universal deployment of advanced technologies, foster growth and innovation, and protect consumers.” Rockefeller previously criticized Wheeler’s former service as a CTIA and NCTA lobbyist (CD April 10 p3).

Thune said lawmakers have some “anxiety” that Wheeler, on his personal blog “Mobile Musings,” had advocated for using FCC authority to impose deal conditions or spectrum auction rules “that might seem to be regulation in another guise,” in opening remarks. “We already have too many agencies ... overstepping their congressional mandates,” said Thune. “We don’t need the FCC to be another one.” In the April 2011 blog entry (http://bit.ly/18b5fRr), Wheeler advocated FCC approval of AT&T’s plan to buy T-Mobile in return for new regulatory terms and conditions (CD May 1 p1). The comments have been criticized by the chairmen of the House Commerce Committee and its Communications Subcommittee, who said the perspective seems to advocate for using “closed door, strong-arm merger conditions” to affect change in the market (CD May 3 p11).

Thune asked Wheeler whether he thought it would be better for the commission to use its rulemaking authority rather than using “strong-arm merger conditions” to create industry-wide regulations. Wheeler said the blog post that Thune cited “was hypothetical speculation.” Deal reviews must be conducted “precisely based upon he facts of that specific instance, based upon the mandate Congress has established in the [Communications] Act and based on precedent,” Wheeler said. “Those will be the guidelines that I will use.” Wheeler said merger agreement review is “important because these are issues that have to be dealt with caution and care and have broad impact. Thus specific review of the specific issues of the case guided by statute and precedent is the role the commission should play.”

Thune noted that Wheeler had said the Act is among “analog legacies in the digital world,” in a committee questionnaire. “I think that frames out big picture discussion perfectly,” Thune said. He urged Wheeler to assist the committee as it works to update and amend laws and regulations where they are outdated. Thune urged Wheeler to “take a deep breath and come to Congress for legal authority” if the U.S. Court of Appeals for the D.C. Circuit sides with Verizon and overturns the commission’s net neutrality rules. The FCC has yet to close the Title II reclassification docket which would reclassify the Internet as a telecommunications service.

Wheeler said if he’s confirmed as chairman he will address the challenges of expanding broadband communications in rural U.S. areas. There are three goals that are particularly important related to rural access, he said: “One is the extension of broadband, second is the expansion of broadband as technology allows faster and faster speeds and the third is the exploitation of broadband,” he said. “Any one without the other is an incomplete solution. They will be key to our broadband future.”

Wheeler told lawmakers one “mega-scale” issue he plans to address is the amount of time that it takes the FCC to make decisions. “I've spent a lot of time dealing with the FCC in my life and it is important that the agency make decisions, and make decisions in a timely manner,” he said. “There is nothing worse for innovation and job creation than businesses not knowing what the rules are. I would hope in an over-arching scope of things that we would be able to with my colleagues ... to identify issues and move to dispatch them."

It’s “of pressing importance” to continue to look “holistically” at the evolution of the USF, Wheeler said. “We need to look at the whole elephant and ask ourselves what has happened since the onset of the program that suggest we ought to be looking at new approaches,” Wheeler said. “Clearly one of the challenges facing the Universal Service Fund going forward is the IP transition.” It’s “essential that universal service be looked at as a totality and the distribution and the contribution programs are looked at in light of the realities today,” he said.

Wheeler told Sen. Amy Klobuchar, D-Minn., he supports broadcasters' decisions to use retrans as a way to develop a new revenue stream. “I believe in that kind of an evolutionary market,” Wheeler said. “What bothers me, senator .. is when consumers are held hostage over program disputes. If I am confirmed that is something I will be looking at.”

Wheeler fielded questions from Sen. Richard Blumenthal, D-Conn., on whether the FCC’s rules should restrict the ability of some larger carriers to bid on particular bands of spectrum. “I believe there is a responsibility the Congress has given the commission to have an effective auction which includes smaller players, which are so often the innovation engine,” Wheeler said. “I remember the first spectrum auction when I was one of the guilty parties of saying you have to do it this way or the sky will fall.”

Wheeler told lawmakers it’s Congress’ role to help incentivize the federal government to reallocate and share its spectrum for commercial use. “You all are the ones who are in control of that,” he said. “The bright light you are focusing on spectrum now is so different than the days when I was negotiation with the federal government over spectrum,” he said. “Secondly, I would hope that part of that bright light is encouragement to think about how new technology has changed the use of spectrum. Most spectrum has been allocated with analog concepts in mind, and living in digital world we can think differently. Thirdly is the issue of offering the necessary incentives for federal users to become efficient and to want to put spectrum toward other uses.”