Walden Vows to Refine and Advance FCC Reform Legislation

The reform legislation will not “change the ‘public interest test’ or strip the FCC’s authority to protect consumers and competition,” said Walden. “It merely asks the agency to do what we ask of most grade-school students -- to show your work.” Walden resisted Eshoo’s comment in her opening statement that the draft reform bills would do nothing but create “billable hours for Washington telecom lawyers.” “We don’t want to hogtie the FCC,” said Walden. “I have no interest in adding to the legal establishment’s billing hours. I'm trying to improve public process and open this up.” The first draft bill is called the FCC Process Reform Act (http://1.usa.gov/15gadcj), which would require the FCC to consider market forces before regulating, publish its decisions promptly, create “shot clocks” for resolving agency matters and allow more than two commissioners to discuss commission business without issuing an ex parte, among other reforms. The second draft bill is the FCC Consolidated Reporting Act (http://1.usa.gov/15wUIzc), which would consolidate FCC reporting requirements to Congress.

Eshoo said she believed the “whole issue” behind the FCC reform effort is the commission’s authority to review acquisitions and mergers. “That is what is driving this more than anything else,” she said. “This is the area that really causes the most heartbreak both pro and con.” Richard Pierce, a law professor at George Washington University, said “it would make a lot of sense” to take the FCC completely out of the merger review process. “The FCC doesn’t know much about antitrust law. The FTC and the Department of Justice know a lot about antitrust law,” he said. “The far more sensible thing would be a statutory change that would require about 10 words that said the FCC has no power over mergers.” Former FCC Commissioner Robert McDowell, now a visiting fellow at the Hudson Institute’s Center for Economics of the Internet, said he agreed: “Antitrust review is a form of public interest review so DOJ and FTC are looking at harms to consumers. That public interest standard at the FCC doesn’t apply and that’s why you get these merger conditions that have nothing to do with the merger transaction.”

Waxman clarified his support of the FCC’s jurisdiction over the public interest aspects of merger approvals in addition to that of the FTC and DOJ. “I don’t want to leave anyone with the impression ... that the role is duplicative for the FCC to retain that power,” he said. He said the FCC responsibilities include looking at the diversity of voices in media, the impact of deals on jobs, and access to telecom services. “All of these things are part of the FCC’s consideration of public interest,” said Waxman.

Walden and Rep. Steve Scalise, R-La., said more narrowly defined rules for FCC authority over mergers and acquisitions are necessary to ensure the commission doesn’t seek to impose deal conditions that have the effect of regulating the broader marketplace. Walden and Scalise said they were troubled by comments previously made by President Barack Obama’s nominee for FCC chairman, Tom Wheeler, on his blog “Mobile Musings.” In an 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). “This is precisely what the transaction review process should not be used for -- back-door rulemaking,” said Walden in his opening remarks. Wheeler told members of the Senate Commerce Committee during his nomination hearing last month that the blog post “was hypothetical speculation” (CD June 19 p1).

Subcommittee Vice Chairman Bob Latta, R-Ohio, asked Free State Foundation President Randolph May whether he believed changes should be made to the FCC’s forbearance authority. Section 10 of the 1996 Communications Act mandates that the FCC shall forbear from applying any regulation or statutory provision if the commission determines enforcement of such requirement is not necessary to ensure that telecommunications carriers’ charges and practices are reasonable and necessary for the protection of consumers, and that forbearance is consistent with the public interest. May said the FCC should bear the “evidentiary burden, in other words, the presumption that the statutory requirements are met,” in order to maintain regulations as permission to forbear. “I think by doing that without changing the substance of the criteria, just as a matter of process and procedure it would lead the tool to be used more as Congress intended” in the Telecom Act. McDowell said he thought it would be a “terrific idea” to expand the forbearance authority over more than telecommunications services.

On Wednesday, Latta introduced legislation (HR-2649) to adjust regulatory forbearance provisions of the Telecom Act. Section 3 of the bill would add an evidentiary presumption to the commission’s Section 10 forbearance authority. Latta’s spokesman told us after Thursday’s hearing the provision would “empower the FCC to reach deregulatory decisions in regards to telecommunications carriers.” May told us after the hearing that changing the FCC’s forbearance authority is something he has advocated for years and the revised forbearance provision should be applied to all entities regulated by the commission.

Telecom and media groups largely said in separate statements Thursday they were supportive of the committee’s inquiry into reforming FCC rules. NAB President Gordon Smith commended Walden’s “fresh look at FCC processes to ensure that commission procedures don’t impede the ability to serve the public interest. The agency has a critically important mission, and it is imperative that it execute that mission expeditiously, fairly and in a data-driven manner,” he said. NCTA President Michael Powell said it’s “appropriate that policymakers carefully consider new ideas that promote transparency and predictability in decision making, streamline reporting requirements and remove outdated regulatory obstacles,” according to a news release. David Cohen, Comcast executive vice president, said in a news release the draft legislation “represents an important next step towards modifying regulatory reforms that have been long discussed by many different commissions regardless of party or leadership.”

USTelecom President Walter McCormick said in a news release the legislation would “provide for streamlined regulatory processes and increased regulatory certainty.” “We hope that today’s hearing will lead to an even fuller examination in the months ahead of the need to update our nation’s communications laws, and we look forward to working with the committee to achieve broad bipartisan consensus on further measures to address the emerging needs of our 21st century economy.” AT&T Executive Vice President-Federal Relations Tim McKone said the draft reform bills are “common sense improvements, with consumers ultimately reaping the benefits of a modernized agency.”