Wheeler Negotiating With Democrats to Win Support for E-rate Order

While the Democrats haven’t been showing their hands, FCC officials said Rosenworcel likely is seeking changes to the order that track concerns raised by Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va., and Sen. Ed Markey, D-Mass., in a Tuesday letter to Wheeler (http://1.usa.gov/1rTAPyI). The senators argued it would be “ill-advised” to establish “a permanent set-aside for Wi-Fi, if that set-aside could end up cannibalizing funding for basic Internet connectivity” (WID July 9 p6). Wheeler has circulated only one draft of the order to date. A second draft is expected but hadn’t made the rounds by our deadline, agency officials confirmed.

By one count, the FCC has logged votes on 16 agenda items under Wheeler and six have divided the commission along party lines. In contrast, on 15 votes when Clyburn was acting chairwoman, the commission was divided three times. Under Julius Genachowski, commissioners voted on 24 agenda items after Rosenworcel and Pai joined the agency in May 2012. All 24 votes were unanimous, though there were partial dissenting votes on one item.

On the net neutrality NPRM, Wheeler agreed to numerous changes to secure the votes of the two Democrats (WID May 16 p1). Clyburn said the NPRM had “changed considerably” as the chairman “incorporated my many requests” (http://fcc.us/1gsKLvf). Industry officials said prior to that meeting they had never seen as item changed as much to accommodate a single commissioner as that NPRM did to win the vote of Clyburn (WID May 15 p1). Prior to the May meeting, Wheeler agreed to changes to the spectrum aggregation rules that guarantee both Verizon and AT&T have a shot at buying up to 20 MHz each nationally of TV spectrum, a change insisted on by Rosenworcel.

Parts of the E-rate order have been unpopular with groups representing educational beneficiaries and libraries (WID June 30 p6). Negotiations between Wheeler and the two FCC Democrats appear to focus on addressing the concerns of schools and libraries about a guaranteed source of continued funding, even as the program is changed to provide billions of dollars for Wi-Fi connections in schools, industry officials say. Industry and agency officials previously predicted that a deal with Republicans on E-rate was unlikely.

Among the changes pitched by Pai and rejected by Wheeler was to give rural and remote schools more funds per student for internal Wi-Fi connections and to allow every school and library to get funding for internal connections in the first year instead of having to wait until future years, an FCC official said. Schools and libraries serving poorer areas now get priority and can eat up all the funding available for a year, agency officials have said. Other Pai ideas included giving schools more flexibility by allowing them to use funds for internal connections on caching servers that can effectively increase the capacity of a pipe and Web hosting, and simplifying the application process for funding internal connections to a single page.

Another FCC official said “conversations” are continuing but declined to say if Wheeler has the necessary votes. The official wouldn’t say if the level of funding is the sticking point. The situation is “a completely fluid,” said an attorney for a public interest group. Wheeler “is running into difficulties internally due to a difference of opinion on procedure” -- expanding funding now or “after a necessarily modernized e-rate,” said the lawyer.

"It is incredibly important to be able to garner bipartisan support for big-ticket items,” said NAB Executive Vice President Rick Kaplan. “Sometimes you have to take a hard and unfortunate 3-2 vote.” Kaplan was Wireless Bureau chief and an aide to both a commissioner and a chairman. “But from a chairman’s perspective, it can’t become the norm. It can really hamstring his or her agenda,” he said. “It’s great, however, from a majority commissioner’s perspective. Those commissioners become critical votes, and as we saw with respect to the loosening of the competitive restrictions in the incentive auction context, you can really start to shape items in ways not otherwise possible.”

"Sadly, this does appear to be the new normal,” said Public Knowledge Senior Vice President Harold Feld, who blames the Republicans for the impasse. “Republicans are unwilling to go along with a Democratic approach they find unacceptable, rather than trade votes for pragmatic concessions,” he said. “In some ways I suppose this is inevitable, given that the president allows the congressional leadership to select commissioners. As the Republican Party has become more ideologically rigid and less pragmatically oriented, they have selected commissioners less willing to trade concessions for votes when they disagree with the overall approach.”

A former FCC official who does not represent clients on E-rate said the fight speaks to bigger issues. Wheeler “isn’t necessarily as interested in compromise as Chairman Genachowski was, and that was part of the reason he was selected by the President -- the Democratic base wanted a more aggressive chairman who could deliver on their core beliefs,” the former official said. “The second dynamic is that the Republicans have no incentive to compromise either. Starting with an item that is ‘horrible,’ in their view, and sacrificing a lot to sign on to something that becomes merely ‘bad’ isn’t worth it to them.”,