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Ajit Pai Charts the Future

FCC chairman Ajit Pai has pledged to roll back regulations he believes are wasteful or will cause unnecessary hardship, including rules that keep broadcasters from competing more aggressively in a world of media choice. Pai, a Republican FCC commissioner since 2012 who was named chairman by President Donald Trump in January, has been accused of being on a mission to dismantle Democratic predecessor Tom Wheeler’s legacy. Pai, though, says that his goal is to deliver value for the American people and that community-centric broadcasters are central to his consumer-service mission.

The 44-year-old Pai has already generated some heat in the broadband world by rolling back regulations governing privacy and the Internet. In broadcasting, he has already restored the so-called “UHF discount,” which gave UHF stations an advantage in tallying reach, and is eyeing other media-ownership rules, including the 39% national ownership cap.

As he prepares to head to Las Vegas for the annual NAB Show, where deregulation and incentive auction issues will be top of mind, he spoke with B&C Washington bureau chief John Eggerton in an exclusive interview about his agenda for governing the industry. Here’s an edited transcript of their talk.

How important is TV broadcasting in a world of broadband and cable and satellite?

I continue to believe that TV broadcasting, and broadcasting generally, remains a critical part of the media landscape. Millions of Americans around the country rely on it to get their news, entertainment, sports and other information that is important to them, and I think broadcasting is going to continue to be a very important value proposition for consumers going forward. It is highly local, it is tailored to the needs of communities and, even as we enter a much more digital landscape, with ATSC 3.0 I think broadcasters are going to be able to innovate yet still preserve that value proposition going forward.

You mentioned ATSC 3.0 [the advanced transmission standard that broadcasters want to start testing as soon as the FCC givens them the go-ahead]. What is the current status of that proceeding?

We adopted the notice of proposed rulemaking [to allow such testing] on Feb. 23. The comments have been coming in ever since, and the FCC’s terrific staff, including folks in our office, are checking the record to see what the public has said about our proposals. We are hopeful we will be able to take final action by the end of the year, but we don’t have a specific time frame other than that.

Is that something you will need to coordinate with the post-incentive auction repack?

I don’t see a direct connection with the repack. Obviously, the same folks who would be interested in exploring ATSC 3.0 might well be involved in the repack [almost 1,000 TV stations will have to move], and so we would want to make sure from their perspective that there aren’t any issues that should be flagged for our attention, but our goal is to allow broadcasters who are willing and able to experiment with this next-generation TV standard to be able to do that and deliver value for consumers on mobile devices and other devices that might enable broadcasters to thrive in a new way.

One of your criticisms of the FCC in the past was that it did not recognize competition among broadcasters, over-the-top providers, cable operators and satellite providers when it analyzed market competitiveness. How did that affect broadcasters’ ability to get the deregulatory help they needed?

One of my core principles at the FCC is that since the agency is considering regulations covering an entire marketplace, it has to have an accurate view of what that marketplace is. To me, that means making a full and fair assessment of all sources of competition in the marketplace. And so, with respect to media, I think it is unquestionable that the Internet has had a transformative impact. The way we consume news and information now is dramatically different from the way it was consumed a generation or two ago.

I think it is important for the FCC’s regulations with respect to media to generally match the times. Going forward, I think you will see more of an effort from the FCC to take a holistic view of the marketplace and set our regulatory framework accordingly.

In your next report on competition, do you plan to actually start declaring markets competitive if the data suggests that?

I can tell you that we are going to make an effort to gather all the relevant facts about the state of competition in a particular marketplace, and we’ll make the appropriate judgment based on those facts. If the facts suggest that the marketplace is competitive, I won’t have any hesitation recommending to my fellow commissioners that we find it so.

Will that be something that you vote on at the commission level, rather than release from the bureau?

We haven’t yet made any determinations with respect to that, but obviously you can forecast given my previous statements about the need for full commission input on matters of this type. I would be favorably inclined to make sure that all of us on the commission level had the opportunity to weigh in.

Broadcasters have petitioned the FCC to reconsider parts of the post-auction repack framework. Are you comfortable with the framework as is, or are you open to tweaking it?

As you know, we just recently put a public notice out that specified a bunch of information relevant to broadcasters with respect to the repack. At this point we are carefully taking input from whatever quarter might want to submit it. But we haven’t yet heard any particular pitches in terms of tweaking it that required commission action.

Your predecessor, Tom Wheeler, pledged to lead the parade back to Congress if the $1.75 billion repack fund was not sufficient. Are you willing to make the same pledge, and to provide more than 39 months for the repack if that does not prove sufficient?

What I can say is that we are actively monitoring the situation. We are obviously in the early, early stages of this process. The first phase of the repack, for instance, has not started and won’t conclude for at least 18 months as I understand it. We, obviously, will take the necessary action if that bridge has to be crossed, but we have not yet approached a bridge.

But your goal would be to have broadcasters and consumers held as harmless as possible in the repack.

Without question. For instance, broadcasters should not have to dig into their own pockets to finance a portion of the repacking costs. That is why I suggested back in 2012, when we adopted the notice of proposed rulemaking, that we should treat the $1.75 billion relocation fund as a budget as opposed to simply a pot of money allocated by Congress. Additionally, there are some tools we have allowed broadcasters to use, if necessary, that will allow them to stay on the air if circumstances beyond their control would otherwise force them off.

Those are a few of the indications that we want to take broadcasters concerns seriously in this process and make sure they are treated fairly.

Can you decide to treat that $1.75 billion as a budget?

Congress set the $1.75 billion into law, so we can’t alter that. But we are scheduled to get the cost estimates back from broadcasters with respect to the. repack on July 12 and at that point, our terrific staff at the agency is going to make an assessment on whether that amount is going to be sufficient.

And if it isn’t?

If for any reason we see that it is not, we obviously want to advise Congress of that and give them the facts they need.

What specific media-ownership rules would you like to see loosened to help broadcasters be more competitive? How gradual or quickly will this take place?

We haven’t made any determinations in regard to time frame or vehicle. But what I have said very consistently, going back to my dissents from media ownership decisions in the past, was that it is critical for our media ownership regulations to match the realities of the modern marketplace. I think that some of these restrictions that date back to 1975, for instance, are increasingly anachronistic and simply don’t factor in additional sources of competition, such as the Internet.

Additionally, I think it is also strange that the agency has blessed the merger of a major wireless carrier and a major [satellite TV] provider last year, and OK’d the combination of the second and third and sixth largest cable providers, yet if KYOU and the Ottumwa Courier in Ottumwa, Iowa, propose to join forces, people begin to get the vapors. That doesn’t seem to me to be a rational approach to media ownership, and so I want it to be a much more fact-based, law-driven discussion about where our rules are and where they need to be in light of the facts in the marketplace.

Restoring the UHF discount — which allows station owners to count 50% of potential viewers in every market when calculating compliance to national caps — will be voted by the time this goes to press. What about the other regulations on the books, the limits on small-market duopolies, the 39% national ownership cap and those 1975 newspaper-broadcast cross-ownership rules? Where are you on those?

We are still preparing for the meeting where the UHF discount is going to be voted, so we haven’t made any decisions about further steps. But I have made pretty clear in my dissent on the original UHF discount that if the FCC was doing that, an adjustment to the 39% national cap [on household reach for station-group owners] would be appropriate.

Following the UHF discount decision, will you take a holistic view of the regulations on the books?

Right, the original reason why I dissented from [eliminating the UHF discount] was that I didn’t think the agency was doing it in the right way. If and when the UHF decision carries the day, we will make a decision on how to proceed.

An indecency decision came out recently, the first under your tenure. What is your view on enforcement of content monitoring?

So long as [the indecency rules] remain on the books, and the Supreme Court has upheld [their] constitutionality, it is the duty of the agency to faithfully enforce that provision with respect to broadcast regulations. Here, too, we will do our best to take a sober look at the facts and apply the law as best we can understand it and reach a decision that respects both the Congress and the courts.

And the FCC always does so in response to complaints, rather than actively going out and searching for violations, correct?

Generally speaking, yes, the agency has taken action in response to complaints that we received.

Some Democrats in Congress have felt the need to introduce legislation preventing the FCC from punishing media outlets for their viewpoints, including preventing it from revoking licenses or denying transfers. What can you say to them to assure them they don’t need to legislate such protections to insure the FCC doesn’t punish viewpoints?

Well, obviously Congress has the prerogative to consider and pass legislation that is within their constitutional power to consider, so I don’t pretend to give them direction as to what they should or should not be considering.

I can ultimately say that as chairman of the FCC, I took my oath to defend and protect the constitution very seriously, and the preservation of the First Amendment and all the freedoms it embraces is, I think, the foundation of that commitment. For instance, I am on the record saying the FCC has no place in newsrooms and, more generally speaking, I think the First Amendment continues to play a vital role in American discourse.

You have been accused by some Democrats as being on a mission to dismantle the legacy of your predecessor. How do you respond?

My mission is pretty clear, which is to help the FCC deliver value for the American consumer. And with respect to broadcasting, I continue to believe that broadcasters do a critical job everywhere in this country delivering news and information to American consumers and we want them to be able to do more of that. That is why, at my first meeting where I formally had the ability to set the agenda, we allowed broadcasters to innovate with respect to ATSC 3.0; we made it easier for radio broadcasters to deliver news to their service areas. I see as part of our mission to use all the tools in the toolbox to modernize our regulations in order to allow broadcasters and anyone in the communications sector to help the American people succeed in the digital age. You can debate about the politics and the “inside baseball,” but I am focused on doing the job the best that I can and letting the results speak for themselves.