FCC GM Defends Request for $59M Budget Increase in FY2016

FCC general manager Jon Wilkins defended the FCC's $530 million budget request on the hill this week, including saying the FCC had not budgeted any extra money to handle Title II litigation.

That came at the first of a series of FCC reauthorization hearings the House Energy & Commerce Committee plans to hold in the coming months. The March 4 hearing was on the FCC's FY2016 budget request.

Some network neutrality fans have suggested the hearing was part of a Republican effort to rough up the FCC over its Feb. 26 decision to reclassify Internet access under Title II regs. Communications Subcommittee chairman Greg Walden (R-Ore.) pointed out in his opening statement that the subcommittee had held a similar budget hearing last year. The FCC was last authorized by Congress in 1990. But he also did not take long to take aim at Title II.

Walden said the FCC's siloed approach to regulation was out of touch and needs reform. He said the FCC's out-of-touch-ness was no more evident than in the Title II decision to apply rules "developed to regulate the telegraph's heyday." But Walden said the hearing was not about network neutrality, but how the agency operates.

Rep Frank Pallone (D-N.J.), ranking member of the full committee, referenced the timing of the hearing, saying it had raised eyebrows coming just days after the Title II vote, but adding that he was hopeful that was "a coincidence." He said the Congress did have a responsibility to make sure the FCC's dollars go "as far as possible."

The FCC has asked for $505 million, a $59 million increase from FY2015, which Walden said would be the most the FCC had ever gotten.

Walden said much has changed since the FCC was last reauthorized, and said the FCC had "struggled" to keep up with new technology and shifts in consumers' media consumption.

Walden also pointed out that the FCC wanted a $25 million transfer from the Universal Service Fund to pay for administrating that fund, which means a total budget increase of $84 million. Walden said the extra $25 million was a disturbing proposal since he said it was a new, separate, funding stream that would come directly out of the pockets of consumers.

The FCC collects USF fees from telecoms to support telecommunications service where it is too costly to deploy, a fee that is passed on to customers.

Walden said USF is already large and burdensome and "appears to have outgrown the FCC's capacity for adequate oversight."

Ranking member Anna Eshoo (D-Calif.) said her concern was that the FCC should have the resources to handle the incentive auction, IP transition, merger reviews and USF reform, which she said were all "top-line priorities." She also said it was important for the FCC to have the money to upgrade its IT, given the issues with net neutrality comments crashing the FCC website. The commission has asked for $21 million to modernize its IT, or what Pallone  tabbed its "ancient and creaky information technology infrastructure."

FCC GM Jon Wilkins was the sole witness. He said that the FCC has a strong record of fiscal responsibility, including raising almost $100 billion for the treasury through auctions in the past two decades since the FCC started to auction spectrum rather than simply allocate it. He pointed out that over that same time the FCC has spent about $8 billion, meaning the Treasury got a dollar for every 8 cents spent on the commission, which does not come from the Treasury but auctions and reg fees.

Wilkins said most (71%) of its request for more money is unavoidable cost, i.e. for a planned move after the FCC's lease on its Portals headquarters runs out. He said the $21 million for IT was a priority, then added that the FCC was not asking for money for, say, more staff, as it had in the past.

"We think we can do that job with the people we have if we upgrade the IT," he said.

Wilkins says that through attrition and not adding staffers, the FCC is already 100 staffers below six years ago and 200 below its 20-year average. He said that for every two people who leave the FCC through attrition or retirement, the FCC can only add one back. Eshoo asked about whether the FCC could "cook the books" by rehiring employees as independent contractors, and Wilkins assured her that was not happening.

Wilkins reiterated the importance of IT spending on expensive infrastructure. He said the FCC has just signed a contract to start moving servers from expensive downtown real estate to an off-site cloud.

Walden said he appreciated Wilkins' financial leadership, but he took the opportunity to express his unhappiness that a data request from the FCC, that the committee had asked for by the March 4 hearing date, was not produced. He said he hoped Wilkins would convey to the chairman that while he understood FCC staffers were busy, he strongly encouraged the chairman to comply. "The FCC submitted an interim response to the committee on March 4," said FCC press secretary Kim Hart. "We continue to work on providing a complete response to [Chairman Walden's] letter."

Toward the end of the hearing, Rep. Bill Johnson (R-Ohio) took a budget route to steer the conversation toward Title II. He asked Wilkins about the legal costs related to the inevitable appeals and stay requests, both at the commission and in the courts and whether Wilkins had anticipated what the coast of that would be. Wilkins said he was the "green eyeshade guy" not a policy guy, but said, unequivocally, that the FCC had no plan to add more resources, including in terms of staffing discussions he has had with offices and bureau heads.

Wilkins conceded that legal effort would not be "costless," but had not projected any costs. Wilkins said his budget assumes the current litigation staff will be able to handle it.

Wilkins said he did not think the FCC would have saved "a significant amount of money" if it had let Congress legislate on network neutrality rather than vote out an order it knows will be litigated for years. Johnson asked for simply a yes or no answer, but could not leave it there. He asked why Wilkins had said "no."

Wilkins said there is major litigation in any given year, and it was already the job of legal staffers to handle that.

Eshoo said the Rep. Johnson had raised an "interesting" point about saving money with a legislative approach, but said for the record it was important to point out that there is also a long line of people who sued over something Congress had done as well.

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.