With a Full Agenda, Thune Takes Charge

Sen. John Thune (R-S.D.) has begun his tenure atop the Senate Commerce Committee at one of the busier moments in communications history, with the Federal Communications Commission preparing to woo spectrum back from broadcasters and reclassify cable Internet-service providers as common carriers under Title II of the Communications Act. Add in cybersecurity, online privacy and the associated challenges prompted by the Internet of Things, and Thune’s plate is more than full — and that is only one province in the committee’s oversight realm. In an exclusive interview, Thune talked to Multichannel News Washington bureau chief John Eggerton about his priorities, what he thinks can actually make it past President Obama’s desk and why the FCC could be strangling the Internet.

MCN: Can you prioritize what you would like to do in the communications space and what you think you can realistically get through both houses and not have vetoed?

John Thune: We are hoping to do something on cybersecurity and data breaches. And I think that is something that could ultimately get signed into law.

We would like to do an FCC reauthorization, which hasn’t been done in 25 years. It is long overdue and there has been some good work done on that by [Sen.] Dean Heller [R-Nevada] and [Rep.] Fred Upton [R-Mich.] on the House side.

And we would like to take a run at a telecom update and modernization. That is long overdue as well. I realize that is a heavier lift, and it is going to be more complicated if we can’t find a way out of this net-neutrality morass that we are in right now.

I would really like to see Congress step up and provide direction, some rules of the road, if you will, on that issue. But unfortunately we are running into a lot of resistance from the administration and the FCC. And it is hard to get Democrats on Capitol Hill enlisted in that effort.

MCN: Obviously, the elephant in every Washington parlor is network neutrality. The FCC is expected this week to pass Title II-based rules. Why is that the wrong way to go?

JT: We provided an alternative: six pages long, very straightforward, that addresses some of the concerns that people have raised about consumer protections that prevent paid prioritization and throttling and blocking of lawful content, and without ceding this incredible power to the FCC. You’re turning the FCC, particularly the chairman, into an all-powerful government entity to regulate and oversee the Internet, something that we think really needs to have the light-touch approach of the last decade continue to be applied.

That’s why we think this is a wrongheaded approach. It creates a lot of legal uncertainty. This thing will be tied up in the courts for a long time.

So, Congress is a place where you can provide some real certainty. We just think what the FCC is doing by trying to regulate the Internet like a public utility under a 1934 statute just makes no sense in this day and age.

I’m not saying that the bill we put out is the perfect answer, but it certainly takes us in the right direction.

MCN: Do you think you can get any Democrats on that bill?

JT: I think we had an opportunity until the administration started meddling in it. The president came out last year and said he wanted to regulate the Internet under Title II and that started to freeze some of the Democrats. We were actually working with some Democrats early on, but they have been getting a lot of resistance from the White House and “downtown” [business interests], which has made it complicated.

I think, left to their own devices, we would have some people willing to work with us. And I think it is a much-preferred approach to ending up in endless litigation and having an all-powerful FCC that could change on the whim of a new administration. That to me seems an approach, whether you are at the core of the Internet or an edge provider, you would want more certainty than this approach provides. Also I think you want to avoid a lot of the risk that goes with it.

MCN: If this bill does not gain bipartisan traction, are you considering anything less bipartisan, like a resolution of disapproval or defunding the FCC?

JT: I think we will be taking a hard look at all of those. You kind of look at what the tools are in your toolbox.

Funding would be one. The Congressional Review Act would be another. Some of the Democrats are saying they would be open to a legislative solution, but just want to wait and see what the FCC does first. So we are keeping those avenues open and continuing to have discussions.

MCN: Would you be willing to drop the Section 706 language from the bill (something Democrats oppose)?

JT: That’s hard, because we would go back to the Open Internet order of 2010 before the court decision. I think the court, under 706, gave the FCC blanket authority and I think that is problematic, too. So, I would be really concerned, if I were a tech company, [about] what 706 could mean down the road, because it is a tremendous grant of authority and power. [Section 706 requires the FCC to determine whether “advanced telecommunications capability (i.e., broadband or high-speed access) is being deployed to all Americans in a reasonable and timely fashion.” FCC network-neutrality rules based on Section 706 were struck down by the U.S. Court of Appeals for the D.C. Circuit in 2014.]

If they would do away with Title II and limit the Section 706 authority and take it back to where it was before [the court decision], the consumer protections that are being asked for are all addressed in our bill. We think that is really a reasonable way to resolve this and we’re disappointed that we haven’t had more cooperation to date.

MCN: Looking from the 30,000-foot level, there is the argument that broadband is so important and so pervasive that the government needs to step in the way it did with utilities and oil companies. It almost doesn’t matter how you got there, the theory goes, you are so big now we have to do something. What is the argument against that?

JT: I just think you ought to have a need before you do something. All the harms that people are concerned about the cable companies and the phone companies committing are all hypotheticals.

That being said, I understand that this technology has evolved to the point where some of those types of [network neutrality] protections may be necessary. But I still think that there is a big difference between the light touch of regulation that assures competition and the heavy hand that strangles it. And where the FCC is headed is the latter.

But is there a need for a little bit of government oversight? Sure, and you want to make sure that there is an honest broker — a referee, if you will — but what is being talked about by the FCC goes well beyond that and creates a tremendous amount of legal uncertainty and a very chilling effect on investment.

MCN: Should the FCC delay the vote?

JT: Sure. Absolutely. I asked them to do that. I asked [FCC] chairman [Tom] Wheeler to hold off and give us a chance. If he had done that, I think, we might actually have gotten somewhere. We had some Democrats interested in a legislative approach and solution, but I think he got his orders from the president. And I don’t think at that point there was any turning back.

The administration made it very clear where they were headed. The president weighed in heavily and I think that is why we are where we are.

MCN: How concerned are you about how heavily the White House reportedly weighed in?

JT: There are some folks who are looking at that. I would expect, in any administration, conversations to occur. So it is not entirely unusual. But the notion that they would create virtually a parallel FCC at the White House and that they would have the level of attention to detail and level of involvement and their hands all over this, it interesting given the fact that the FCC is supposed to be an independent agency.

MCN: Let’s talk about your Local Choice plan to give cable subscribers the choice to pay directly for stations that opt for retransmission consent, or not receive them at all if they did not want to pay. Will you reintroduce it in some form?

JT: We will certainly take a look at that issue again. I think sometimes the broadcasting and cable industries get fiercely at odds with one another over these policy debates, but they do tend to complement and enhance each other’s value. And I think there are common challenges that they face, common opportunities that they face, from Internet-based competition. And the more that these two industries can look at the long-term picture of serving consumes, there is going to be more opportunity to find common ground.

We think the Local Choice proposal was really recognizing that broadcasters bring value and ought to be compensated for that value, but that there is a limit, probably, to what viewers are going to want to pay. And letting the consumers negotiate that directly with the broadcasters seemed like a reasonable, market-based approach to deal with that issue.

We took a shot at it, and if we get into a telecom update, we’ll look at that relationship. We thought it was an innovative of addressing an issue that needs a solution and isn’t going away and is going to continue to escalate. Every time there is a blackout it elevates the issue even more.

MCN: You talked about the value of broadcasting and cable. You clearly have experience with the importance of communications, given that you are from a state with a lot of territory and not a lot of people.

JT: I come from a state where you rely heavily on broadcasters, who bring great value because they do all the public safety and weather communications. We have some outlets that do a great job of always being ahead of the weather and we turn to them for that. That is a value that they bring. And, the town I grew up in [Murdo, S.D.] — we had one TV station, a CBS affiliate, so that was it. All we saw was CBS. In about the eighth grade, NBC put up a booster tower and we had two. Now you have cable and the Internet.

It is important to make sure people who live in those areas have access to the same opportunities those who live in the more populated areas do. That is part of the philosophy and the approach I bring to this job.

MCN: That is kind of a good transition to the IP transition. Any sense of how you would like that to be handled?

JT: I think it could be handled as part of a review of the Communications Act. Is there more of a role for Congress to play in that transition and I still think that is an open question.

MCN: Talk to us about the importance of a permanent moratorium on Internet access taxes and the Permanent Internet Tax Freedom Act you have just reintroduced.

JT: It’s huge. It is something I have been involved in with Senator [Ron] Wyden [R-Ore.] for some time. Protecting the Internet against taxes has provided such a benefit to our economy and its growth, which in turn creates revenue for state and local government. If Congress makes this tax moratorium permanent it will create a certainty that hasn’t been there before. I think that helps spur innovation.

We are looking at Internet of Things issues and the power of the Internet to revolutionize businesses. Permanently getting rid of the Internet tax and providing that kind of certainty is really good for investment, and growth, and jobs. In the long run, it’s a great economic policy and an issue we should settle once and for all.

MCN: And what are the prospects for passage?

JT: I think still pretty good. We’ve got it solved for the short term [the moratorium was extended through September as part of a must-pass spending bill]. But nothing is considered in a vacuum, and anytime we bring up the bill there are others who want to amend it. So getting it through the House and Senate will be a fairly heavy lift, but I think that there is good, strong, bipartisan support for making it permanent.

John Eggerton

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.