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Genachowski: FCC Will Protect Consumers

With the National Cable & Telecommunications Association show in Los Angeles fast approaching (click here for complete Cable Show coverage), FCC Chairman Julius Genachowski talked with B&C about a broad range of topics. On the docket: everything from retrans and spectrum plans, to his assumption that Internet service providers (ISPs) will preserve a free and open Internet even without rules of the road for network management regulation.

In this exclusive interview with B&C Washington Bureau Chief John Eggerton, Genachowski previews a shout-out to cable operators regarding the value of fixed plant (he was to be interviewed during the show by NCTA President Kyle McSlarrow), weighs in on the retransmission consent regime (creaking and likely in need of tweaking, he suggests), and explains why he remains confident he can work with broadcasters on a viable spectrum reclamation plan.

 The Supreme Court last week punted--for now--on whether to hear Cablevision's challenge of the must-carry rules. The chairman calls must-carry a vital part of the "ecosystem."

 He refuses to detail how the FCC would regulate network management in the wake of the federal court's decision in the BitTorrent case. But he does expect ISPs in the interim to preserve Internet openness. For its part, NCTA members have pledged to abide by the FCC's openness principles.

 But the chairman also warned any bad actors out there that the commission "will protect consumers." The following is an edited transcript of that conversation. 

What message do you have for cable operators gathering in L.A. this week?

One of the things our broadband plan helped us recognize was the unique and vital role the cable plant can play and needs to play in the economic future in the United States. It is potentially a competitive advantage for the United States that we have a cable infrastructure. And I think that is a real opportunity for the country, as well as for the cable industry. And, obviously, more and more people in the industry recognize that. 

So, wireless broadband is not going to make that fixed plant obsolete?

No, we need to lead the world in wired broadband and wireless broadband. It's not either-or. Both are essential platforms for innovation. We need to have both world-class, universally distributed wired and wireless infrastructure in the 21st century. 

In the wake of the BitTorrent decision, NCTA members have pledged to abide by the FCC's Internet openness principles. But do you have any advice to any potential bad actors who don't sign on to that?

Preserving a free and open Internet, I am as convinced as ever, is essential to making sure that we have a platform for innovation and competition and expression. And so, the importance of preserving the openness of the Internet is as important as it ever was.

 The transparency component is also very important. I think, on all of these issues, it is in everyone's interest to develop high-level rules of the road so that the freedom and openness that exists on the Internet, that consumers expect, that innovators expect, is preserved, so that businesses throughout the Internet ecosystem can continue to innovate and invest and contribute to our broadband future.

But if it is months or years until the FCC's authority is clarified, what can the FCC do?

We expect providers of broadband service to maintain a free and open Internet, and be honest and transparent with consumers. 

And if they aren't?

I assume they will. But if a problem arises, the FCC will protect consumers. 

What if anything needs to happen with the retransmission consent process?

We are taking a look at the framework. The experiences over the Christmas/New Year's holidays and in April were real warning signs that there is some creakiness to the framework that may not be serving consumers well.

 I think it is important that private parties be able to negotiate and strike market deals, but we do need to make sure that the overall framework serves consumers who are directly affected by what happens during these negotiations but don't have a seat at the table. 

Would you argue that it is in the interest of industry as well as consumers not to have viewers lose access to TV station signals?

Yes. We need to make sure there is a framework that allows market-based deals but serves consumers as well. The two issues that have been identified as ones to look at as part of the framework are signals being pulled from the air, particularly without notice; and the effects on prices that consumers pay. Looking at the overall framework from those perspectives will be at the heart of our review. 

Your predecessor, Kevin Martin, slammed cable rates with relative frequency. You talked about them at the NAB convention, too, but in terms of the rise in retrans fees. Does that suggest you don't pin the rise in prices entirely on the cable industry?

I think there are many factors involved. I think from a consumer's perspective, they are less interested in all of the complex reasons than in the bottom line of getting a fair deal for the amount they are paying. And so, consumers have concerns and we have concerns. 

Now that Rep. Rick Boucher, chair of the House Communications Subcommittee, and others on the Hill have made it clear that they think a spectrum inventory should precede and inform any reclamation of spectrum from broadcasters or others, how can you stick to the specifics of the agenda you outlined in the national broadband plan?

We're going to continue working with all the stakeholders, working with the wireless industry, working with consumer electronics manufacturers, working with broadcasters. We're going to continue working as a resource to Congress. The goal is to make sure we have the spectrum that we need as a country to lead the world in mobile innovation.

 We know that there are real challenges to that. We know that there is a real risk of a spectrum crunch, and we know that we can't wait until we have the crisis to solve it because there is no solution that can be implemented instantaneously.

 Running, as we have been doing, a strategic exercise for spectrum to make sure that the use of our spectrum serves our overall national needs is essential. We will continue to work with everyone involved and be very clear about our goals, which are making sure we lead the world in mobile, that we have the infrastructure and spectrum we need for mobile innovation, that we continue to have a vibrant broadcasting business.

 As you know, in the broadband plan there is a proposal for a win-win-win solution, and we will continue to work with all the parties on implementing it. 

You called it a spectrum "exercise." How much flexibility is there in terms of the timetable and who the spectrum comes from and how much? It is a flexible document, so can those things change with new information?

We are focused on the very clear goals that are in the plan: recovering 500 MHz over the next 10 years, having sufficient spectrum available for licensed and unlicensed use, making sure we preserve a vibrant broadcasting industry, adding market-based incentives and choices for broadcasters. It is important that we work on [these things] as a country to make sure we have the mobile infrastructure we need for the 21st century. 

Why are you so confident that the spectrum reclamation plan can remain voluntary?

There is so much value in the broadcast spectrum that in order to unlock it, we have to work on it together. It is one of those issues that, if we work on together, we can free up spectrum for mobile broadband, we can give more choices, and unlock value for both broadcasters and the American taxpayer. I am convinced that there is an opportunity and a path to an outcome that is a win for everyone. 

You have talked to NAB President Gordon Smith. Did you get the sense that you can work with the industry on this?

I don't see any reason why we shouldn't be able to. Providing additional choices to broadcasters and giving them the option of sharing spectrum, for example, in a market really is a win-win. I'm optimistic we can get to an outcome that works for everyone. 

I know you can't talk specifics of the Comcast/NBCU deal, but the FCC has asked for more information about access to online video. Is the FCC going to have to get into online video access if that is where video delivery is moving?

I can't talk about the specifics of the transaction review, other than to say the process is moving and we intend to be very thorough in our review and tackle all the significant issues that are raised. 

You talked at the NAB convention about protection of basic must-carry rights. What do you think about the future of must-carry as the law of the land?

It is the law of the land, and it is an important part of the ecosystem along with retransmission consent. As we talked about before, the retransmission consent framework is something that hasn't been revisited in a long time. Many players are coming to the FCC saying there are issues we need to review, and we think there are issues to review.  

Will you give us the exclusive on whether you are going to reclassify Internet as a Title I or Title II service?

No, John.