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Reelection Campaigns Likely to Stall Telecom Legislation

With all of the House and a third of the Senate seeking re-election in 2012, there won’t be enough time or energy on Capitol Hill for any major rewrites of telecom legislation, despite that fact that it’s been talked about for years and with renewed volume in the wake of the network neutrality rulemaking. However, as we look into the inside-the-Beltway crystal ball, media ownership, spectrum legislation implementation, major court actions on indecency and network neutrality are all on tap, according to communications lawyers, lobbyists and government officials polled, many on background.

There has been a lot of hand-wringing and big stickwaving about Federal Communications Commission reform legislation, including putting shot clocks on rulemakings and requiring cost-benefit analysis of any new regulation. But that’s more hat than cattle: With at least two-thirds of the open Senate seats being Democratic, that Republican-backed reform effort almost certainly would not muster the necessary votes.

One possible exception would be peeling off and passing one element of the reform package, allowing more than two FCC commissioners to have a discussion outside of the monthly public meeting. That has bipartisan support, but it’s probably a long shot as well.

Privacy legislation will continue to be the subject of hearings, but comprehensive legislation on that front is also a likely victim of the political divide. While Reps. Ed Markey (D-Mass.) and Joe Barton (R-Tex.) have come to a meeting of the minds on a do-nottrack bill, the Obama administration has signaled that self-regulation with the continued threat of stronger government action is the way to go. But Randolph May, president of the Free State Foundation, says a bill could move if spurred by “some major untoward privacy slip-up” that sounds alarm bells with the public.

“I do think privacy is heating up,” says Dan Brenner, an attorney with Hogan Lovells. “The enormity of trying to create the rules is never-ending, which may be the same for any major bill.”

Some form of spectrum reclamation bill will almost certainly make it to the president’s desk, so the FCC is going to have to fi nally give broadcasters a better sense of how it will move and repack stations. The commission will also have to give Rep. John Dingell (D-Mich.) and the National Association of Broadcasters a better answer on how the border issues with Canada and Mexico will be resolved, allowing for enough spectrum for continued broadcast TV service in cities such as Detroit and Buffalo.

“If legislation passes and is signed into law, we could have a lot to do on spectrum auctions,” says FCC commissioner Robert McDowell.

Don’t look for the FCC to do any major remake of retrans, however, at least through the front door. The rulemaking proposal could lie fallow; but if there are any big retrans impasses that occur over the holidays, that may prompt the sort of letter-writing campaign from Capitol Hill to the FCC that would incite action. “I don’t really see them doing nothing,” says one top communications attorney. At most, it will likely be nibbling around the edges, clarifying what constitutes good-faith bargaining.

The FCC has already circulated a notice of proposed rulemaking on its media-ownership rules. The commission is overdue for its quadrennial rulemaking review per congressional directive, but it was waiting for a court decision out of the Third Circuit, which it got last July. Now, with broadcasters appealing that decision to the Supreme Court, broadcasters’ ongoing uncertainty over their status vis-à-vis local station ownership and cross-ownership will continue at least into the middle of 2012. That is likely the earliest the FCC could adopt new rules, though it may go longer if the Supreme Court takes the appeal.

One possible way to get at retrans reform without actually refereeing the disputes would be through that media ownership item, which tees up the issue of whether shared services agreements, which can include negotiating retrans, are a way for owners to skirt the station limits. Another question is whether local marketing and news-sharing agreements should be factored into local limits

Also up for decision in the courts is the fate of the FCC’s network neutrality rules which, similar to the media ownership rules, have been attacked by both sides. In one corner is Verizon, which believes it was unnecessary overregulation; meanwhile, some public interest groups argue the rules were insufficiently regulatory, particularly as they are not applying some of the regs to wireless broadband.

Then there are the FCC’s indecency regs, which have been in a state of legal limbo for years. The Supreme Court will weigh in on whether the FCC’s approach has been unconstitutionally chilling on speech.

McDowell says that whatever the outcome of that indecency case, the FCC should then be freed up to “uncork” that bottle and process what amounts to a backlog of more than 1 million indecency complaints, some of which are tied to license renewals.

“Depending on how the D.C. Circuit decides Verizon’s net neutrality appeal, the FCC’s jurisdiction to regulate broadband services could be substantially curtailed,” says May of the Free State Foundation. “And the Supreme Court’s decision in the indecency case could, but probably won’t, put all electronic media on the same First Amendment footing. It’s more likely to be a narrower decision holding the FCC’s new indecency policy unconstitutional on vagueness grounds.”

This month, there could be two new FCC commissioners, just in time for a vote on implementing the IP closedcaptioning portion of the Video Accessibility Act, which is how broadcast and cable operators and others will make online versions of their programming available to the disabled.

Studios are pushing for a longer timetable for captioning all that archival video content, up to eight years, but are also suggesting a holistic approach rather than one based on when a show with captions aired. But whatever the FCC decides about implementing the rules, it has to do so by a Jan. 12 congressional deadline, although the industry will have a year from that date to comply.

McDowell says he will be focused on reforming the contribution side of the Universal Service Fund. The FCC already approved a revamp of the payouts from that fund, which has subsidized phone service and will now be redirected to—what else—broadband. But the other side of the coin is how the money is collected.

Some legislators have pointed out that companies in their states contribute far more than they get back in subsidies. That will be the case in some instances because it is a cross-subsidy. But they are looking for a more equitable system. FCC chairman Julius Genachowski has pledged to put that contribution mechanism reform on the priority list.

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