Wheeler: FCC Should Look Into Consumers Held Hostage Over Corporate Disputes

FCC nominee Tom Wheeler said Tuesday that consumers should not be held
hostage to business disputes, and that was something the FCC needed to keep
tabs on. He also said that the incentive auctions should be expedited, and that
maybe the industry was in need of another Newton Minow "Vast Wasteland"
moment to use the bully pulpit of the post to call them to the angels of their
better programming natures when it came to violence or indecency.

All that and more came
out in a marathon -- almost three hours with a break for votes -- hearing on
Wheeler's nomination to be FCC chairman. One potential flash point came when a
Republican senator suggested there was an issue that could potentially derail
Wheeler's nomination: political speech.

There is currently a
petition before the FCC on whether it has the authority to boost political ad
disclosures after Congress failed to pass them in the DISCLOSE Act.

Sen. Ted Cruz (R-Texas)
asked Wheeler whether he thought the FCC had the authority " to implement
the DISCLOSE Act or otherwise regulate political speech." Some Hill
Democrats have pushed the FCC to step into boost on-air disclosures of ads by
PACS and other groups.

Wheeler said he needs
to learn more about it, but does not need any schooling about how passionately
both sides of the aisle feel about the issue. He also pointed out the current
open proceeding, which would also limit his ability to weigh in. "I do not
miss the expression on both sides as to the strong feelings, and I know this is
an issue of tension."

But Cruz was not ready
to move on. He pointed out that all the Republican members of the committee,
joined by Minority Leader Sen. Mitch McConnell (R-Ky.) sent a letter to then
chairman Julius Genachowsi on the issue -- essentially advising the FCC not to
step in.

Cruz asked Wheeler to
submit an answer in writing to the question, and warned that it was an issue
that could potentially prevent him from getting the job. A spokesperson was not
reachable at press time for comment on what the Senator meant, although a
single Senator can block a nomination.

"This is the one
issue that, in my opinion, has the potential to derail your nomination."
He said he didn't want that to happen.

Sen. Blumenthal
(D-Conn.), who supports the FCC boosting disclosures, said he had no
potentially derailing issues and advised Wheeler to consider carefully,
cautiously and deliberately all of the issues.

Wheeler was asked a
couple of times about retrans. The first time he did not say much. But the
second time, in response to Sen. Amy Klobuchar (D- Minn.), he provided a little
more meat on the bone.

broadcasters are using retransmission consent as a way of developing new
revenue streams where they can get revenue from subscribers through the
intermediary of the cable operator," he said, not that there is anything
wrong with that. "I believe in that kind of an evolutionary market,"
he said. But what he doesn't like and says the commission "needs to be
attuned to," is "when consumers are held hostage over corporate
disputes." He said if he is confirmed, that is an issue he will be looking

Wheeler was asked by
Blumenthal about the effect of sports-related programming blackouts, which he
said upset consumers, and what the FCC could do to prevent blank screens when
consumers want to watch sports contests.  Wheeler said that sports
blackout rule derives from the days when decisions were made based on what
broadcasters had contracted to. "The market has moved since that time. The
market has a plethora of new players," the latest example being Verizon
Wireless paying a billion dollars to the NFL to be able to stream NFL games
onto mobile devices. "So, clearly this is an issue that is ripe for
commission decision."

Sen Dan Coats
(R-Ind.), who lobbied Congress before returning to it, gave Wheeler a chance to
respond to critics of his background as the former head of the National Cable
& Telecommunications Association and CTIA: The Wireless Association. Coats
said he had let his former clients know they were starting with a clean sheet.
Wheeler agreed: "I was an advocate for specific points of view. I hope I
was a pretty good advocate. If I am fortunate enough to be confirmed, my client
will be the American public."

The Parents Television
Council, Morality in Media and religious broadcasters have all been pushing the
FCC not to change its indecency enforcement policy along the lines of the
"egregious" only approach adopted by FCC Chairman Julius Genachowski
last fall. Sen. Tim Scott (R-S.C.) asked what Wheeler's approach would be to
indecency enforcement.

"I have three
brand new grandkids," he said. "I am old enough [he is 67] to when I
see some things I kind of grit my teeth and say 'is this what I want my
grandkids to be seeing. Whether it be violence or obscenity or indecency or
whatever. At the same point in time, the courts have been pretty specific and
restrictive. I do believe, however, that it is possible to call upon our better
angels with some leadership." He did explicitly say he was drawing a
distinction between taking regulatory action and using the FCC post to urge
restraint, but that was the impression. Although he did reference Newton Minow,
whose speech to broadcasters in the 1960's about the industry being a
"Vast Wasteland" still smarts -- Minow was an heir of sorts for FCC
Chairman Julius Genachowski.

"I remember
Newton Minow talking about television's 'vast wasteland.' He did that without
regulatory authority. He caught the public's attention. Maybe it's possible to
do the same kind of thing today, and say: 'Can't we do better.'"

Wheeler also said he
thought the FCC needed to move more swiftly and give business more regulatory
certainty and that the world would transition to IP delivery with or without
the FCC, the only question being how it should mitigate the impact.

Wheeler agreed with Senator
Blumenthal that not all spectrum was created equal, but was not ready to say
how that should translate into policy about spectrum auctions or local market
spectrum holdings.

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.