Wheeler, Pai Spar Over JSAs In Hearing

Federal Communications Commission chairman Tom wheeler and Republican commissioner Ajit Pai mixed it up Tuesday over the chairman's proposed joint sales agreement (JSA) limits. 

The FCC's budget got a going-over at a House Financial Services Subcommittee hearing Tuesday (March 25), but the questions to Wheeler and Pai, the only commissioners testifying, were mostly about policy rather than money.

While Wheeler pointed out that he and Pai had agreed on 90% of votes, he conceded they had major disagreements on some issues, and JSA's was clearly one of those.

Asked by Rep. Tom Graves (R-Ga.) about the JSA vote, planned for March 31, Wheeler said that making some of those arrangements attributable under ownership rules was a way for the FCC to bring the waiver process into the open and require companies to establish why such an arrangement would be in the public interest.

He said the change was necessary because JSAs had become a way for owners to circumvent FCC rules.

When commissioner Pai offered up anecdotal evidence of JSA's benefitting the public interest by allowing a station to deliver the only Spanish-language newscast in his home state of Kansas, Wheeler said bad actors had been hiding behind the skirts of good ones, and that nothing in his proposal would prevent that sort of beneficial sharing arrangement.

Wheeler said that limiting the JSAs would increase diverse ownership opportunities currently being "sucked off the market" by sharing arrangements, while Pai said it would decrease it. It couldn't decrease it much, however, since there are only four African American-owned TV stations, a point they both concede.

It was the first appearance for both Wheeler and Pai before the subcommittee, but the members seemed to be well versed in the policy disputes. Topics of conversation included network neutrality, the Community Information Needs (CIN) study, and even a few dollars and cents questions.

Wheeler made it clear he was not trying to end-run the courts on recrafting network neutrality rules. He said the court had made it clear the FCC had the power to regulate network openness.

He also pointed out that he had gotten calls from cable and phone Internet service providers after the court threw out the FCC's nondiscrimination and anti-blocking rules, saying they would continue to abide by the rules anyway.

Wheeler said that demonstrates that they were not burdensome, but also said they still were necessary to provide certainty to those businesses, the kind of certainty that obeys the court and that carriers can live with.

Rep. Kevin Yoder (R-Kan.) asked about the FCC's CIN study, which Wheeler canned after complaints that proposed questions about how issues were covered and why smacked of government pressure on newsgatherers.

Wheeler pointed out that the FCC was under a statutory obligation to survey the market on the critical information needs of communities -- a way to gauge the impact of media policies on diversity -- but that some of the questions did raise concerns. He suggested the underlying goal was laudable and collecting data was important, but that there was a difference between studies by academics and other outside groups -- which he supports -- and a survey that comes with a government eagle on it.

He also cited Pai's criticism of the study in the Wall Street Journal as helping turn the study into a cause celebre, though he said it was a dog that didn't bark after he first excised the questions then tabled the entire study.

Pai said his position was pretty simple: The government does not belong in newsrooms asking about news philosophy or decisions on what to cover and not to cover.  He said there was no relationship to barriers to diversity. He applauded Wheeler for pulling the plug.

Ranking member Rep. Jose Serrano (D-N.Y.) said he was not interested in government pressuring the media, but was interested in finding out why some communities got primarily negative news coverage, or little coverage.

Subcommittee chair Ander Crenshaw (R-Fla.) had actually teed up the survey as a budget issue early on in the hearing, suggesting if the FCC had the money for that questionable enterprise, perhaps it had more than it needed.

Wheeler made it clear he thought the FCC needed all the money it had budgeted. The FCC isn't seeking any money from Congress as it covers its nut with user fees, but Crenshaw pointed out that those fees get passed on to the public.

The FCC has asked for a $35-million boost in its budget. Wheeler assured the committee he knew that was real money and the committee deserved an accounting, which he provided succinctly, his clipped, emphatic, delivery proving effective in punctuating his arguments.

Wheeler said that $35 million was divided into three buckets: 1) tech/IT upgrades; 2) USF reforms; 3) benefits, salaries and inflation adjustments that were mandatory expenditures.

He said the IT expenditure was necessary to improve IT systems that he said were, generally, old, inefficient, and insecure. That includes the fact that the FCC systems are on the "edge" of DHS standards for security. Something he said had to be fixed. Spend it now for upgrades, he said, or the FCC would spend it over the next couple of years anyway in "glue and bailing wire."

The Universal Service Fund, an $8-billion program, is being reformed and needed closer scrutiny, he said. The lifeline program has been abused by companies as well as consumers, he added, saying the FCC needs to spend more on auditors and investigators, not just more lawyers. He also pointed to funding trials for shifting rural funds from voice to broadband, refocusing E-rate, and overseeing the transition to IP.

Finally, Wheeler said that 70% of the budget is people and that he can't do the same things with those employees -- he did not specify reducing headcount, but that was the impression -- as he could if he were still in the business world. He said the FCC wound up moving those bodies around as they were needed elsewhere.

After the hearing, Wheeler said to Pai: "See you Thursday." The pair are slated to reprise their performance in a budget hearing at the Senate Appropriations Committee's financial services and general government subcommittee.

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.