Results tagged “FCC Reform”

February 8, 2017 2:33 PM

Humble Pai

In his first two weeks on the job, newly-appointed FCC Chairman Ajit Pai seems to have already distinguished himself from his predecessor, Chairman Wheeler.  The distinction is not merely one of political philosophies--which was apparent when Wheeler was still Chairman.  Rather, the two are distinguished by differences in leadership styles and goals.  

Wheeler, for his part, took the reins of the Commission with more industry-specific knowledge than any prior Chairman--having been the head of two major industry associations.  However, Wheeler had no specific policy goals, a general philosophy ("competition, competition, competition"), and a leadership style more accustomed to dictation than persuasion and cooperation.  Thus, Wheeler's legacy as Chairman may have been destined to end up as bitterly disputed as the rules he would adopt.  

Chairman Pai, on the other hand, has chosen to be much more inclusive--of both his fellow Commissioners and the public--in order to progress toward an ambitious policy priority; bridging the digital divide.  Notwithstanding some predictable hyperbole from "net neutrality" advocates (dedicated to a dogma that "protects" consumers from a non-existent "threat"), and a sensational headline about "stopping services" to few, if any, customers (which Pai himself debunked), Chairman Pai has been very well-received.  Importantly, Pai deserves credit for his commitment to humble/inclusive leadership, and for prioritizing the goal of improving access to advanced communications services of rural, and low income, Americans.

Good Ideas Don't Just Come from the Boss

The advantage of being the Chairman of an independent agency is not only the ability to set the agency's agenda, but also in the Chairman's solitary ability to control every matter on the agenda until the last minute, changing the item as needed to get the votes the Chairman wants.  To give up this power requires real humility, but it offers the prospect of getting the best possible advice/information/criticism from one's Commission colleagues and the public. 

Ajit-Pai-text.jpg

On February 2nd, as part of a "pilot program," Chairman Pai elected to release to the public complete drafts of two items (an NPRM and a Report & Order) at the same time the items were included on the agenda for the FCC's next Open Meeting, on February 23, 2017.  Pai hopes to make this a routine Commission practice in the future. Likewise, on Monday of this week, Chairman Pai pledged to share with the other Commissioners the content of matters that would be voted on at future FCC Open Meetings before disclosing this information to the public or members of the press. Finally, yesterday, he adopted two additional process reforms--at the suggestion of his fellow Commissioners, Michael O'Rielly (R) and Mignon Clyburn (D).

Leading Toward a Specific Goal

Chairman Pai's decision to enlist everyone's talents is smart; because he's going to need all the help he can get.  You see, Pai has chosen to address a formidable problem that has long confounded policy-makers: the "digital divide," which has left many Americans without access to advanced communications services.  In his first speech as Chairman (to Commission staff), Pai stated his belief that "one of our core priorities going forward should be to close that divide--to do what's necessary to help the private sector build networks, send signals, and distribute information to [all Americans]." 

This was not, by any means, the first time that Pai has drawn attention to this problem.  As recently as September of last year, then Commissioner, Pai released his "Digital Empowerment Agenda" which contained a number of ideas for things the Commission could do, either by itself or as part of a partnership with local governments, to spur broadband buildout to underserved communities throughout the country.   

Yet, despite having his own ideas about how to help bridge the digital divide, Chairman Pai, consistent with his process reforms, seems more interested in soliciting the best ideas of others.  Thus, at his first Open Meeting as FCC Chairman, Pai announced the formation of a "Broadband Deployment Advisory Committee" ("BDAC") to "provide advice and recommendations to the FCC on how to [accelerate broadband deployment in underserved areas]."  And, while the group's first project will be to provide recommendations for how to bridge the digital divide "by reducing and/or removing regulatory barriers to infrastructure investment," there is no reason to think the group will only be used for one project.  See Announcement and also Public Notice

Nothing to Lose

The problem that Pai has chosen is as vexing as it is worthy, and Chairman Pai's willingness to "tie himself" to this problem is both ambitious and risky.  However, as someone once said, "it's amazing what you can accomplish if you don't care who gets the credit."   

The full support of the FCC--and the private stakeholders, whose support the FCC is currently enlisting--will lead to cooperation from, at least some, state and local governments, and will improve access for some Americans.  But, even in the worst case scenario, policymakers will at least have a better conception of the problem than they did before.  In other words, by choosing a specific goal--along with his humble commitment to including the public, private stakeholders, and fellow Commissioners--Chairman Pai has made it more likely that some of the country's most neglected consumers will see a bigger slice by the end of his term.


October 21, 2013 4:02 PM

Lifeline Series, Part 2: the Sound and the Fury

In the last post we mentioned the letter from the 44 House Republicans, who with no sense of self-awareness, sent the FCC a letter during the shutdown where they referred to the Lifeline program as representing "everything wrong with Washington."  Sure, it was wildly hyperbolic, but--admittedly--not completely baseless.  

But before we get started in discussing the "state of the debate," it helps to know some history--because understanding the real facts--is necessary to fully appreciate the bedlam that characterizes the current state of the "conversation."  The best piece I can recommend--which keeps with the theme of "why are we here?"--is this entertaining and informative blog by Harold Feld, explaining the ironies of Lifeline.

Where We Are:  The "Uncivil" War

If you've paid any attention to Lifeline over the past few years, you'll also recognize that the House Republican letter is hardly the first time that the Lifeline program has been portrayed as some kind of political litmus test, implying that if you support Lifeline you are naïve at best, and grossly irresponsible at worst.  For a debate in which few, if any, of the program's opponents have any experience with the Lifeline program, the level of rancor in this "debate" is truly without equal.

Even worse, some "political activists" on the "anti-Lifeline" side try to generate opposition/hostility toward the program by associating the Lifeline program with the most appalling, frequently racial, stereotypes of poor people.  For example, who can forget the "Obamaphone lady?"  More recently, there was this deceptive video that circulated over the Summer from political activist (and pseudo-journalist) James O'Keefe.   

What's notable about O'Keefe's video is that it features actors, acting out the worst stereotypes of low income people.  People viewing the videos aren't reacting to anything that is actually being depicted in the video, rather they are being manipulated by a storyline created by the narratives of actors with a political agenda.

But there wouldn't be a rancorous debate unless both sides were participating.  So, as dishonest and deplorable as the "kill Lifeline" side is, the advocacy of the "save Lifeline" side is as insipid as it is unpersuasive.  The "save Lifeline" crowd has a website called Lifelineconnects.org.  On the website, you can look through their news clippings on their advocacy activities.  The group has done some advocacy at the Commission, and they have had advocates for the program testify before Congress.  Do you know what their message is?  Lifeline is good.  Beyond anecdotes of how Lifeline is helping a few deserving people, there is very little of substance on the web site.  

How We Got Here

The one uncontroverted fact about the state of the Lifeline program is that it has become wildly controversial over the last several years.  But, how did it get to this?  It didn't start that way; Lifeline started as a reasonable, bipartisan program to ensure that all Americans had access to basic communications services.  The addition of wireless service to the program in 2005 was merely an evolution of the program's founding principle.

So, when it became necessary to update the program--only a few years ago--it was clear that the program needed changes.  Starting in 2009--which, it should be noted, was a very bad year for the U.S. economy--the USF's low income fund began to grow dramatically.  

In early March of 2011, the FCC released its Lifeline/Link Up NPRM to discuss changes to the Lifeline program that would help modernize the program and put it on a more stable foundation for the future.  The NPRM identified the dramatic growth in the low income fund as the primary factor leading to the conclusion that the Lifeline rules needed to be revised.  

While the growth in the fund was the real issue that needed to be addressed, rather than to try to understand the basis of this phenomenon and to deal with the larger implications of the growing low-income fund in a holistic way--addressing USF contribution reform along with reforms to the Lifeline program--the Commission took a short cut and assumed that most of the problem was the result of the influx of prepaid wireless "Lifeline-only" service providers, who must have been running amok. New rules on service providers, the Commission said, would surely solve the problem.

This one lazy assumption is what set the table for all of the successive, unproductive, rancorous debate over Lifeline's future.  Because, after all, when you limit the possible explanations for fund growth to one--waste--then every service provider and every consumer participating in the program becomes part of the problem. Thus, the eventual result of the Commission's approach--that the future of the Lifeline program would be the victim of an unproductive war of political values--was hardly unforeseeable at the time, as I explained in this blog.

Given where we are, in terms of the level of the conversation about the future of Lifeline, does anyone honestly think that a solution to Lifeline's real problems is going to come out of this protracted "Sumo match" of opposing political values?  Neither do I.  But, if the Commission is to rescue Lifeline, they'll have to start understanding the relevant facts.  

In the next installment in this series, we'll look at how the wireless Lifeline business works, and how the Lifeline Reform Rules are working.  Finally, in our last installment, we'll talk about realities that the Commission must recognize, and the changes that must be made in order to stabilize the Lifeline fund.  

October 15, 2012 9:25 AM

Regulation Can Promote Investment and Consumer Welfare (You Just Might Agree With Jim Cicconi)

Whatever you think might be the purpose for which the FCC was created, you're probably wrong.  Congress explains the purpose of the Commission in one gigantic, and barely comprehensible, run-on sentence contained in Section 1 of the Communications Act of 1934.  To make it easier, I'll break it into a couple sentences.

The goal of the Act was to ensure that citizens had nondiscriminatory access "to rapid, efficient, Nation-wide, and world-wide radio and wire communications services" with "adequate facilities at reasonable charges."  Radio and wire communication services are to be made available at reasonable charges for the "purpose of national defense" and to "promot[e] the safety of life and property."

The first few times you read it, this provision sounds reasonable; if only because Congress uses the word "reasonable" twice in the same really long sentence.
 
Now that you know the purpose of the Act, what do you think this FCC thinks its purpose is?  If you didn't have the context of the Act and you only looked at the Chairman's bio, you would be forgiven for thinking he was the Chairman of some kind of mini Federal Reserve Bank for the telecommunications industry.  The notion of promoting investment is mentioned more than any other single concept, and "job creation" is also listed prominently in the first paragraph. 

To be fair, there isn't anything flatly antithetical to the FCC's official purpose in any FCC Commissioner's literature, speeches, or statements.  This is the problem.  The breadth of the Act's purpose almost certainly ensures that no two FCCs will define their focus or their actions in any consistent way.  The only person I've ever heard offer a solution is Jim Cicconi of AT&T.

His point is so non-controversial that it's easy to miss.  All he says is that the FCC should be "re-chartered" by Congress to focus on consumer protection.  The problem, he argues, is that the public--and many members of Congress--expect the FCC to act whenever a consumer issue arises. 

But, he explains, because the legislatively-defined purpose is not well-suited for the public's expectations of the FCC, "it leads [the FCC] into some adventurism in interpreting their own statutes."  Here is a report of his quote in 2008, again almost 4 years later at a Phoenix Center event, in his own words here, and again in May of this year here.  
 
You know what's weird about this statement?  I've only heard it from Cicconi.  I must have spent more than 5 hours looking at Internet search results to try to get some other cite for this idea.  But, I couldn't find anything by anyone saying anything similar.  It's just him! 

The better question is why no one else has raised this point?  My guess is that most people think that the official "purpose" of the FCC is written so broadly that Congress wouldn't need to change a thing for the FCC to focus on consumer protection.  Again, this is a problem. 

Look back at what the Chairman says is his focus. Is it any wonder that it's become cliché-like for someone on every side of telecom policy debates to argue that the FCC should decide in their favor because it "promotes investment?"   Likewise, the statement that a regulatory policy "promotes investment" has become almost boilerplate in every major FCC Order over the past few years. 

But, "investment", or "promoting investment" can never be meaningful regulatory goals,   because these terms offer the regulated firms no transparency of purpose or predictable consistency across political administrations.  Regardless of whether the regulator sides with one industry group or another, in a carrier-centric scheme the regulator can always say it is "promoting investment" by the "winning" side.  Changes in technology, as well as changes in political dominance, virtually guarantee an artificially-distorted regulatory environment.

The value of the last point cannot be understated.  Because a carrier-centric regulator will necessarily create policies with disparate effects on competing companies, these disparities in regulation will always find a political voice. 

The result is what we have now--unproductive partisan bickering over the economic interests of competing firms.  The voice of the consumer gets lost in this cacophony, if it ever finds its way into these quarrels at all. 

On the other hand, if the regulator is charged with the clearer obligation to focus on protecting the interests of communications consumers, regardless of the "regulatory classification" of the offending firm, then regulated firms can more easily discern the future expectations of the regulator. 

The almost zen-like paradox of Cicconi's proposal is that the regulator cannot promote investment by focusing its decisions on the investment of the regulated firms.  Rather, the regulator must have some transparent focus on something other than the business models of competing firms.

An explicitly consumer-focused regulator would have the ability to redress consumer harms perpetrated by any company that contributes to a communications service that consumers purchase.  Not only will consumers enjoy greater protection, and less confusion as to which state or federal agency can resolve their concern, but communications firms will benefit from a certainty not possible today, and both the FCC and Congress will also enjoy the same clarity of focus.
 
February 3, 2011 2:56 PM

Shakedowns, Capture, and the Unbearable Weight of Transparency

[At first glance, this post may seem untimely, but because the post is all about how decisions appear, it really is more relevant than it may seem. Kind of zen, I know, but bear with me.]

I tried an interesting exercise recently.  Rather than reacting to the FCC's order approving the Comcast-NBC Universal Joint Venture, I decided to watch how others reacted, and to consider the agency's perceived role as a regulator in the license transfer (merger) review process.  With respect to this merger, many observers used the word "shakedown" to describe the FCC's "merger conditions" that were, ostensibly, designed to turn what the Commission itself found to be an anticompetitive merger into one that serves the "public interest."  

One outraged blogger described the Commission's order approving the joint venture as "an unprecedented regulatory shakedown of a company that obviously would have done anything to gain [FCC] approval."  Another observer compared the FCC's recent "net neutrality" order and the Comcast-NBCU order to someone who was "breaking bad" (to use the title of an AMC series about a high school chemistry teacher cum meth wizard).  Even a few Members of Congress called the conditions attached to the FCC approval a "shakedown.

These reactions really made me think . . . about whether any of these people had any sense of perspective.  Is the Comcast-NBC Universal Order really an "unprecedented" example of a "regulatory shakedown?"  It didn't sound right, so I decided to do some Internet searches to see if there was any way to tell if the FCC's order conditionally approving the Comcast-NBC Universal merger was indeed "unprecedented" or just business-as-usual.  

So, I searched the words "FCC" and "shakedown" on both Bing and Google. (maybe I should have saved some time and just Binged those keywords, since, in the highest form of flattery, Bing apparently is pilfering Google search results.  The results?  Well, interestingly enough, the Comcast-NBC Universal merger order was only one of many topics that had been classified as "FCC shakedowns" over the years. In other words, the FCC has a long history of being accused of engaging in regulatory "shakedowns."  Here are a few examples, but the list could go on and on.

In 2006, Commissioner McDowell denounced the XM-Sirius merger conditions as a shakedown.  Over 10 years ago, then-House Telecommunications Subcommittee Chairman Billy Tauzin decried the FCC's "shakedown, blackmailing, and greenmailing" of companies it regulates.  Another commenter, also 10 years ago, posited that anytime Jesse Jackson is involved in an FCC merger proceeding, the parties shake themselves down--apparently, in anticipation of a Commission shakedown.  Over 15 years ago, Howard Stern decried that a settlement/"fine" paid by the owner of the radio stations that broadcast his show was "the biggest shakedown in history", because the broadcasting corporation could do no other business with the FCC without first paying the fine.

Interestingly, the same description--"shakedown"--had been used to describe the result of the FCC's cooperation when it approved Comcast's acquisition of the old "AT&T Broadband" (from when AT&T actually owned an incumbent cable company) in 2002.  However, on that occasion, Comcast was considered the one doing the shaking-down. Technically, the practice of regulated entities using the FCC to extract benefits from the public is referred to as "regulatory capture"--a practice of which the Commission also has a rich history.

So now that we know that allegations of FCC "shakedowns" are not "unprecedented", but rather "typical", what's the lesson?  Should we just dismiss these concerns with a quick glance in the rear-view mirror, and a snarky "gambling? at Rick's?" self-satisfied chuckle?  

No!  I mean ideally, no. In an ideal world, the agency is truly independent, and mergers are either "in the public interest"--as presented to the regulator--or not.  But, let's face it--we aren't in ideal world.  Therefore, we probably should be a lot more cynical and a lot less shocked to learn there is gambling at Rick's.  

Unfortunately, the fact is that the FCC asks for criticism when it resists a transparent process.  However, unless, or until, the Commission wants to exercise some independence, it will be a political people-pleasing agency, and the political process is never transparent.  

Agency independence is a prerequisite to transparent decision-making, which leads to confidence in the fairness of FCC decisions, which could lead to Congress feeling ignored, which leads Congress to seek out less independent Commissioners, which leads Commissioners to be more politically responsive, which puts a cover on transparency.  In other words, the much-coveted "transparency" is not the equilibrium state for the Commission.  Thus, the Commission cannot escape the accusations that its highest profile decisions are either the result of "shakedowns", "capture", or capture disguised as a shakedown.  For most decisions, who's really to know?

As a practical matter, the only thing we can know is that, even if "voluntary conditions" to merger approvals are a shakedown, you can't always assume you know who's doing the shaking and who's doing the taking.  "Shakedown Street" goes two ways.  One party's "shakedown" victory may just be the "cost of capture" for another.  Through all this, though, we have to remember that after all is said and done we shouldn't cry for the post-merger firm that agrees to the conditions.  If the shakedown has a cost, then the cost will ultimately be paid by the consumer . . . or the shareholders of the firm that agreed to the conditions . . . or the public trust.

July 28, 2009 1:26 PM

Ex Parte Rules Reform: Making the Process "Transparently" Translucent?

Recently (July 15th), Communications Daily ("Comm Daily") reported that on June 12th, Commissioner Copps, as Acting Chairman, had circulated to the other Commissioners a draft Notice of Proposed Rulemaking ("NPRM") that would propose new rules for reporting "ex partes".  The existing ex parte rules require parties who have private, "one-on-one" meetings with Commissioners, or Commission staff, to file a notice by the end of the next business day explaining who from the FCC and who from the interested party attended the meeting, as well as a short summary of what was discussed.  Moreover, if a written presentation was used, the filing party must include a copy of the materials used in the meeting. 

The proposed new rules would require parties that have one-on-one meetings with Commissioners, and Commission staff, to provide more detailed information about the meetings in the subsequent notice filing.  The theory behind the proposed rules is that they will help to "fix" the FCC by imposing more "transparency" and "openness" on the Commission's process.

I wish the FCC the best of luck, should it decide to "reform" the ex parte reporting process, but I have to concede that I am a little skeptical as to whether these proposed changes will have the desired effect.  Why?  Well, it's like that old expression that you can't be just "a little" pregnant.


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