House Hearing on Communications Act Overhaul Turns to Net Neutrality

"If it was a victory for Verizon, it was a Pyrrhic victory,” said Hundt, now CEO of the Coalition for Green Capital. “I believe the court has vindicated the wisdom of Congress in the 1996 act.” The problem wasn’t in the net neutrality rules themselves but in the classification of the service, that the U.S. Court of Appeals for the D.C. Circuit said the agency could not call broadband an information service and regulate it like a common carrier, he said. “If it quacks like a duck, it’s a duck."

Communications Subcommittee Chairman Greg Walden, R-Ore., said the prime question is: “Should the Internet be regulated as a common carrier under Title II?”

"That’s easy. No,” said Powell, now CEO of NCTA. The FCC can address broadband either through Section 706 of the Communications Act or by reclassifying broadband as a Title II service, Powell said, saying he far prefers the former if the agency does choose that path. Reclassification would be a “radical transformation,” Powell said. The FCC can oversee the growth of broadband services, a power inherent in Title I and Section 706, as the court recognized, he said.

FCC Chairman Tom Wheeler “ought to take a fresh look” at the provisions and consult with Congress, Hundt said. “But the key point is they have the authority.”

Wheeler committed to Senate Commerce Committee ranking member John Thune, R-S.D., that he would “come to Congress for more direction before attempting another iteration of network neutrality rules,” Thune said Tuesday in a joint statement with Senate Communications Subcommittee ranking member Roger Wicker, R-Miss. Wheeler made the commitment in answering Thune’s questions for the record (http://1.usa.gov/1kCrrg0) during the Senate confirmation process in mid-2013. Thune and Wicker said they were pleased the court struck down the net neutrality rules but expressed worry over its recognition of FCC broadband authority. “The uncertain and potentially boundless authority the court has now found must be addressed by Congress,” Thune and Wicker said. “The Communications Act is woefully out of date, and it is time for Congress to provide a road map to clarify the FCC’s role in the 21st Century communications landscape. The last thing consumers need is for the FCC to waste more time and money on misguided efforts to regulate the Internet."

Wiley, head of the communications practice of Wiley Rein, agreed with Powell that it “doesn’t make any sense” to regulate the Internet under Title II. Copps, special adviser to Common Cause’s Media and Democracy Reform Initiative, said he believes there’s authority, but whatever must be done should be done “quickly and promptly” to help give clarity to industry, consumers and the FCC because important issues like interconnection may hang in the balance. Section 706 should not become a “solution du jour,” Copps said.

Party-Line Subcommittee Split

Subcommittee members split along the same party lines that have defined congressional reaction to the net neutrality decision. Democrats expressed disappointment in the decision while taking solace in the decision’s recognition of FCC broadband authority. Republicans claimed victory. Walden, House Commerce Committee Chairman Fred Upton, R-Mich., and the two subcommittee vice chairmen, Bob Latta, R-Ohio, and Marsha Blackburn, R-Tenn., all released statements praising the decision.

"With this, the open Internet suffers a blow, but it is not irreparable,” said subcommittee ranking member Anna Eshoo, D-Calif., in a statement Tuesday night. “Strong enforcement of the Commission’s Open Internet principles is the least Congress can do to preserve a free and open Internet, ensuring that networks remain a robustly competitive engine for innovation and economic growth. I will utilize every arrow in my quiver, including legislation, to make sure the FCC can carry out this critical mission effectively.” Other top Democrats in both chambers emphasized the same in statements.

At the hearing, Democrats emphasized the court’s recognition of FCC broadband authority. That recognition was “the crux of the debate,” said Rep. Doris Matsui, D-Calif. The FCC needs “a new set of rules” and should “exercise the authority the court recognized” and reinstate the no-blocking and antidiscrimination rules the court just struck down, said committee ranking member Henry Waxman, D-Calif. Eshoo called the hearing “timely” given the decision. “But as Chairman Wheeler affirmed last week, the Communications Act continues to provide the FCC with ample authority to exercise its role,” affirmed in the ruling, Eshoo added.

Rep. Joe Barton, R-Texas, asked if there’s “still a need for a Title II? ... In the telecommunications marketplace today, could we deregulate the telephone companies in totality?” The former FCC chairmen pointed to consumer protections and other obligations that would need to be ensured. “We're talking about economic regulation here,” Wiley said. “I don’t think that makes sense.” Common carriage law is inherently about government-sanctioned monopoly, which doesn’t exist anymore, Powell said.

Both members and the former FCC chairmen favor the agency’s transition to a focus on broadband, they said. “I would commend Chairman [Julius] Genachowski for migrating the [USF] fund toward broadband,” Powell said, stressing that this shift happened through the Section 706 authority. Matsui said transitioning the USF to broadband is a “critical” step. Congress “hasn’t spoken with much specificity about broadband regulation,” Powell said. Copps backed greater broadband access and adoption action, beyond USF attention alone. “This has to be an infrastructure mission,” if the U.S. wants to be globally competitive, Copps said, comparing what should be happening to past efforts in building out railroads and highways.

Communications Act and Video

Any Communications Act overhaul should not “derail a more immediate update of our video laws,” Eshoo said, mentioning retransmission consent blackouts. “I believe on a bipartisan basis we can make this happen in 2014.” Both she and Rep. Steve Scalise, R-La., introduced separate video bills addressing retrans disputes in December, and a communications lobbyist told us shortly afterward that these bills may become wrapped up in the debate to reauthorize the Satellite Television Extension and Localism Act, which expires at the end of 2014. Walden is working on a STELA draft slated for completion in Q1 and has stressed he wants a “clean” reauthorization. The American Television Alliance backed Eshoo’s video remarks. “Our video laws can and should be updated in 2014,” the group said in a statement after the hearing.

Eshoo quizzed Powell on the must-buy requirement and retrans disputes. “I don’t think it’s a sustainable business model, quite frankly,” Eshoo said. Powell agreed and called must-buy “deeply flawed,” criticizing the reality that only cable faces this obligation and not, say, DirecTV subscribers. “I think it’s a perfect place for harmonization,” Powell said.

Broader updates to the statute may be required, the former FCC chairmen said when questioned, though they differed on whether the updates would require a Communications Act overhaul. Some members pressed the former chairmen on rural connectivity issues and how the FCC should be restructured. Wiley criticized what he sees as occasional “duplication” of work in merger and acquisition review on the part of the Department of Justice. “The two agencies need to work together, and I think they have worked together through the years,” Wiley said, despite criticizing the delays that sometimes have happened. Powell said the FCC is “one of the last New Deal agencies” engaged in affirmative economic regulatory power, “not to say some of that may or may not be warranted.” It’s a “holdover” from the past, he said, backing a broad review.

Copps and Hundt resisted the idea that an overhaul is inevitable. “The Declaration of Independence and the Constitution are pretty old, too,” Copps said, saying the framework of the 1996 act “remains, in many ways, strong.”