Divisive FCC Funding Bill Could Derail Net Neutrality Compromise

No FCC funding “may be used to regulate, directly or indirectly, the prices or related terms … charged or imposed by providers of broadband Internet service,” said the full legislative text of the appropriations bill's policy rider prohibiting rate regulation, “for such service, regardless of whether such regulation takes the form of requirements for future conduct or enforcement regarding past conduct.” The committee didn't post the appropriations measure or accompanying report publicly but provided hard copies to the press in a committee room within the Capitol building.

Financial Services Subcommittee ranking member Chris Coons, D-Del., offered two failed amendments to modify the Financial Services appropriations bill. The first would have provided more funding for the FCC. The second would have stricken various policy riders, including the one on net neutrality and provisions on universal service for mobile broadband. ”I don’t support rate regulation but I do support net neutrality,” Coons said.

Sen. Brian Schatz, D-Hawaii, spoke in favor of the amendment to strike riders and claimed credit for the net neutrality provisions, naming Sen. Patrick Leahy, D-Vt., and Sen. Tom Udall, D-N.M., as the two others working with him to include it. Schatz invoked the “ongoing, productive, relatively discreet” negotiation between Senate Commerce Committee Chairman John Thune, R-S.D., and ranking member Bill Nelson, D-Fla., as reasons not to include the net neutrality provisions in the appropriations process. Udall, a member of both Commerce and Appropriations, also told us earlier this summer that he strongly backs the compromise efforts of Thune and Nelson (see 1506240037).

“We don’t know whether that will come to fruition or not,” said Schatz, ranking member of the Communications Subcommittee, of the Commerce negotiation. But he urged appropriators to “give that process a little space” and let Commerce lawmakers take on the issues in the appropriate venue. No one is interested in regulating retail broadband rates, Schatz added.

Thune first proposed negotiations with Democrats in January when issuing a draft bill to codify net neutrality rules while limiting FCC authority. Companion efforts stalled in the House, but senators told us last month of the ongoing debate in the Senate, with a draft that evolved from what Thune issued in January. Thune told us earlier this year he was pressing appropriators to give Commerce leaders that space to negotiate on net neutrality (see 1505050040). "Such language in an appropriations bill is counter to our efforts to reach a bipartisan compromise,” Nelson said in a statement. Thune and Nelson, neither of whom is a member of Appropriations, “have been making real progress on bipartisan net-neutrality legislation, but that could be undermined if lawmakers try to fiddle with the FCC in this funding bill,” a Nelson spokesman said. Nelson has been absent from the Capitol for more than a week due to health issues.

GOP summaries of the measure never mentioned mobile broadband but Democrats referred to problematic language in an earlier summary. The full appropriations text said the FCC couldn’t use any appropriated funds to modify, amend or change any rules or regulations “for universal service support payments to implement” the Feb. 27, 2004, recommendations of the Federal-State Joint Board on Universal Service “regarding single connection or primary line restrictions on universal service support payments.” The language “undercuts FCC efforts to expand the mobile broadband network” and “would freeze broadband support to existing recipients and their current geographic locations,” preventing “the FCC from using these limited funds to support new broadband rollouts where service is needed the most -- unserved and underserved areas,” Democrats said.

The GOP proposal slates $320 million for FCC operations, $20 million less than the FCC received for this year and many tens of millions of dollars below what the agency requested. In addition to a rider forbidding the FCC from regulating rates under the net neutrality order, it includes a provision that would grandfather in all broadcaster joint sales agreements formed before a March 2014 FCC ruling. In the Coons amendment, the FCC would have had “an additional $23,832,000 for necessary expenses” to back “essential information technology upgrades” and provide “funds to start-up and support the Public Safety Answering Point Do-Not-Call Registry to ensure our nation’s first responders do not receive unsolicited telemarketing calls that tie up essential phone lines,” as a summary sheet said.

The GOP proposal would provide $44.2 million in addition to the $320 million “dedicated solely to moving expenses associated with the FCC’s expiring lease for its headquarters building and that will be utilized to either relocate operations to a new facility with substantially reduced square footage and lower rental expenses or to significantly reduce the agency’s leased space at its current location and restack employees within the smaller footprint,” said the report accompanying the full legislative text of the appropriations measure. The committee report includes many other recommendations for the agency, from its earthquake alert system to stand-alone broadband support to call completion in rural areas to FCC transparency: "The Committee directs the FCC to identify any changes made to an item after its adoption by the Commission, at the time such item is published," the report said.

Early on, the appropriators approved a manager’s package of amendments without partisan disagreement. “It has been cleared by both sides,” Financial Services Subcommitee Chairman John Boozman, R-Ark., said. Sen. Jon Tester, D-Mont., included language in the package on coordination on rural telecom service. “The Committee recognizes the FCC’s vital role in preserving and advancing universal communications services,” the Tester amendment said. “The Committee encourages the FCC to coordinate efforts with the Rural Utility Service to optimize the use of limited resources and promote broadband deployment in rural America.”

Senators of both parties mentioned a core source of partisan disagreement -- the sequestration-level funding caps that Republicans have imposed in their budget. “This is a difficult allocation,” Boozman admitted. But Coons’ amendment to up the funding, which relied on a budget deal to lift the budget caps, would allocate billions more for Financial Services and “simply doesn’t work in light of the caps,” Boozman said, explaining his opposition. “Important pieces are missing due to a grossly insufficient allocation under the budget caps,” Appropriations Committee ranking member Barbara Mikulski, D-Md., said early on in the hearing, dismissing the bill due to its funding levels and riders. “The president’s budget is not lavish spending."