FCC comes in from the cold

On Tuesday, a House Energy and Commerce subcommittee will hold an oversight hearing to assess the Federal Communications Commission’s adherence to what Chairman Greg Walden (R-Ore.) calls “the highest standards of transparency and accountability.”

The agency’s five commissioners will be asked about progress on long-running (and repeatedly delayed) proceedings including the voluntary incentive auction for broadcast TV spectrum, reform of the FCC’s byzantine rules for video programmers, and long-promised process improvements aimed at making the agency more efficient.

{mosads}As important as these topics are, however, there is a much more urgent matter for the Committee to address.  It is simply this:  The FCC has gone rogue.  The agency has lost sight of its core mission to improve communications on behalf of American consumers. Instead, its resources have increasingly been misdirected to tilt at the windmills of lobbyists and political operatives backed by favored industry participants.   

Consider just a few of the agency’s most consumer-unfriendly decisions of the past year:

• The Open Internet – Under intense pressure from a wide range of special interests, Chairman Wheeler scrapped a nearly-complete order to re-authorize core net neutrality rules following what he himself called a clear “roadmap” provided by the courts.  Without notice, the commission substituted a spaghetti bowl of open-ended new regulations that effectively transformed the global Internet into a public utility subject to uncertain but vast state and federal control.  Costs and benefits played no part in the final order.

• Enterprise Broadband – Even as business customers rapidly transition wholesale access away from rate-regulated analog networks to better and cheaper cable and fiber alternatives, the agency is amping up oversight of the regulated providers on behalf of powerful customers.  Three years after the FCC began an expensive data collection effort inexplicably focused on the declining segment of the market, the now hopelessly obsolete data are still not in a usable form.  Yet the agency recently doubled down with more detailed investigations of business arrangements some customers want modified.

• Legacy Network Retirement – The FCC concluded correctly in 2010 that the analog phone network had reached the end of its useful life, costing millions to maintain that would be better spent upgrading to new digital technology.  But much as the move to digital TV broadcasting became a political football, the agency continues to be distracted by parochial interests who don’t want a timetable for switching over.  As with DTV, by the time the transition is legally allowed to occur, nearly all consumers will have long-since cut the cord, leaving providers tossing millions in capital budgets into a technical black hole.

• Incentive Auction Set-Asides – The agency fell victim to lobbying from the deep-pocketed foreign owners of T-Mobile and Sprint, who demanded significant subsidies and set-asides in the upcoming (and much delayed) auction for urgently-needed broadcast TV spectrum.  When the FCC didn’t give in fully, Sprint announced it wasn’t going to participate at all, leaving T-Mobile the likely only bidder for the reserved frequencies.  The same behavior ruined the auction last year for a band known as the H Block.  But the agency seems to have learned nothing from its mistakes.

These and other dalliances are landing the agency in more awkward efforts to defend their actions in court, where even the Department of Justice can’t find a legal basis to support them. 

But more to the point, the special interests now directing the FCC have usurped the agency’s resources, keeping them from completing critical proceedings that would benefit consumers over favored businesses. 

FCC Chairman Tom Wheeler came in promising to promote competition as the best way to regulate a communications industry transformed by better and cheaper technologies built on the Internet.  But the agency is increasingly doing the opposite—micromanaging dying technologies that should be retired as quickly as possible, picking and choosing winners in specific markets, and falling victim to industry clients who play the regulatory process like a Stradivarius.

There’s a better way.  Writing in 1999, a prescient observer recognized that the Internet revolution would “continue to erode the traditional regulatory distinctions between different sectors of the communications industry,” generating new kinds of competition that would, if left to develop naturally, create win-win benefits for both consumers and industry.

That sage advice came from none other than Bill Kennard, then chairman of the FCC.  Kennard, who helmed the agency during the critical last years of the Clinton administration, saw the Internet evolve into a potent engine of disruptive innovation.  To promote new forms of competition rather than the interests of favored incumbents, Kennard wrote, the FCC needed a new strategy, one that “wisely manage[d] the transition from an industry regulator to a market facilitator.”

That isn’t happening.  Members of the House oversight hearing would do well to adopt Kennard’s fact-based pragmatism, and get the FCC back on track before any more damage is done.

Downes is project director at the Georgetown Center for Business and Public Policy, and co-author, most recently, of “Big Bang Disruption:  Strategy in the Age of Devastating Innovation” (2014).