Tech policy preview of 2012

{mosads} The pressure on Congress to take some action to improve the country’s network protections will also increase as every new major cyber breach has become a reminder of just how vulnerable we are to cyberattacks in this digital age. House Republicans have recently begun movement on a series of measures designed to encourage information-sharing between the private sector and government on threats and best practices with few if any hard mandates. But the Senate is close to finalizing a proposal much closer to the White House’s plan, which would give the Department of Homeland Security broader authority to ensure critical infrastructure firms comply with government security standards. The Senate plan is a tough sell in the House, and cybersecurity is still a young policy area, so the enactment of any legislation could be claimed by both sides as a political win. That leaves the passage of some form of the information-sharing bill far more likely than a comprehensive solution in 2012.

Lawmakers will continue to debate the issue of consumer privacy legislation, but there remains strong resistance to new regulation of Web firms, particularly in the House. Instead, the Federal Trade Commission will likely continue to set the standard through its agreements with Web firms like Google and Facebook, both now bound by settlements to clearly present and abide by their privacy policies. 2012 will likely see more firms come under scrutiny for how they use consumer information, including smartphone and mobile app makers, online marketers and location-based service providers like Foursquare and Yelp. More congressional scrutiny can also be expected, with public opinion often serving as de facto regulation in the fast-changing policy area.

Advocates of the Federal Communications Commission’s net neutrality rules turned back a Republican bid in Congress to repeal the rules this year, but the real threat — a lawsuit in federal court — still looms. The rules, approved by the FCC in 2010, prohibit Internet service providers from slowing down or blocking access to legitimate websites. Supporters of the rules say they preserve competition and consumer choice, but opponents argue they are an unnecessary burden on businesses and amount to government control of the Internet.

Verizon has filed a lawsuit, arguing that the FCC overstepped its authority by trying to regulate broadband Internet service. The prospects for Verizon’s lawsuit got a boost when a judicial panel randomly assigned the case to the D.C. Circuit Court of Appeals. That same court ruled against the FCC when it tried to enforce the principle of net neutrality against Comcast in 2010. If the court strikes down the net-neutrality rules, the FCC could choose to re-classify broadband Internet as a “telephone service,” as opposed to an “information service.” The FCC has a much broader authority to regulate telephone companies. But re-classifying the Internet would be a politically explosive move, and it is unclear whether FCC Chairman Julius Genachowski has the stomach for another protracted battle over net neutrality.

LightSquared has invested billions of dollars to launch a nationwide wireless broadband service, but first it has to convince the FCC that its network will not interfere with GPS devices. Despite the company’s efforts to mitigate the GPS problem, preliminary government tests this month revealed there are still widespread issues. Worse, the company has now become a political controversy. 

Republicans have accused the White House and the FCC of showing the company undue favoritism and say it could be a Solyndra-style scandal for the administration. In September, Rep. Michele Bachmann (R-Minn.) accused President Obama of “crony capitalism” for allegedly giving favor to his political supporters, pointing to LightSquared’s primary investor, Philip Falcone. Falcone, who has donated thousands of dollars to both Democrats and Republicans in recent years, said he is a registered Republican and has denied any attempts to influence the process through political connections. 

Sen. Chuck Grassley (R-Iowa) has pledged to block President Obama’s two nominees to fill FCC vacancies until the agency releases internal documents related to its review of LightSquared. None of the controversy is helping LightSquared, which says the interference problem is the GPS industry’s fault. FCC officials say LightSquared will have to prove it has fixed the problems before they will give the company approval to move forward.

AT&T and T-Mobile will have to decide by Jan. 12 whether to abandon their blockbuster $39 billion merger following a series of setbacks that have left the deal on life support. The Justice Department has sued to block the deal on antitrust grounds, arguing the merger of the second and fourth largest wireless carriers would stifle competition. The Federal Communications Commission also opposes the deal, saying it would destroy jobs and weaken competition. 

AT&T asked to put the Justice Department trial on hold this month so it could reconsider its options. The company emphasizes it is still trying to find a way to salvage the merger, but even if it manages to survive the Justice Department lawsuit, it still faces a lengthy administrative hearing at the FCC. AT&T is on the hook for a $4 billion payment to T-Mobile if the deal falls apart.