OVERNIGHT TECH: FCC aims to close auction loophole

THE LEDE: Regulators have plans to “fix” a legal loophole that allowed Dish Network to get billions of dollars in government subsidies.

Federal Communications Commission (FCC) Chairman Tom Wheeler on Wednesday announced that his agency was eyeing new rules to prevent big companies from taking advantage of “designated entity” programs for small firms in airwave auctions. “We are going to fix this,” he said during a hearing in the Senate Commerce Committee. “We are going to issue a new public notice on this to make sure that this specific issue is teed up. We are going to make sure that designated entities have the opportunity to participate and not have designated entities be beards for people that shouldn’t.”

{mosads}Abuses in the small business program came up multiple times during Wednesday’s hearing, with multiple lawmakers blasting Dish Network’s use of two smaller subsidiaries to get the credits amounting to $3 billion in a recent airwave auction. The FCC has said that the credits are still under review and that nothing will be granted to companies that violate the rules. 

Sen. Claire McCaskill (D-Mo.) called the situation “outrageous.” Sen. Kelly Ayotte (R-N.H.), who penned a Wall Street Journal op-ed on the issue with FCC Commissioner Ajit Pai, told the FCC to “take a very thorough review of what happened here.” “Because it can’t upend what we intended with the so-called designated entity program, because it’s isn’t benefitting truly small and disadvantaged businesses.”

CLASH OF COMMISSIONERS: Though Wednesday’s hearing had occasional fireworks between lawmakers and FCC commissioners, the biggest sparks seemed to be between Chairman Wheeler and Commissioner Pai, who bickered a few times over various legal points. “It’s very fun to sit between the two of you,” joked Commissioner Jessica Rosenworcel, who was seated between the two regulators. “I think that the meetings at the FCC must be very interesting,” added Sen. Richard Blumenthal (D-Conn.).

RIGHT BACK AT IT: But Wednesday was just Round One for the FCC commissioners (except for Wheeler, who also appeared in a House panel on Tuesday). All five commissioners will be back on Capitol Hill on Thursday, for a session in the House Communications and Technology subcommittee. Like Wednesday’s event, the House panel is scheduled to look at a wide range of FCC issues, though the net neutrality rules will likely rear their head.

“The Open Internet proceeding is not the only place where the FCC seems to have abandoned good process,” subcommittee Chairman Greg Walden (R-Ore.) will say, according to prepared remarks. Not only does it delegate too much authority to bureau staffers, he said, but the FCC also does not release information to the public and takes too long to finalize major issues. “But mostly, I’m concerned that the FCC oversteps its jurisdiction too regularly,” he will add.

SCHMIDT BELIEVES IN LESS INTERNET REGULATION: Google’s Eric Schmidt said he has a “strong” sense that the best way to promote net neutrality is to increase competition. Schmidt reportedly called the White House to lobby against the FCC’s newly approved rules on reclassification. While he did not address that directly during a talk at the American Enterprise Institute, he said less regulation is a good rule for the Internet. 

“As a general rule, less regulation is better,” he said. “So the problem with where we are now is trying to figure out where the harms are and we have benefited from essential government staying out of the Internet and I’m worried that we’re now on a path starting to regulate an awful lot of things on the Internet.”

CONSTITUTIONAL QUESTIONS OVER FISA COURT: A report released Wednesday from the Brennan Center for Justice concludes that the secretive Foreign Intelligence Surveillance Court is no longer in compliance with the Constitution. The improvements in surveillance technology have changed the court’s scope since it was established more than three decades ago, the report found. 

PRIVATE MEETINGS FOR THE FCC: A group of House and Senate lawmakers on Wednesday reintroduced a bill that would allow bipartisan members of the FCC to call private meeting with federal-state joint boards. The proposal, branded as a way to streamline decision-making, would allow a majority of commissioners to vote to hold the private meetings as long as no official action is taken and an FCC lawyer is present. The move to amend the Government in Sunshine Act is sponsored by Reps. Anna Eshoo (D-Calif.), Mike Doyle (D-Pa.) and John Shimkus (R-Ill.) in the House and Sens. Dean Heller (R-Nev.) and Amy Klobuchar (D-Minn.) in the upper chamber. 

NEW HIRES AT CTIA: CTIA-The Wireless Association hired former Verizon executive Tom Sawanobori as its new chief technology officer and brought on ex-American Bankers Association aide Stephanie Mathews O’Keefe as its new communications head, the trade group said on Wednesday. It also promoted former chief of staff Brad Gillen to be a new executive vice president, lifted up vice president of operations Rocco Carlitti to be the chief financial officer and named spokeswoman Amy Storey as the new vice president of public affairs. 

ON TAP: 

The Free State Foundation’s annual policy conference kicks off at 8:30 a.m. Reps. Greg Walden (R-Ore.) and Steve Scalise (R-La.) are both scheduled to appear, as is Sen. Ron Johnson (R-Wis.), FTC Commissioner Maureen Ohlhausen and FCC Commissioners Ajit Pai, Michael O’Rielly and Mignon Clyburn. 

The House Intelligence Committee is holding a hearing on cyber issues at 9 a.m.

At 10 a.m., the Senate Small Business Committee is holding a hearing titled, “Patent reform: Protecting innovation and entrepreneurship.”

At 11 a.m., all five FCC commissioners will testify again, this time in front of the House Energy and Commerce Committee. 

IN CASE YOU MISSED IT: 

Some key Senate Democrats are giving signals that they may join with Republicans in support of bipartisan legislation to replace federal net neutrality regulations.

With a number of high-profile cases, including two on same-sex marriage and ObamaCare, being argued before the Supreme Court this session, lawmakers want the public to be able to tune in to the proceedings.

Google Executive Chairman Eric Schmidt expressed confidence Wednesday that technology companies would win the debate about encryption over the government. 

The man whose drone crashed onto the White House grounds earlier this year won’t face charges.

Senate Judiciary Chairman Chuck Grassley (R-Iowa) on Wednesday said Congress should act “decisively” to rein in so-called patent trolls.

Please send tips and comments to Julian Hattem, jhattem@digital-release.thehill.com  and Mario Trujillo, mtrujillo@digital-release.thehill.com

Follow us on Twitter: @HilliconValley, @jmhattem