McDowell Disputes Claims of Broad Industry Support for Net Neutrality Order

Chairman Julius Genachowski highlighted industry support for the order when it was approved (CD Dec 22 p1). McDowell questioned the amount and depth of the support. “Why did a small, very small pool of corporate entities decide to very reluctantly issue statements of perhaps acquiescence more than support, you'd have to ask them,” he said. “They have to continue to do business before the FCC. Maybe that has something to do with it."

McDowell told us that “it’s far too soon to grasp the long-term effects” of the net neutrality order, a month after it was approved. “The markets may not understand its full effects for a year or two, if it’s not overturned in the appellate courts in the interim,” he said.

McDowell said bills to overturn the rules appear likely to advance in the House and Senate. “Congress in a way did lead. … Congress sort of spelled out what our jurisdiction is. Congress set up our authority. It did not give us the authority to regulate the Internet. That is the legal threshold problem” with the decision.

McDowell said the order will likely face challenges in court from both opponents and supporters of net neutrality, and they could lead to Supreme Court review. “Ultimately, the FCC’s order will fail, whether it’s at the intermediate appellate court level or it’s the Supreme Court,” he said.

The fight over net neutrality is not over at the FCC, McDowell said. “It’s going to be presented to us as soon as the rules become effective and the first complaint is filed,” he said. “We're going to have to relive this again and again and again, and the markets will remain uncertain.”

McDowell was sharply critical of concessions that Comcast made to get approval of its purchase from General Electric of a controlling interest in NBC Universal, especially concessions on net neutrality. He noted that net neutrality was taken off a list of proposed merger conditions circulated by Genachowski. But the company agreed to abide by the rule in a letter of agreement, which is also enforceable.

"This would actually have Comcast live under the net neutrality order of December 21st even if it’s overturned in court,” McDowell said. “Comcast has to live by all the relevant rules that are codified in the Federal Code of Regulations, right? So there was no need to enumerate each of those rules again in the order or in the conditions or in the letter of commitment. Why just have one party live under those rules?"

McDowell said the concessions by Comcast point to ongoing problems with the FCC’s merger approval process. “When companies are vulnerable and before a regulatory agency this has all too often become an opportunity for government to extract conditions, concessions from those companies that may or may not have something to do with the transaction itself,” he said. “Government is a blunt instrument and frequently the unintended consequences of government action create more harm then the intended benefits."

McDowell told us that analysts’ reaction to the Comcast-NBCU deal speak to Wall Street’s concern about the current commission. “The expectations were so low that the most heavily conditioned merger approval in recent FCC history actually can beat market expectations when it’s not as bad as feared,” he said. “Is that a good thing to have that climate of concern overhanging a lot of investors’ outlook on the industries we regulate?”

McDowell also said the commission should not get in the middle of the Level 3-Comcast peering fight. “I'm not sure the FCC would have jurisdiction to be involved,” he said. Even if it had authority, “since the inception of the Internet, since the concept of peering was born, it has been self governing.” If the government gets involved, “the expert antitrust authorities” at the Department of Justice or the FTC should be the ones to do it, he said.

MMTC Conference Notebook

Two privacy bills are likely to resurface soon in the House Commerce Committee. Reps. Bobby Rush, D-Ill., and Cliff Stearns, R-Fla., each plan to revive his own privacy bill from last year, but they may work together later. Rush told reporters at the conference he will reintroduce his bill “shortly.” Stearns said he’s considering industry comments on a measure he introduced last year with Democrat Rick Boucher, who was a representative from Virginia. -- AB

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The FCC should focus on spectrum and broadband education rather than net neutrality, Rep. Cliff Stearns, R-Fla., said in a lunch keynote at the conference. In another keynote, Rep. Bobby Rush, D-Ill., agreed that it’s important to teach people why they should adopt broadband. Stearns, chairman of the House Commerce Oversight Subcommittee, told reporters afterward that he supports authorizing voluntary incentive auctions, and mapping government spectrum to see what might be relocated, he said. “The bottom line is we need more spectrum.” Stearns anticipates a “battle” with the House Homeland Security Committee over how the 700 MHz D-block is handled. Stearns wants the spectrum auctioned commercially, but Homeland Security Committee Chairman Peter King, R-N.Y., has said he plans to reintroduce a bill to give the D-block to public safety. Stearns said he’s “not sure [King] has the jurisdiction on Homeland Security” to decide what the FCC does with the spectrum. Stearns said he may revive a D-block auction bill he co-sponsored last year with Democrat Rick Boucher, then a representative from Virginia. Stearns said his Oversight Subcommittee plans to probe NTIA and RUS on their broadband grant and loan programs. The agencies seem to have given money for underserved areas, he said. “The intent was to get to the unserved areas.” Finding more spectrum is also critical, said Stearns. Rush and Stearns agreed that additional broadband education is needed. Lawmakers’ mission should be to “make sure that not only is [broadband] accessible, but also that people have an understanding of why it’s important,” Stearns said. He downplayed deployment as a problem, saying the National Broadband Plan found that 95 percent of the country has access. Rush said Stearns’s assessment of access is probably too rosy. “It depends what kind of access you're talking about,” he said.