Obama Victory Expected to Mean Status Quo at FCC, Even if Genachowski Leaves

Tuesday’s election was the first since 2004 in which neither the presidency nor either house of Congress changed control. Following that election, then-President George W. Bush had a Republican-controlled Congress, at least for two years. Obama, and the next chairman of the FCC, face a House under Republican control. NTIA Administrator Larry Strickling, a veteran of the 2008 Obama campaign, is widely viewed as the likely next chairman of the FCC (CD Oct 31 p4), though the conventional wisdom often doesn’t come to pass.

Most FCC watchers expect Genachowski to leave shortly after Obama is sworn in to a second term of office. Eight years ago, Michael Powell announced the day after the inauguration he was leaving as chairman, but put off his departure until March, when he was eventually replaced by Kevin Martin. One wild card is that Genachowski could stick around for several months if he is tapped to move to another position in the administration, such as an open ambassadorship, government and industry officials said Wednesday. If Genachowski leaves before his successor is approved, he’s likely to be replaced on an acting basis by Commissioner Mignon Clyburn.

"We have to assume that with no change in the status quo, either in the White House or Congress, that the regulatory trajectory of the last four years will continue during the next four years,” FCC Commissioner Robert McDowell told us Wednesday. “Look for more rules to be placed on the wireless sector. If the net neutrality order is struck down by the court, look for the Title II docket to be revived."

"The spectrum auctions are going to be the main event,” along with the quadrennial review of FCC ownership rules and a rulemaking on what’s a multichannel video programming distributor (MPVDs), said a top communications lawyer. “Dealing with the spectrum auctions is consuming the commission.” Asked if the FCC will take a more regulatory stance, the lawyer said it depends on who Obama nominates to replace Genachowski. Strickling might be more of a policy centrist than Genachowski, the lawyer predicted.

Much next year at regulatory agencies is “going to depend a lot on the personalities” of their chairmen, said former FCC Republican Chairman Mark Fowler. “It really boils down to the people who come in, and what their regulatory philosophy is, so the president can only hope he chooses someone whose philosophy is similar to his own.” Fowler, a Republican who ran the FCC under President Ronald Reagan and now invests in radio and paging. FTC Chairman Jon Leibowitz like Genachowski is expected to leave next year (CD Nov 5 p11).

"The House Republicans remain very, very important to the way the FCC takes shape,” because they'll try again next Congress to get both chambers to pass reform legislation, said Reed Hundt, Democratic FCC chairman under President Bill Clinton. “It will go nowhere in the Senate, and it will basically be a meaningless effort,” he predicted, much as happened this past year.

"Nobody is going to say they want to regulate for regulation’s sake -- they'll have a reason,” a former FCC official said. “What they pick to put under that messaging might be different.” At the FCC, “there are still three Dems, so there will be no change in how the commission operates post-election,” said a former administration official. “As to it being a second term, the FCC is not that sensitive to the administration. [Former Chairman] Bill Kennard, for example, did not act in a less restrained fashion than Reed Hundt. … So too with Powell and Martin. The FCC is more driven by the approach of the chairman."

"We prepare for all options when we have an election cycle,” said Tom Tauke, Verizon executive vice president-government relations. The company wouldn’t have changed its positions had Romney been elected, as it’s “a matter of tactics and strategy,” he said. With a Romney win, “there may have been an effort on the part of the industry to seek a major overhaul of the Telecommunications Act and the policy governing the Internet ecosystem.” Tauke said. It’s “unlikely” there will be interest in reforming telecom law in the Senate, so industry isn’t likely to look at any sort of comprehensive reform agenda, he said. Tauke expects at the FCC to “battle the same battles that we have been working on over the past couple of years,” such as seeking more spectrum, attempting to ensure that the commission doesn’t try to regulate Internet Protocol networks and IP services, and focusing on “attempting to deregulate - or reduce regulation - in the areas where there is competition.”

NTCA CEO Shirley Bloomfield doesn’t expect Obama’s re-election to change much at the FCC, but it might free up the agency’s “metaphorical bandwidth” to focus more on issues and less on politics, she said. The commission has “positioned itself as a regulatory agency” that hasn’t had as much interaction with Capitol Hill as “very politically active” past commissions, she said. It’s “a little bit more immune to some of the political pressures,” she said.

CompTel CEO Jerry James said the continuity with a continued Obama presidency “could be helpful,” in that the commission has already initiated activity in several areas of concern to the association’s membership. Personnel changes at the agency and in congressional committees if Romney had won would have required the association to educate new members on its issues, James said. But “historically, technology issues have been nonpartisan,” he said. The Telecom Act calls for IP-to-IP interconnection rights no matter who’s in charge of a regulator, James said.

Public-interest communications lawyer Andrew Schwartzman doesn’t expect much to change at how the FCC approaches some of the bigger issues. “I don’t think Obama’s mandate is any stronger or weaker than before,” he said. “The key to the future at the FCC is when Chairman Genachowski leaves and who replaces him.” Unless McDowell decides to leave, Genachowski “may be stuck at the FCC for a while,” because the chairman wouldn’t want the agency to be split between two Democratic and two Republican members, Schwartzman said.

"Telecom competitive policy issues are bipartisan and transcend any one party focus,” said Steve Berry, Competitive Carriers Association president. “I am not sure about any new mandate -- the only mandate I gleaned from the election is that the American people want Washington to work better together."

In the first term, the Obama administration “struggled to find its footing” and was “internally divided between the progressives reflecting the sensibilities of Netroots and the Clinton centrists,” said Public Knowledge Senior Vice President Harold Feld. “What has gone unnoticed is the extent to which the Obama Administration found its footing in 2010-11,” he said by email. “In this supposed year of gridlock, the FCC and DOJ stopped AT&T [buying T-Mobile] and significantly conditioned Verizon/SpectrumCo. The incentive auction legislation passed. TV white spaces and spectrum sharing generally went from a curiosity to a major policy initiative. USF Reform actually happened. Spectrum concentration is back on the table for discussion."

Institute for Policy Innovation Policy Counsel Bartlett Cleland said it’s hard to find too many implications for the FCC from Obama’s thin margin of victory over Romney. “Extrapolating a mandate for the FCC from either 2008 or 2012 is an enormous stretch, at the least, since the issues put to the FCC were barely mentioned, much less made a centerpiece in either presidential election,” he said. “That said, whether people are thinking about it or not, one consequence of a vote for president is the philosophy that will guide the FCC. Ultimately I doubt that the clear split in the country, the popular vote being a spread of about two percent, will be considered by the FCC."

Obama’s margin of victory makes “little or no difference,” said Minority Media and Telecommunications Council Executive Director David Honig, co-chair of Telecom Lawyers for Obama-Biden. “Telecom policy should have been a major election issue, given its importance to the nation’s economy and especially to job creation,” Honig said. “But since neither candidate had much to say about telecom policy and even the party platforms were rather thin on the subject, the election results won’t impact the FCC very much or at all.” Morale at the agency is high and “and on most issues all five commissioners are in sync,” he said. “Seldom, over the past 40 years -- really not since Dick Wiley’s chairmanship -- have we had a more cohesive, collegial set of commissioners."

Guggenheim analyst Paul Gallant expects the new FCC to follow the same course as the FCC of the past four years. “We expect the Democratic FCC and DOJ to continue actively promoting competition in the wireless market, with the goal of ensuring that AT&T and [Verizon Wireless] do not become a ‘wireless duopoly,'” Gallant wrote. “Government policy levers include: Deciding how much spectrum AT&T/VZW can buy at future auctions; managing wireless market structure via merger review (perhaps allowing some transactions but not others); and possible limits on roaming/tower backhaul pricing."

"The Democratic victory will slow AT&T and Verizon deregulatory plans as they play more defense than offense on broadband, telecom/IP, and wireless policy in general, and special access and net neutrality in particular (including, potentially, application of data tiers),” Stifel Nicolaus said. The Verizon and MetroPCS appeal at the U.S. Court of Appeals for the D.C. Circuit to net neutrality rules “takes on even more importance, in our view,” the analysts said. “Democratic resistance to Bell spectrum aggregation and market consolidation are also a negative, though interest in some cable program-access rights and broader privacy protections could be helpful.”