Walden Presses for FCC Revamp, Warns Against Legacy Regulations

"Given the complexities, you may be better going sector by sector, video and audio,” Walden replied, but said, given the convergence of technologies, “you may not be able to do it other than in a big rewrite.” Some stakeholders believe STELA is “going to be the longest train in Washington, but I don’t think that’s necessarily going to be the case,” Walden said.

Walden had spent his keynote lamenting the Communications Act “born out of the era of Ma Bell” and praising the recent deregulatory path, which fueled the approach the 112th Congress took in the spectrum auctions, he said. “It’s high time Washington learns the lessons of our telecom past.” He urged the Senate to pass the FCC Consolidated Reporting Act and alluded to other FCC processes in need of revamp, from the necessity of shot clocks to an ex parte revamp. Walden shared an anecdote of applying for a broadcast license regarding translators back in 2003 and hearing back only earlier this year -- and then being given 30 days to return a “perfected” application. “See, the FCC can take as long as it wants. … They get to put shot clocks on the applicants but refuse to put them on themselves. That needs to change."

"Next month we will continue this exercise by examining the future of copper networks in the age of the Internet,” Walden said of the House Communications Subcommittee. No one should want to stifle innovation with legacy phone rules, and while FCC practices have improved, there’s no guarantee the agency will not backslide, he said. “These are highly complex issues,” Walden told McDowell, describing the challenge of educating lawmakers. “Just learning the nomenclature takes time.” He called the communications industry a “bright spot” in a “struggling” economy and urged Congress to supply skilled foreign workers with more visas and to support “the Internet as it is today.” The latter point would be to send a message internationally, Walden said, referring to how “a number of nations sought to subject the Internet to international regulation” at the World Conference on International Telecommunications in Dubai in December.

The broad goal of a business tax revamp should be a more neutral tax system, said Council of Economic Advisers Chairman Jason Furman in a speech at the same event. He discouraged any bias toward debt financing and said “you want to lower at least the average cost of investment so you get more investment here in the United States.” Such a revamp should “have a goal of leveling the playing field” with an eye toward a more neutral set of incentives, Furman said. He laid out the ties between tech policy and total factor productivity, describing the post-World War II “golden age” in which productivity boomed and then the slowdown of recent decades. But technology has potential to change that, he said.

Furman outlined the spectrum-sharing research the federal government is doing and its attempts to catalyze private investment “by creating a tax, legal, and regulatory framework that supports it” and making permanent the research and experimentation tax credit. The spectrum auctions can “create a win-win-win,” Furman said, stressing the desire to reallocate spectrum to its most valuable use. Unlicensed spectrum is important because “a great deal of spectrum usage is nomadic,” he said. Another key “is promoting spectrum sharing,” he said, citing instances when clearing spectrum may be too expensive. He urged “broad participation” to “ensure these benefits are shared by everyone” and warned against the possibility of inflated prices, calling for “vigorous antitrust enforcement,” as has happened before.

But spectrum sharing is “not a good value proposition for the private sector” and should not be the “cornerstone” of federal policy, despite that’s likely “where we're headed,” McDowell said during a panel. He backed timetables for the auctions and incentives to clear the federally owned spectrum. Such gestures will come with costs, likely to be offset by net benefits to the economy, he said. The U.S. needs to be “bolder and brasher with our spectrum policy,” McDowell said, warning against “overthinking” the auction. “I would hope that this auction is kept as simple as possible. … A complex auction will fail. The FCC really needs to think that through.”

"There’s been a clamor, mainly by some well-meaning lawyers at the Department of Justice” to “restrict access to spectrum by the number one and number two carriers” in name of competition, said Robert Shapiro, chairman of advisory firm Sonecon, during a panel. Sonecon has advised AT&T, Google and other companies. But “the largest incumbents are the largest because they're more efficient,” Shapiro said. “Restricting access by the more efficient carriers will overall reduce efficiency of the national broadband network.” He feared a scenario in which the large carriers would have to raise prices. “The case for restricting access to the auctions is a case of good intentions masquerading as economics,” he said.

"Money” is key to “bringing broadcasters to the front door” of the spectrum auctions, said Preston Padden, head of the Expanding Opportunities for Broadcasters Coalition. He criticized the FCC proposal to score the auction, which he said would limit payments to broadcasters. He called that “misguided” and outside the statute authorizing the auction. “If they stick to it, it will lead to a failed auction,” Padden said, urging the FCC to instead rely on basic auction design, stick to free-market principles and “give up this idea of sitting in a room and scoring stations.”

"Let’s let the bidders determine what the pricing is,” McDowell said. “You want broadcasters to have an incentive to relinquish their spectrum … Creating Rube Goldberg algorithms is not the way to go.”