O'Rielly Pressed on IP Transition, E-rate at Senate Commerce Hearing

Rockefeller helped create the E-rate program in the 1990s, and he has received pledges from sitting FCC commissioners to help update and strengthen it. “Today I ask the same question of you I ask of them,” Rockefeller said to O'Rielly. The FCC nominee answered simply “yes,” affirming commitment to E-rate.

But O'Rielly’s comments on the Internet Protocol transition scared Rockefeller: “I got worried,” he told the nominee. O'Rielly called the Internet “extremely disruptive” and said it’s “wise to embrace it rather than control or manage it.” Regulatory touch must be “extremely light” due to how fast technology changes, he said, calling for more certainty and less regulation. O'Rielly expressed support for the public policy discussions that would accompany Internet Protocol transition trials.

Rockefeller said O'Rielly associated quick technology changes with the idea that it would be unwise to regulate “what needs to be regulated.” His own view is “very, very different,” Rockefeller said, describing how industries escape regulation under the pretense of fast changes. “The faster the change, the faster they'll take advantage of it,” he said. “How does the FCC make sure the values in the Telecommunications Act are in effect at all times, not just in all periods of waiting, but in all times? I think the FCC has to be sure the IP transition period does not leave rural -- and they'll do it -- and underserved areas at risk. They'll do that, no matter how quickly the technology changes.” Rockefeller called the O'Rielly fondness for “flexible” and “light-handed” regulation to be “code words.” O'Rielly reiterated the importance of addressing universal service and IP components in trials and the need for universal coverage.

Sen. Roy Blunt, R-Mo., asked where O'Rielly stood on broadcast-TV indecency enforcement actions, citing the lack of enforcement and dismissed complaints in recent years. O'Rielly wants more detail on why so many complaints have been dismissed before judging, he said. He committed to the FCC’s “obligation” to enforce its rules fully. More than 70 groups requested Tuesday that the committee ask about indecency enforcement during the hearing (CD Sept 18 p15). O'Rielly is open to relaxing some FCC media ownership rules but would need to look at the record more, he told Sen. Maria Cantwell, D-Wash. She expressed worry about relaxing those rules and said “a lot of people in the media space are using the Internet as an excuse” for concentrating media. She praised diversity and said she hopes O'Rielly “comes to grips” with the idea that media concentration is, as courts have begun to find, a problem.

The U.S. telecom industry is competitive, and “our carriers should be free from undue government intervention,” O'Rielly said in an opening statement (http://1.usa.gov/19ezRA5). But he said that in communications, “establishing and enforcing clear rules of the road can help consumers and industry participants alike,” pointing out the importance of effective and efficient FCC rules.

Communications Subcommittee Chairman Mark Pryor, D-Ark., asked how O'Rielly’s proclamation about supporting freedom “applies to your position at the FCC.” O'Rielly replied that it referred to expanding number of voices on the Internet and the “new opportunity for voices.” The Gettysburg Address is laced with references to liberty and freedom, O'Rielly said: “Freedom itself is entwined in our overall goals ... I think those are some of our general charges.” He clarified to Pryor that he plans to work with Democrats on the FCC. “The last thing we need on this commission is partisan divides,” Pryor said, citing “red flags” in O'Rielly’s testimony that worried him.

Commerce ranking member John Thune, R-S.D, said he understands the timeliness of O'Rielly’s proceeding and hopes for a full FCC by the time the Senate breaks for recess in mid-October. Several observers pointed to this timeline as possible last week (CD Sept 13 p1). The “committee must focus on establishing modern legal and regulatory structures that serve the purposes of our 21st century economy, whether it is reviewing the authorities of the FTC under Section 5 of its statute regarding unfair methods of competition and unfair and deceptive acts or practices, or seeking to modernize and streamline our telecom laws to better reflect today’s converging marketplace,” said Thune. He worried about the “uncertainty” the FCC November 2011 USF order has created and wants “a full slate” of FCC commissioners to apply the changes “in a way that is more predictable for rural carriers and customers.” He expressed great pleasure at hearing the FCC circulated an order on rural call completion problems Tuesday (CD Sept 18 p1). “We really do expect to hear what you want to do” and “live up to that,” Rockefeller added, pointing out how sometimes nominees become different people once in their positions.

"When the commission has tried to manipulate or micromanage these auctions, it’s often been problematic,” O'Rielly told Thune in response to questioning on the FCC planned incentive auctions. He cited bad situations where license holders who obtained licenses at a discount flipped it to another participants, causing benefits to be lost. “I am cautious as we enter this space to want to impose any obligations on bidding eligibility,” O'Rielly said.

"New Hampshire gets ripped off under” the FCC’s USF, said Sen. Kelly Ayotte, R-N.H., expressing desire for updates. “I really think we can go much further in how we use universal service.” The state paid in $30 million and received $14 million back for USF, she said. Sen. Claire McCaskill, D-Mo., criticized fraudulent Lifeline program practices and cited reporting of Lifeline supervisors encouraging fraudulent applications. O'Rielly said “problems still exist” with Lifeline, despite recent rule updates, and called for comprehensive review. She also asked O'Rielly about shot clocks for mergers and said “sometimes not getting an answer is worse than getting an answer you don’t want.” O'Rielly said it makes sense for the FCC to try to review transactions as soon as possible.

Rockefeller stressed the incentive auction and E-rate as his two priorities, alluding to discussions with O'Rielly earlier in the week. The auction process “is a complex undertaking, but its success ultimately will be judged on its ability to fund the public safety broadband network,” Rockefeller said in an opening statement (http://1.usa.gov/16FoGld). The E-rate “program has been hugely successful,” he said. “But the technology demands of schools and libraries continue to increase, and we need to modernize the program to meet those broadband connectivity and infrastructure needs. We cannot afford to underinvest in our most important resource -- our children -- or to risk them falling further behind their global peers in science and math.”

Democrat McSweeny said in her opening statement “the benefit to consumers from competition and protection from deception and fraud are well established,” (http://1.usa.gov/18zxoy8). “Competition leads to better prices, more and better choices, and innovation. Stopping fraudulent and predatory practices ensures that the playing field isn’t tilted against consumers. In particular, I believe the FTC’s work protecting those that are most targeted by scams or deception -- such as seniors, veterans, children, the financially distressed -- is important.” The way people use technology has evolved, McSweeny said during questioning, noting she supports privacy protections, particularly for children.

Committee members should have questions for the record in by Friday, Rockefeller said. The committee will have to clear the nominees before they move to a Senate vote on the floor. If O'Rielly clears the committee, he’s expected to be paired in such a vote with Tom Wheeler, the administration’s nominee for FCC chairman. The Broadband Coalition called for quick confirmation of the FCC nominees. “To address a multitude of issues, an FCC with a full plate must have a full table,” said spokesman Chip Pickering, former Republican member of Congress from Mississippi, in an email statement Wednesday. “Seating both Michael O'Rielly as commissioner and Tom Wheeler as chairman should be a priority for the Senate.” He called both nominees “eminently qualified and ready to roll up their sleeves and get down to work fostering innovation and promoting competition in the telecommunications market.”