December 2013

New Federal Communications Commissioner Michael O'Rielly plans to tell House Communications Subcommittee members that the FCC has fallen down on the media ownership review job and needs to get moving.

That's according to his testimony for a Dec 12 oversight hearing. "The Commission has failed to comply with the obligations required by the Telecommunications Act of 1996, which were subsequently amended by Congress, to review and repeal or modify any of its media ownership rules that are no longer in the public interest as a result of competition," he says. Commissioner O'Rielly also outlined his keys to a successful incentive auction, which he also knows a little something about from his former job. "I helped shape and craft the text of the incentive auction statute, in partnership with the able Republican and Democratic staff from the House and Senate," he points out. As he sees it, the FCC needs to "entice enough broadcasters to participate, reasonably protect those broadcasters that choose otherwise, and convince wireless companies to bid on the spectrum made available."

House Oversight and Government Reform Committee Chairman Darrell Issa (R-CA) accused Health and Human Services Secretary Kathleen Sebelius of criminal obstruction of his investigation into the launch of HealthCare.gov.

The dispute centers around a letter the Centers for Medicare and Medicaid Services sent to a contractor that worked on the online health insurance marketplace, directing it not to turn over correspondence and other documents to congressional investigators and stating CMS would manage any congressional inquiries. That letter amounted to “criminal obstruction” of a congressional investigation, according to Chairman Issa. “Obstructing a congressional investigation is a crime,” he said. “The federal obstruction laws reflect the fact that Congress’ right of access to information is constitutionally based and critical to the integrity and effectiveness of our oversight and investigative activities.” HHS Spokeswoman Joanne Peters responded that the department is attempting to comply with Chairman Issa’s investigation while ensuring it doesn’t reveal any private consumer information or technology secrets.

Add Rep John Dingell (D-MI) to the list of those advising the Federal Communications Commission not to limit the bidders for broadcast spectrum.

In a speech on Dec 11, Rep Dingell said that "the plain and simple fact of the matter is that more spectrum is needed to meet exploding consumer demand." In order to increase spectrum for mobile broadband, pay down debt, provide for the FirstNet interoperable first responder network, and have enough money to incentivize broadcasters to put up spectrum for auction and pay to relocate those that don't, the FCC needs all the bidders it can get, he suggested. "There’s a simple answer here: avoid restricting the number of potential bidders. Limiting the number of carriers allowed to bid on broadcaster airwaves will decrease auction revenues to the detriment of revenues and total new spectrum rolled out for wireless broadband."

If you've been following the debate about wireless spectrum, you know that Sprint and T-Mobile are at loggerheads with Verizon and AT&T over how much of the airwaves the big carriers will be allowed to buy in an upcoming auction. If Verizon and AT&T manage to snap up the bulk of it, regulators worry they'll threaten competition in the wireless industry. To avoid that fate, some have suggested imposing auction limits on the nation's two biggest carriers.

In a recent Senate hearing, observers got a glimpse of how these restrictions might take shape. One option being considered is a set of caps that explicitly acknowledge Verizon and AT&T's current position at the top of the market. "No one has ever suggested that the two dominant incumbents be excluded from the upcoming incentive auction," wrote T-Mobile, Sprint and a handful of other companies in a letter to the Senate Commerce Committee. "But they already control nearly 80 percent of all available low-frequency spectrum." Rules that primarily restrict the largest carriers would free up more spectrum for other bidders, these companies argue. But experts disagree over the second-order effects -- whether it would raise more revenue that way in the long run, for example, or whether the smaller carriers would be able to use that spectrum as efficiently as the larger ones. Sorting through all this is the Federal Communications Commission, which has to juggle sometimes competing goals in designing the auction. Making sure the auction generates enough wealth to fund other expensive projects is one example. But the FCC also has to consider whether the rules of the sale ultimately benefit consumers.