FCC Commissioner Ajit Pai

The Federal Communications Commission jettisons this entire framework by waiving the attributable material relationship (AMR) rule -- for the benefit of Grain Management, a private equity firm that leases 100 percent of the spectrum capacity of all of its licenses to the two largest wireless carriers in the country. This decision cannot be justified under the FCC’s waiver law, since waiving the AMR rule here eviscerates -- rather than promotes -- the purpose of the rule.

The FCC’s suggestion that the rationale underlying the AMR rule does not apply when an applicant obtained its spectrum licenses without the benefit of bidding credits simply cannot be squared with either the text of the rule or the reasoning of the FCC decision that adopted it.

In addition, the FCC’s claim that Grain’s leasing agreements do not support any inference of undue influence flatly contradicts its determinations in the context of joint sales agreements among broadcast television stations.

Finally, the decision will likely produce anomalous results, inject needless uncertainty into the FCC’s auction process, and invite arbitrageurs to make creative end-runs around our AMR rules -- all of which is unnecessary given the upcoming DE rulemaking. For all these reasons, I dissent.

The fact that the marketplace is embracing the IP Transition means we’re in the best of times. However, the government seems to be stuck in neutral when it comes to modernizing its regulatory framework to account for the IP Transition. What’s sidetracked us?

Our efforts have been plagued by three critical mistakes.

First, we are bogged down in brouhahas from the past. Second, we are failing to seize the present. When it comes to embracing the IP Transition, we can’t keep putting off until the unspecified future the things we can and should do today, starting with modernizing our rules. Third, we are becoming crippled by fear of the future. Embracing creative destruction means that something must be abandoned -- and that something is the PSTN.

The Federal Communications Commission is scheduled to vote on a proposal to change E-Rate, a program designed to help schools and libraries connect to the Internet. That proposal promises over $5 billion for Wi-Fi but doesn’t identify where the money will come from to fund this new program.

After crunching the numbers provided by FCC staff, the Office of Commissioner Ajit Pai has developed financial projections that validate the concerns of congressional leaders of both parties that the proposal’s promises would come out of funding available today for Internet connectivity. Here are the results:

• Over the next five years, the FCC’s Wi-Fi proposal would cut over $2.7 billion ($2,716,652,262) in funding available for Internet connectivity for schools and libraries.
• In Year 3, the proposal would cut over $645 million ($645,658,643) or 27% of funds available for Internet connectivity.
• In Year 4, the proposal would cut over $985 million ($985,937,579) or 39% of funds available for Internet connectivity.
• In Year 5, the proposal would cut over $1.085 billion ($1,085,056,039) or 41% of funds available for Internet connectivity.
• Because of these spending cuts, many rural schools would lose all of their funding for Internet connectivity in Years 3 through 5.

The FCC’s Washington-knows-best approach would deprive local school districts of the flexibility to meet local needs. By slashing funds available for Internet connectivity, the program will likely provide many American students with “Wi-Fi to nowhere.”

Any good math teacher would give the Federal Communications Commission’s E-Rate proposal an “F” because the numbers just don’t add up.

It promises over $5 billion for Wi-Fi but doesn’t identify where the money will come from to fund this new program. As it stands, the proposal will blow a $2.7 billion hole in E-Rate’s budget -- one that the FCC has promised outside parties it’ll fill with a post-election increase in Americans’ phone bills. The proposal also doesn’t pass the test in other respects.

Rather than giving small, rural schools and libraries a fair shake, it continues to direct the bulk of E-Rate funds to large, urban school districts.

Instead of fundamentally reforming the E-Rate bureaucracy, the plan doubles down on complexity. Schools and libraries will still have to file reams of paperwork, operate on Washington’s timeline, and hire consultants -- that is, if they participate in the program at all.

Rather than giving local school boards, principals, teachers, and librarians the flexibility to decide what services and technologies best meet their communities’ particular needs, the plan takes a Washington-knows-best mindset.

[Commentary] Schools in rural areas routinely get less funding per student than those in wealthier, urban areas. For example, E-Rate distributes to students in Washington, DC, roughly three times the amount that Kansas students receive -- even though our nation’s capital has a much larger tax base and broadband is cheaper to deploy there than in rural Kansas.

Indeed, small Kansas towns from Colby to Coffeyville and Elkhart to Seneca tend to get less money than large school districts with more resources.

These disparities undermine E-Rate’s core mission of giving rural schools the same technological tools as their urban and suburban counterparts. One reason for this unfair distribution of funding is the complex E-Rate application process.

To apply for E-Rate funds, schools must complete a seven-step process with six application forms spanning 17 pages -- just for basic service. If a school wants to invest in a technology the federal government does not consider a priority, additional paperwork is required. Moreover, schools are required to sign service contracts months before the school year begins, and possibly years before the school knows if E-Rate funding will even be available to offset the cost of those services.

All of this means that it is expensive and burdensome to apply. E-Rate also doesn’t give schools a budget. That means urban schools at the front of the line often get as much money as they want while many rural schools at the back of the line must make do with what is left.

The result is some schools using E-Rate to subsidize BlackBerrys for administrators while other schools can’t even get funding for classroom Wi-Fi. That’s not right. To fulfill E-Rate’s promise to all of our students, we must cut the bureaucracy and refocus the program on our children’s needs. We must create a student-centered E-Rate program.

The Internet has levelled the playing field so that consumers can access the best products for the cheapest price, and anyone who wants to compete for their business can do so quickly and easily. To borrow from Adam Thierer, broadband has made it easier for entrepreneurs to innovate without first asking the government’s permission.

What makes all this digital innovation possible? Broadband infrastructure -- and a lot of it. Since the Telecommunications Act of 1996, telephone companies, cable operators, and wireless providers have invested more than $1.2 trillion to deploy broadband to the American public, with more than $68 billion invested in 2012 alone. For those keeping score, that’s one trillion dollars more than the Universal Service Fund has ever distributed, and about $60 billion more than it distributed in 2013.

Aside from the mechanics of implementing Title II, we need to ask a more basic question. Where would Title II regulation lead? One good indication is to compare the results produced by the American regulatory model to those of a more intrusive regulatory model: Europe’s. Rather than taking a light-touch regulatory approach to broadband, the European model treats broadband as a public utility, imposes telephone-style regulation, and purports to focus on promoting service-based (rather than facilities-based) competition.

Why would we ever want to abandon our regulatory model for Europe’s? Those of us who support light-touch regulation of the Internet should engage in this debate and take our case to the American people. Should a carrier like T-Mobile be able to respond to consumer demand by offering free music to its customers? We say yes, but those who support Title II regulation say no. Is it good for competition when a carrier like T-Mobile is able to differentiate itself from its competitors and offer innovative service plans? Again, we say yes, but those who support Title II regulation say no.

As a result of the Federal Communications Commission’s crackdown, and after more than 58 years of providing service to Central Nebraska and Northern Kansas, KHAS in Hastings, Nebraska went dark on June 13.

That same day, KNDX in Bismarck, North Dakota and KXND in Minot, North Dakota also went off the air because of the Commission’s decision.

Before the Commission’s restriction on JSAs, agreements were in place to save these three stations: KHAS, an NBC-affiliate, was slated to be purchased by Excalibur Broadcasting; and, KNDX and KXND, FOX affiliates. These transactions, however, were blocked by the Commission’s new rules prohibiting the use of JSAs in these markets. So what has the Commission’s JSA crackdown yielded?

Gray Television’s KMOT is now serving as the NBC affiliate and FOX affiliate for Minot through its use of multicast channels, while KXND has gone out of business. And that is not all. Gray Television has also announced that three more stations -- KXJB in Fargo, North Dakota; KAQY in Monroe, Louisiana; and KJCT in Grand Junction, Colorado -- will soon go dark because of the Commission’s JSA restrictions. Their programming will be transferred to Gray stations in those markets.

As a result, Gray Television will earn a greater share of local advertising revenue in Hastings, Bismarck, Minot, Fargo, Monroe, and Grand Junction than would have been the case with the JSAs that were originally proposed. Are these the victories for competition that critics of sharing agreements were hoping to see? Or has the real goal all along just been to drive television stations off the air?

As you know, the E-Rate program is part of the Universal Service Fund. It provides about two billion dollars each year for schools and libraries to connect to the Internet.

E-Rate has had its share of successes. But the program is seventeen years old and badly in need of an overhaul. Indeed, there’s a broad consensus on the need to modernize the program.

First, parents across this country understand that we can’t prepare children for the world of tomorrow in a classroom of yesterday. Second, improving educational opportunities for our nation’s kids shouldn’t be a partisan or ideological issue. My proposal has five main elements. First, we should streamline the program.

Second, we should target next-generation technologies.

Third, we should allocate E-Rate funds more fairly and predictably.

Fourth, we should increase transparency and accountability.

And fifth, we should be fiscally responsible.

In my home state of Kansas, for instance, no fewer than five new Spanish-language LPFM stations have already been approved during this window. These stations will serve communities big and small, from Topeka, the state capital, to Ulysses, a small town of about 6,000 people in southwest Kansas named after our nation’s 18th President.

A new Chinese-language LPFM station has also been approved to serve Lawrence, Kansas. These unique offerings are exactly what Congress intended when it passed the Local Community Radio Act in 2010. Given the static facing the AM band, we can’t afford to delay. Let’s set the end of October as the deadline for action and prioritize opening an FM translator window for AM broadcasters.

When the Federal Communications Commission voted to restrict television broadcasters’ use of joint sales agreements (JSAs), we warned that this decision would lead to “less ownership diversity” and “more television stations going out of business.”

Unfortunately, just two months later, this is coming to pass. Now, Sinclair Television Group announced its intent to surrender to the Commission for cancellation three television station licenses in the Charleston, South Carolina and Birmingham, Alabama markets. Sinclair reported that it was unable to find a viable buyer for any of these stations. As a result, it appears that these three stations will soon be going dark.

So what has the Commission’s decision wrought? Instead of increasing the number of African-American-owned television stations, we are driving stations off the air. This will mean job losses, less service to South Carolinians and Alabamians, and less ownership diversity. We do not see how such an outcome possibly serves the public interest, and we hope that the Commission will take action immediately to correct its misguided restrictions on JSAs.