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Nine Months Late, an FCC Oversight Hearing

Submitted on July 27, 2018

 You’re reading the Benton Foundation’s Weekly Round-up, a recap of the biggest (or most overlooked) telecommunications stories of the week. The round-up is delivered via e-mail each Friday.

Round-Up for the Week of July 23-27, 2018

Robbie McBeath
McBeath

The House Communications Subcommittee held a long-delayed Federal Communications Commission oversight hearing July 25. Overall, the review of the FCC was split along partisan lines. Republican representatives generally expressed satisfaction with the work of the FCC over the last nine months. Democratic representatives felt differently. 

The hearing touched on a variety of policy issues, from spectrum allocation, to cybersecurity, to emergency alerts. Below we unpack the main takeaways from the hearing, including news about the decision to block Sinclair’s acquisition of Tribune, and the future of broadband policy.

Better Late Than Never?

The hearing was originally scheduled for February 16. In the announcement of this week’s hearing, Communications Subcommittee Chairman Marsha Blackburn (R-TN) partially explained why it had taken so long to reschedule: “This subcommittee has been busy this Congress working to improve our nation’s communications systems and infrastructure for the 21st century, including passing the first reauthorization of the FCC since 1990.” The RAY BAUM Act, a bill signed into law in March, reauthorized the FCC and changed many FCC reporting requirements to Congress, among other things. 

[For more information on the RAY BAUM Act, see the Benton Foundation’s Now that the RAY BAUM’S Act is Law, What's in it?]

Democrats on the panel aired a number of grievances, including the long delay of the hearing itself. Specifically, minority leaders are frustrated because the FCC has not been responsive to their letters. "We have a job of oversight and it's hard to have oversight when nobody responds to you," Communications Subcommittee Ranking Member Mike Doyle (D-PA) said before the hearing. 

Federal Communications Commission Chairman Ajit Pai, Commissioner Michael O’Rielly, Commissioner Brendan Carr, and Commissioner Jessica Rosenworcel testified at a Congressional oversight hearing for the first time since October 2017. There was much to discuss. 

Opening Statements

Majority Opinion: Things are good! 

Chairmen Walden and Blackburn used their opening statements to praise the work of the FCC, particularly around “improving our emergency alert and 9-1-1 services” and for expected future cooperation with the FCC on implementing the reporting requirements of the RAY BAUM Act. 

Their tone matched that of Chairman Pai’s prepared remarks: things are fine, light-touch deregulation is good, and concerns over net neutrality and privacy are overblown.

In Chairman Pai’s testimony, he claimed that, at the time his Restoring Internet Freedom Order was adopted in December 2017, “there were many hysterical predictions of doom and gloom. We were told that it would be the destruction of the Internet, or as some outlets put it, ‘the end of the Internet as we know it.’ But the Restoring Internet Freedom Order has taken effect, and the sky has not fallen. Indeed, the only thing that has fallen is the credibility of the Chicken Littles who made such dire predictions.”

Chairman Walden concurred. “The rhetoric around these issues has become like watching the opening of an old television show, waiting to get to the main programming. We sit here and listen to the same old falsehoods that we ripped away privacy and net neutrality protections, while the reality is all we have done is restore a bipartisan equilibrium and regulatory framework that existed just three years ago.”

Minority Opinion: Things are not good!

Democratic participants did not agree. 

Subcommittee Ranking Member Doyle bristled at the "Chicken Little" characterization in his opening statement. He said the FCC has been favoring corporate interests over those of the people. Rep. Doyle also said the FCC had gutted the Lifeline subsidies, deregulated broadcasters to the detriment of the public, including weakened children’s television rules, and said the FCC was putting the convenience of carriers over the safety needs of the public in its transition from copper to fiber.

"The Commission has failed to uphold the public interest and is favoring corporations.” -- Subcommittee Ranking Member Mike Doyle (D-PA)

Full Commerce Committee Ranking Member Frank Pallone, Jr. (D-NJ) shared Rep. Doyle’s concerns. Some key quotes from his opening statement:

  • “In a series of partisan votes, the agency dismantled protections for consumers and initiated numerous proceedings designed to benefit big corporations to the detriment of working-class Americans and local communities.” 
  • “By far the most high profile and controversial decision was the elimination of the FCC’s net neutrality rules….It’s not surprising that Chairman Pai’s order faces massive consumer opposition…. It is not too late to stand with the American people and restore net neutrality. I urge [House Speaker Paul Ryan (R-WI) to bring [the Congressional Review Act] up for a vote and stand with the bipartisan Members that have signed a petition to force one.”
  • “In another example of siding with corporations over consumers, Chairman Pai’s changes to the FCC’s media ownership protections undermine competition, localism, and diverse viewpoints in favor of corporate consolidation.”

Commissioner Rosenworcel, the lone Democratic commissioner at the hearing, countered Chairman Pai's optimism and testified that in the previous several months, the agency "acted at the behest of the corporate forces that surround it, shortchanging the American people."

Sinclair

Despite the early barrage, minority leaders Pallone and Doyle expressed some praise over the FCC’s recent actions that could block Sinclair’s acquisition of Tribune. The agency designated the deal for review on the grounds that Sinclair had misled regulators. Despite the praise, the Sinclair merger was still a major subject of lawmakers' inquiries, partly due to a tweet from the Commander-in-Chief. 

This week, President Donald Trump wrote on Twitter, “So sad and unfair that the FCC wouldn’t approve the Sinclair Broadcast merger with Tribune. This would have been a great and much needed Conservative voice for and of the People. Liberal Fake News NBC and Comcast gets approved, much bigger, but not Sinclair. Disgraceful!”

At the oversight hearing, Chairman Pai stood by the FCC's decision to designate the Sinclair-Tribune deal for review. Rep. Pallone took the lead in pressing Chairman Pai on President Trump's tweet and asked each commissioner whether they agreed with it. 

  • Chairman Pai said he stood by his decision, saying he would look at the facts, apply the law, and decide based on what was in the public interest.
  • Commissioner Michael O'Rielly said he could not answer since the issue had been referred to the FCC judge.
  • Commissioner Brendan Carr said the hearing designation order had laid out the fact and law as applied.
  • Commissioner Jessica Rosenworcel said she did not agree with the tweet. 

Rep. Pallone asked Chairman Pai if the FCC would conduct an investigation into issues of candor and misrepresentation cited in the hearing designation order, either now or when Sinclair TV station licenses come up for renewal. (Lack of candor with the FCC can be a basis for revoking broadcast licenses.) Chairman Pai said. on the advice of the FCC's general counsel. that he could not answer since such an investigation was inextricably linked with the hearing issues. Commissioner Rosenworcel said the FCC should be open to investigating Sinclair for character qualifications based on allegations of lack of candor. 

The President's tweet had suggested there was a need for a conservative voice like Sinclair's. Rep. Pallone asked whether ideology went into whether the FCC approved or denied a deal. Chairman Pai echoed his answer to how he would view mergers supplied at his 2011 nomination hearing, saying he would look at the facts, apply the law, and decide based on what was in the public interest.

Broadband

Chairman Walden brought up broadband in his opening statement, praising the FCC’s June 19 action to raise the Rural Health Care Program annual program budget cap. Chairman Walden said, “I want to thank the commission for the decision to lift the cap on the rural health telemedicine piece. That made a huge and positive difference for our rural clinics when you added $171 million over the $400 million cap.”

Rep. Anna Eshoo (D-CA) struck a less friendly tone on the FCC’s efforts towards closing the digital divide. After criticizing Chairman Walden’s description of net neutrality and privacy concerns as “falsehoods,” Rep. Eshoo moved onto the issue of broadband. She said that 24 million people have “low or no broadband.” Every time the FCC comes here we go over and over and over this issue and it’s not getting any better, she said. “Is there a 5-year plan at the FCC on this?” she asked. 

Commissioner O’Rielly responded by questioning her 24 million number, claiming that this ignores the 10 million people who have Internet access via satellite. Commissioner O’Rielly said, "We are working on the really hard area -- Remote Areas Fund needs to be set up. And we're going to need additional funding that we don't have today. And it will either require contributions from Congress in federal dollars, which I've testified in favor of, and the dollars went to other federal agencies, or it's going to require additional contributions from ratepayers to the likes we haven't seen before."


Rep. Peter Welch (D-VT)

Rep. Eshoo was not the only lawmaker to directly criticize the FCC’s efforts to reduce the digital divide. Rep. Peter Welch (D-VT) had an exchange with Chairman Pai over spurring broadband deployment in rural communities, where Rep. Welch called into question Chairman Pai’s deregulatory solutions. [You can watch the exchange here.]

Rep. Welch noted that in the 2018 Broadband Deployment Report, released under the leadership of Chairman Pai, there was a determination that broadband services are now being deployed to all Americans at a reasonable and timely basis. “What you said in your statement is that the current FCC is now meeting its statutory mandate to encourage the deployment of broadband in a reasonable and timely basis,” Rep. Welch said to Pai. "That's not what Congress is requiring. It's not to encourage. It's to Get. The job. Done."

Rep. Welch then went on to make sure he had agreement with Chairman Pai as to certain broadband facts and the recognition that these facts indicate there is a problem. Rep. Welch brought up the facts that:

  • 24 million Americans lack access to fixed broadband at speeds of 25 megabit per second (Mbps) download speed and 3Mbps upload speed; i.e., 25/3Mbps, the FCC standard for "broadband." Pai agreed.
  • 31% of rural Americans lack access to broadband service. Pai agreed. 
  • 44 million Americans lack access to both fixed at 25/3Mbps and mobile LTE broadband at 10/3Mbps. Pai said he had to double check those numbers, but had no reason to suspect they were incorrect.

Rep. Welch also wanted agreement that it is not the FCC’s job to encourage broadband deployment, but rather to get it done. “Absolutely,” Pai responded.

Rep. Welch then went on to directly question Chairman Pai’s deregulatory approach as a solution for the problem of the digital divide. Below is a transcription of their exchange:

WELCH: I have heard you talk about what you see as the benefits of deregulation including the elimination of net neutrality, correct? 

PAI: Correct.

WELCH: Alright. Let me be explicit. We could give you a pen, and you could write a revocation of every single regulation that exists. Will that provide the financial incentive for broadband carriers to buildout on dirt roads in Vermont and Iowa and Kansas where there is one house every half mile?

PAI: Congressman this is the central problem. In too many parts of the country there is no private business case for deployment. 

WELCH: Exactly. That’s my point.  [Crosstalk] Deregulation won’t get it done where there’s no market opportunity. 

PAI: That is not correct, congressman. Look at the letter from VTel [Vermont Telephone Company] which I appended to my testimony. VTel stated specifically they are spending millions of dollars more because of these regulatory modernizations.

Rep. Welch then thanked Chairman Pai for bringing up VTel. “What they said in the letter is that they’re going to invest $4 million more. What you didn't indicate was that VTel was the recipient of a $130 million ARRA [American Recovery and Reinvestment Act] grant. That’s kind of, like...relevant? It was actually public money that went into helping the broadband buildout.” He went on to say that there is agreement that "we have to get rural America wired", but that deregulation is not an adequate solution. “[I]t’s not gonna happen just with deregulation,” he said. “There’s gotta be some mapping. There’s gotta be some bolstered universal fund. There’s gotta be a promotion of local competition.”

At that point, Rep. Welch’s time expired.  “[T]his is a real, ongoing problem,” he concluded. 

Matt Wood, policy director at Free Press, live-tweeted about the exchange, writing “And @PeterWelch, despite @AjitPaiFCC interrupting him, nails it: simply removing all safeguards and rules protecting broadband users -- even if that were a spur to deployment (and it's not!) -- won't make the business case and the economics for rural broadband work.”

Lifeline

On the issue of Lifeline, Rep. Pallone said, “Universal service—critical to the most vulnerable populations—also has been undermined under Chairman Pai’s leadership. The FCC’s proposal to revise the Lifeline program is a particularly egregious example.  If adopted, this proposal could cut phone or internet service for approximately 8.3 million people. These are single mothers struggling to get by, veterans searching for jobs, and seniors on fixed-incomes. They are at risk of being left behind. The FCC should be looking for ways to help those struggling participate in our economy and community – not cut them off.”

Rep. Jerry McNerney (D-CA) asked questions on Lifeline, to which Commissioner Rosenworcel upbraided Chairman Pai and her colleagues for cuts to the program.  

Net Neutrality DDoS Attack

Rep. Deb Dingell (D-MI) questioned Chairman Pai on why the agency has yet to provide documentation of the supposed distributed denial of service (DDoS) attack it faced after comedian John Oliver told people to file net neutrality comments. Chairman Pai generally punted on the question.

Rep. Eshoo followed up on Chairman Pai’s non-answer, asking if Chairman Pai had referred the alleged DDoS attacks to law enforcement. Chairman Pai repeated that the FCC doesn’t have criminal law jurisdiction, again not answering whether the FCC had discussed the matter with authorities who do have jurisdiction. Chairman Pai ultimately said the FCC inspector general is close to releasing his findings on the attack. 

Commissioner Rosenworcel saw it quite differently. She said she did not think the FCC had been sufficiently cooperative with the various investigations, including one by New York state, and that that was a problem. "Our claim that the agency suffered a distributed denial of service attack following John Oliver’s report on our net neutrality plans is just not credible," she added.

Conclusion

Republican lawmakers and policymakers have been satisfied with the “light-touch” deregulatory approach to communications policy the Pai FCC has implemented. Democrats disagree, arguing the policies have hurt the American people, often at the benefit of corporate interests. 

Regardless, we anticipate much of the same oversight in the months ahead, hopefully on the quarterly schedule that the Republican leadership of the Commerce Committee promised. “Since the FCC is shirking its responsibilities, Congress should be conducting more oversight in the future,” Pallone said. We’ll see.

As always, you can follow FCC news everyday in Headlines. 

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By Robbie McBeath.

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