Stearns Seeks Telecom Act Rewrite After House Democrats Fall

Communications Subcommittee Ranking Member Cliff Stearns, R-Fla., wants to have hearings in early 2011 about rewriting the Telecom Act for the 21st Century, Stearns told us in an interview. Stearns plans to seek the chair of the full Commerce Committee if current Ranking Member Joe Barton, R-Texas, doesn’t get a waiver from GOP leadership, he said. Otherwise, he would like to be chairman of the Communications Subcommittee, and Barton has told Stearns he could have it, Stearns said.

"There’s been a lot of work put into” the net neutrality deal worked on last September by Commerce Committee Chairman Henry Waxman, D-Calif., Stearns said. But Stearns didn’t support putting a bill out without a hearing, he said. “Let’s bring that compromise up for a hearing, let’s hear the stakeholders talk about it, [and] let the American people including the FCC comment on it, and then we'll know better what to do."

Boucher’s USF bill meanwhile will be resurrected next year by Republican cosponsor Rep. Lee Terry, R-Neb. “I do plan to reintroduce the bill as there is overwhelming industry support for this legislation,” Terry said Wednesday. “I am confident this bill can move forward in Congress.” Terry said the bill “would not be what it is today without the help of Rick Boucher."

Online privacy will be a top priority for the Commerce Committee if Barton, becomes chairman, Barton said Wednesday. Barton aims to “find out if Internet privacy policies really mean anything,” he said. “Millions of people put their information into the hands of Web sites like Facebook because they believe what they're told about walls protecting their privacy. I want the Internet economy to prosper, but it can’t unless the people’s right to privacy means more than a right only to hear excuses after the damage is done."

Boucher, first elected in 1982, was upset by Republican Morgan Griffith, despite a large funding advantage and favorable ratings by political analysts. Boucher got 47 percent of the vote, but Griffith got 51 percent. The House Communications Subcommittee also lost Democratic Reps. Zack Space of Ohio and Baron Hill of Indiana, while a race between Rep. Jerry McNerney, D-Calif., and Republican David Harmer was too close to call at our deadline. Republican Charlie Bass, a former Commerce Committee members with knowledge of rural telecom issues, took back his seat in New Hampshire. Meanwhile, Subcommittee Republican Roy Blunt, a strong net neutrality opponent, was elected to the Senate in Missouri.

The losses of Boucher, Space and Hill, combined with the departures of Reps. Bart Stupak, D-Mich., Bart Gordon, D-Tenn., and Charlie Melancon, D-La., mean a huge loss of key rural Democratic membership on the House Communications Subcommittee. Boucher’s loss in particular opens a “huge void for the rural industry,” said Paul Raak, vice president of the Independent Telephone & Telecommunications Alliance. The only rural Democrat left on the subcommittee is Rep. Peter Welch, D-Vt., but Welch is currently lowest in seniority and could be forced out of the subcommittee to make room for new Republicans, Raak said.

Meanwhile, Senate Commerce Committee members up for reelection kept their seats. Sen. Barbara Boxer, D-Calif., beat out former Hewlett-Packard CEO Carly Fiorina in a race that was closely watched by the telecom and tech industries. Sens. Jim DeMint, R-S.C., Johnny Isakson, R-Ga., David Vitter, R-La., and Daniel Inouye, D-Hawaii, won their elections as expected. In other Senate races, Democratic Sen. Blanche Lincoln lost to John Boozman in Arkansas. Lincoln oversaw the Rural Utilities Service as chair of the Senate Agriculture Committee. Sen. Russ Feingold, a critic of media consolidation in the Judiciary Committee, lost to Republican Ron Johnson. Meanwhile, Richard Blumenthal, the Democratic attorney general from Connecticut who led an investigation of Google “Street View,” was elected to the Senate.

And on ballot proposals, Microsoft Founder Bill Gates and his father supported an initiative to impose an income tax on the top 1 percent of Washington state earners to pay for education and health programs. Preliminary results show the referendum lost 65-35 percent. Amazon.com founder Jeff Bezos, Microsoft co-founder Paul Allen, Microsoft CEO Steve Ballmer and software billionaire Charles Simonyi opposed the measure.

Change May Doom Net Neutrality

Net neutrality is the most partisan among all communications issues on the Hill, with Republicans generally against it and the incoming freshman GOP House members particularly so, said industry officials. They said spectrum is somewhat partisan in that the incoming Republicans who seek to reduce the deficit and government spending may be more inclined to seek a higher cut of any incentive auction revenue for the Treasury, and less for licensees such as broadcasters. Retransmission consent rules for carriage deals between TV stations and subscription-video providers aren’t partisan, industry officials said.

Net neutrality supporters now face an uphill fight. The top four Republicans seeking to be chairman of the Commerce Committee have all opposed broadband reclassification. Also, all 95 election challengers and open-seat seekers who signed a net neutrality petition by the Progressive Change Campaign Committee lost their elections. Republicans probably won’t pass a net neutrality bill, said former Rep. Albert Wynn, who was a member of the House Commerce Committee and now lobbies for Dickstein Shapiro. “The overriding philosophy of the GOP is unless there’s a clear problem, they will not introduce regulation,” he said. “Net neutrality is a classic example.”

Don’t expect Republicans to advance anything on net neutrality, agreed ITTA’s Raak. House action on the issue is still possible, but it will look very different from what the Democrats sought, said Tom Wacker, vice president of the National Telecommunications Cooperative Association. It may still be possible to find bipartisan agreement on the deal that House Commerce Committee Chairman Henry Waxman, D-Calif., tried to finish in September, said Hal Singer, managing director of Navigant Economics. The deal didn’t contain controversial price regulation, but Republicans will still have to be convinced there’s a problem that’s worth addressing with legislation, Singer said.

"Comprehensive telecom legislation is unlikely” in the 112th Congress, said communications lawyer Andrew Lipman of Bingham McCutchen. “There are several areas of consensus for specific, rifle-shot bills” including on spectrum, he said. “Both the Republicans [and] the Democrats recognize the acute need for more spectrum.” And “if there is an industrywide consensus on net neutrality, then Congress could adopt conforming legislation.”

"If someone does something bad in the marketplace, I think there will be a hue and a cry” on net neutrality and a Republican House could be more inclined to intervene, said CEA President Gary Shapiro. He sees a “bipartisan consensus” on spectrum. “There’s a new source of revenue” for the government, “and it’s spectrum,” he said. Unclear is whether the parties will differ, and by how much, on what cut of auction proceeds broadcasters should get from giving up their spectrum for wireless broadband use, he said.

Boucher’s defeat means a legislative overhaul of USF will be slowed down significantly, said John Nakahata, who was an adviser to then-FCC Chairman Reed Hundt and now is a partner with Wiltshire & Grannis. “It seems unlikely that there will be significant legislation out of this Congress,” Nakahata told us. But Boucher and Terry worked too hard to find consensus on USF for Terry to abandon legislation now, Raak and Wacker said. Terry likely would seek a new Democratic cosponsor but it’s unclear who since the bill’s other major co-sponsor, Space, also lost his election. Boucher and Terry may have differed on a few areas, but it’s unlikely Terry would risk breaking the consensus the legislators achieved, Wacker said.

GOP gains won’t affect most rural issues because they are nonpartisan, said Wacker. The split between rural and urban members will have more influence, he said. Wacker and Raak said their associations will turn to subcommittee Republicans to lead on rural issues. NTCA plans to work with Terry and returning member Rep. Greg Walden, R-Ore., Wacker said. Rep. Fred Upton, R-Mich., and John Shimkus, R-Ill., who are seeking chairmanship of the Commerce Committee, also know rural issues well, Wacker said. Meanwhile, in the Senate, rural telcos may have a new champion in Blunt, who served on the House Communications Subcommittee and comes from a rural district, Raak and Wacker said. But first he'll have to get a seat on the Senate Commerce Committee, they said.

Meanwhile, the Tea Party and other Republican’s emphasis on deregulation could be a blow to competitors seeking special access regulation and spectrum caps, said Public Knowledge Legal Director Harold Feld. CompTel plans to immediately get up on the Hill to educate new members on competitive issues, said CEO Jerry James in an interview. The GOP likely will put off many telecom issues, including a potential revamp of the Telecom Act, until later in the session, because Republicans say their focus is the economy, jobs and repealing healthcare, James said.

While much depends on committee composition, it’s unlikely there will be “Titanic shifts” in Congress’s approach to spectrum issues, said CTIA Vice President Jot Carpenter. Both parties want to free up wireless spectrum, said Mobile Future Chairman Jonathan Spalter. “With the election behind us, now is the time for policymakers to put partisanship aside, roll up their sleeves and look for ways to work together to resolve the pressing issues facing American consumers."

On spectrum, Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va., “seems intent on moving a fairly significant bill” that includes the D block and incentive auctions, said Managing Director Gregg Rothschild of the Glover Park Group, a former top Democratic House Commerce aide. If the Senate passes a spectrum bill, “presumably the House would take it up in some form and you could actually have some significant legislation pass in the 112th Congress on that topic,” Rothschild said.

On retransmission consent, it’s hard to see whether the consumer harm pay-TV providers contend come from carriage deals’ higher prices could get Republican lawmakers interested in the issue or be trumped by the party’s general distaste for regulation, industry lawyers said. “This is not a deficit issue, so consequently in the scope of the new Republicans coming into the House majority that are looking to be deficit hawks, retrans is not on that list,” said President Matt Polka of the American Cable Association, which is seeking changes to retrans rules. “Even though `the deals got done,’ now I think lawmakers see this really is a broken market and something really needs to be done."

The election may affect legislation expected to impact the satellite industry, said industry executives. For instance, the power shift could add to the polarization on issues like export control reform, they said. The space industry has long criticized the government’s stringent controls on satellite parts as detriment to the business. Another effect may be an increased role for satellite broadband as Congress looks to cut down on costs in broadband initiatives. Broadband satellite providers point to their service as an easy way to provide broadband without the heavy costs of building out terrestrial service to rural areas.

Cybersecurity, Privacy Survive Into Next Congress

Despite the harsh tone of the campaign, several tech issues enjoy so much bipartisan support that Congress should be able to pass major bills, said several technology analysts Wednesday. Cybersecurity is a good example, said former Rep. Albert Wynn, a Democratic member of the House Commerce Committee during his 16 years in Congress and now a member of the Dickstein Shapiro lobbying firm in Washington. Wynn admits he’s “more optimistic than some” but predicts Republicans and Democrats must show they can get things done during the next session. The Republican win makes passing legislation much more difficult, added Internet Security Alliance President Larry Clinton. But a lot of Tea Party-backed Senate candidates are veteran politicians who know the system, and House Republicans will feel responsible to move bills. “I don’t see complete gridlock,” he said.

Both parties view cybersecurity as an important national security issue, Wynn said. Debate will center on whether the bill should contain federal mandates for private sector industries such as financial services, and Republicans could be divided between their traditional limited government philosophy and a desire for security, he said. Spending in the bill will also be an issue, he added.

Republicans attach more importance to security issues, said Clinton, and their new majority in the House will pay more attention to it instead of signing off on what the Senate sends over. As for that chamber, Clinton predicted a stronger GOP will push for a less regulatory, more pro-market bill but that cybersecurity already enjoys bipartisan support. The fact that major cybersecurity supporter and Senate Majority Leader Harry Reid, D-Nev., barely won re-election won’t weaken his ability to get a bill done, said Clinton. “You either get elected or you don’t,” he said, predicting Reid will retain leadership.

TechAmerica lobbyist Liesyl Franz sees the status quo holding in the Senate on cybersecurity, with the same leadership and sponsors of the bills. “We expect an impetus to reintroduce bills that have been marked,” she said. Obviously, no one knows what the new House leadership will do, but cybersecurity will continue to be a major issue, she said. “I'm not sure what our starting point will be or how quickly we move on it, but it’s a matter of when and how,” she said.

Privacy is another bipartisan issue, though it isn’t at the top of the GOP’s agenda, said Wynn. Republicans take it seriously but are conflicted by the business wing of their base. Absent a major market failure in the area of privacy, the GOP will not push it, Wynn said. The defeat of Rep. Rick Boucher, D-Va., impacts the debate, said Chris Wilson, TechAmerica’s director and counsel of e-commerce and telecommunications. But the privacy issue isn’t going away, he said. Rep. Bobby Rush, D-Il., is still in Congress and will have a voice in the debate, he said. Wilson sees more action from the Senate on privacy legislation. An upcoming FTC report on the roundtables the agency held this year on privacy could come out in a few weeks and impact the debate, he said.

A solid bipartisan backing will help maintain momentum that privacy legislation gained in Congress, experts said. “We're still going to see traction on the bill,” said Ryan Calo, director of the consumer privacy project at the Stanford Law School Center for Internet and Society. The concern over privacy “has reached a critical mass among privacy groups and the general public,” he said. With Boucher gone and Republican control of the House, the country may see a bill that is “more in the direction of user control,” rather than a bill with “an emphasis on substantive restrictions on how information can be collected and processed by companies,” Calo said. The change could be “an opportunity to have more meaningful discussion and drive this thing forward,” said Craig Spiezle, executive director of the Online Trust Alliance. If Stearns is the commerce subcommittee chairman, “the hope is he'll combine some efforts of the Boucher bill with the Rush bill,” he said.

Stearns “may want to have a high-profile role in another committee,” which could leave the Boucher-Stearns privacy bill orphaned, said Chris Wolf, co-chair of the Future of Privacy Forum. But pressure to prioritize privacy will be driven by headlines, he said. It will remain a priority “if we continue to see more coverage about privacy not being respected,” Wolf said.

Among other issues, intellectual property has bipartisan appeal, said Wilson. In fact, both parties have such strong interests in it that the election doesn’t change the dynamics terribly, he said. Copyright also “has tremendous support in either side of the house,” said Patrick Ross, executive director of the Copyright Alliance. “I assume there will be some sort of legislation in online piracy in both sides.” It’s agreed that “you can’t have offshore websites profiting from infringement and expect that to be tolerated,” he said. The structure of the House Judiciary Committee will be worth keeping an eye on, Ross said: If the issue is addressed in a subcommittee, “a logical candidate to chair the subcommittee is Rep. Howard Coble,” R-N.C.

Boucher Loss Shocks Telecom

The telecom and tech community lamented Boucher’s defeat. Many cited Boucher’s fairness and immense knowledge of telecom issues. Boucher was “an extraordinary public servant and a great leader across the whole gamut of telecommunications issues,” said FCC Commissioner Michael Copps. “His dedication to broadband, his leadership to reform Universal Service to make sure the wonders of advanced telecommunications are available to all our citizens, and his uncommon ability to bring contesting parties to the table to forge workable compromises are the stuff of legend."

"The loss of Boucher is a big one,” said Katherine McGuire, Business Software Alliance government relations vice president. He dominated the privacy issue as a leader, she said. “We'll be pleasantly surprised to see who steps in there.” There aren’t a lot of new members coming in who have a tech-savvy background, she added.

"Even as a member in minority, Boucher would have been a driving force on USF, spectrum, and an ally against copyright maximalism,” said Feld. Boucher is a loss in particular because he offered a “bridge” between the Commerce and Judiciary committees, as a senior member of both, said a former FCC official. That was especially important on issues like retransmission consent, the official said. Telecommunications Industry Association President Grant Seiffert said “Congress will miss out."

In Boucher’s absence, some privacy advocates are looking to other legislators, like incoming Sen. Richard Blumenthal, D-Conn., and Rep. Ed Markey, D-Mass., to strengthen efforts to champion privacy, they said. “Blumenthal has been very aggressive on privacy investigations and settlements,” Wolf said. Rep. Anna Eshoo, D-Calif., also is “attuned to these issues” especially since her district includes Google, he said.

Tech Stingy With New Legislators

The wave of incoming freshmen legislators in the House had little early help from the telecom, media and technology industries, our analysis of campaign finance data shows. Among non-incumbent candidates that won seats in the House or Senate, only a handful received more than $5,000 in direct contributions from the large political action committees associated with those industries by October. We looked at contributions made to candidates by PACs including those of USTelecom, NCTA, NAB, CTIA, Verizon, AT&T, CWA, Qwest, Comcast, Disney Employees, Clear Channel, Google and Microsoft, based on Federal Elections Commission data compiled by CQ Moneyline. Contributions made within the final eight weeks of the campaign aren’t yet reflected in the available data.

AT&T and Verizon were the clear frontrunners in donating early to the campaigns of non-incumbents who either toppled sitting legislators or won open seats Tuesday. Our analysis shows AT&T’s PAC gave $67,500 to the campaigns of non-incumbents who won Senate seats Tuesday, while Verizon’s gave $40,000 to those candidates. In House races, AT&T’s PAC donated $41,000 to new representatives while Verizon’s gave $29,000. Though the amounts represent just a fraction of the PACs’ overall donations, they far exceed the contributions to those campaigns by other communications industry PACs, our analysis shows.

House veterans who won Senate seats drew the most early contributions from communications sector PACs. Rep. Roy Blunt, R-Mo., raised the most money early on from the sector in his bid for the Senate. He raised more than $48,000 early on from a variety of communications industry PACs, including NAB, the American Cable Associations and Viacom. Tea Party winner Marco Rubio, Senator-elect from Florida, received $2,500 from each Verizon and AT&T’s PAC. Sen.-elect Rand Paul of Kentucky, another Tea Party winner got $2,500 from Verizon’s PAC.

Some defeated incumbents raised significant sums from communications industry PACs. The failed campaign of Communications Subcommittee Chairman Rick Boucher, D-Va., (see separate report in this issue) received contributions from 19 of the 21 PACs we tracked. In fact the PACs we tracked gave more to Boucher’s campaign than they did to all the non-incumbent winning candidates in the House combined.

By funding the campaigns of incoming legislators early on, Verizon and AT&T may have done a better job than others at reading the tea leaves of the election, granting them “a margin of access, which gets you a margin of influence,” said Jim Harper, a scholar at the Cato Institute. But because new members of Congress tend to be ineffective legislators off the bat, their support may not reap huge rewards right away, he said. Furthermore some of the Tea Party-backed winners may be less comfortable with being lobbied by supporters than would be other candidates who came up through more established political machines, he said. “The new crop in the House is going to be relatively resistant to traditional lobbying,” Harper said.