THE FCC'S REGULATION-WARY REGULATOR

Shortly after Commissioner Robert McDowell arrived at the FCC is 2006, he made clear that he would be no rubber stamp for fellow Republican and Chairman Kevin Martin.

He refused to go along with Martin’s proposal to impose multicast must-carry obligations on cable operators, forcing Martin to withdraw the item from an open meeting agenda. It was a declaration of independence for McDowell, an embarrassment for Martin.

So, it has come as no great surprise that McDowell has been resisting Martin’s latest efforts to heap new localism regulations on broadcasters.

He dissented on the FCC’s enhanced disclosure rules requiring stations to file quarterly reports on their local programming efforts. What’s more, he has sharply questioned proposals to require stations to set up community advisory boards and meet minimum local programming quotas.

Two weeks ago, in a speech at the Quello Communications Law and Policy Symposium in Washington, McDowell reiterated in his strongest language yet his opposition to Martin’s localism initiatives and his skepticism about regulation in general.

“Simply put, government cannot outsmart an unfettered and competitive market,” he said.

In this interview with TVNEWSDAY Editor Harry A. Jessell, McDowell elaborates on his problems with the localism push, expresses sympathy for those who would like to see less broadcast ownership regulation at a national and local level and touches on other issues of importance to broadcasters.

An edited transcript:

You used a series of rhetorical questions during your speech at the Quello symposium. I would like you to take a stab at actually answering one of them: “Why are we considering placing these proverbial albatrosses around the necks of traditional media precisely at this tipping point in history when they can least afford a regulatory disadvantage vis-à-vis unregulated platforms like the Internet?”

The answer to that question is, I think we should not be foisting regulations upon them. You don’t want to hand a drowning man a rock. The Internet is unregulated and other platforms may emerge that allow people to pull content of their choice from whenever and wherever they want. That’s revolutionary. So why are we disadvantaging one platform that has diminishing top-line revenue?

But the question is where is this desire to regulate broadcasting coming from at the commission?

That might be a better question for the chairman. I can only speculate. Certainly some of these issues were raised in the context of our media ownership proceedings—the 2003 proceedings and the ones that we concluded last December. While I don’t think there’s harm in asking questions, my concern has also been with the [enhanced disclosure] order that we came out with earlier this year as well.

This Form 355 requires TV stations to ascertain the programming needs of various segments of their community and to list all their programming in various categories such as local news, religious programming, programming aimed at underserved communities and programming that is produced by independent producers and so forth.

It requires very granular detailed information from all stations across the country on an ongoing basis, on a routine basis. There are a number of concerns. First of all, from what I’ve heard, from what’s in the records, stations will have to hire half a person or maybe even a person and a half to comply with it. So it means basically a full time job to comply with this. Second of all, why do we need all this information all the time? Is there another way to derive this information—at renewal time, for instance?

There are other ways to drive information rather than just collecting warehouses full of information all the time, putting a burden not only on the broadcasters, but on the commission as well.

You also said in that same speech that the FCC is “regulating with a wink and a nod” by requiring broadcasters to list the types of programming that they air. What do you mean by that?

This is an implicit and maybe backdoor way of regulating content and going back to the old ascertainment of rules of the 1970s when we had much less competition. So, while the commission is explicitly saying, oh, we’re just collecting this information, it’s really subtly telling broadcasters that they need to air a certain kind of content. So that troubled me from a variety of perspectives. It’s certainly a First Amendment concern, No. 1. No. 2, with many, many more media outlets now than ever before, and broadcasters facing more competition than they’ve ever had to face, won’t the market respond. Nobody has more of an incentive to respond to the needs of the local communities than the local broadcasters. That’s how they differentiate themselves in the marketplace.

Some of the old-line Republican communications policy makers believe that Martin is the most regulatory chairman of the last 30 years. What do you think, considering where he’s been on cable, where he’s now going on broadcasting?   

And there are some other issues. I will let others voice their opinions on that. I think it’s important to note that the vast majority of votes at the commission—I’d say well over 95 percent of them—are unanimous. But in the past year there have been a number of matters that I have had to speak with him on and Commissioner [Deborah] Tate has had to speak with him on and those seem to be increasing in frequency. It’s his prerogative to put forth his agenda and to find three votes. So, I wish him the best of luck in pursuing his agenda, but, at the same time, it’s my prerogative to respectfully disagree.

Were you surprised by his broadcast localism push?

He and I talked about it before it became public, but I was surprised by the breadth and depth of what the Form 355 ended up looking like as well as by the further notice and all of the ideas that are keyed up there. It looks like we could be going back to the old communication rules.

Why not just vote against that localism rulemaking? I think you concurred in part, approved a part? Why not just cast a no vote and send a strong signal?

Generally speaking, I don’t vote against rulemakings. I don’t think there’s any harm in asking questions because of conclusions that I might disagree with. We’re not making a rule. We’re not making policy by adopting a rulemaking. So I welcome the debate and, who knows, my mind can always be changed. So I don’t want to prejudge these things completely by trying to block a rulemaking from happening. But as this one was offered up, I had some serious questions regarding the premise of some of the ideas, which is why I had all those questions in that speech that you were referring to and in the statement.

Let’s talk about deregulation a little bit. You did loosen broadcast-newspaper crossownership slightly. Would you have gone further in relaxing that if you were the boss?

There is a good argument to make that the [U.S. Court of Appeals for the] Third Circuit upheld a blanket lifting of the ban. Legal scholars can debate that a little bit, but, if you read the fine language, it’s pretty obvious to me.

But what would you have done if it were up to you? Where would you have drawn the line?

It’s hard to say. This is a consensus document with a 3-2 vote. Each of the three of us became the swing vote. So, it was a compromise decision. The greatest of plans, when it comes to compromise time, sometimes get watered down.

Sticking with the structural regulations for a minute, do you favor relaxing the duopoly rules for small market TV stations?

You know I came from the wireline telecom side, so I think we should change the name of duopolies because it’s very misleading,

It is really self-defeating for the broadcasters, isn’t it?

It is self defeating, but that’s just an aside. The stations serving the smaller markets sometimes are the ones that are hurting the most economically and could use some help. We have to go back to why are they hurting economically. Why are TV and radio stations and newspapers—all the traditional media—seeing declining revenues? I believe it’s precisely because it’s a more competitive market. So there might be the danger of local news and information disappearing as a result of regulations that, ironically, are designed to promote localism. It would be in the public interest to reexamine that.

What do you think is going to happen on Feb. 18, 2009, the morning after?

For the most part, I think it will be a success. I’ve been a little bit more optimistic than some have been about the prospects for the DTV transition. There’s a lot of healthy anxiety and adrenalin coursing through the veins of a lot of people right now about this. That’s a good thing. But no one has more to lose than the broadcasters. So they have a tremendous incentive to physically knock on people’s doors, to hook up their boxes, in advance of the transition.

It could be that there will some folks that don’t get the word in time, but I’m hoping that in the hours and days immediately thereafter that they will be made whole as well.

Are you sympathetic to the broadcasters concerns about unlicensed devices in the broadcast spectrum, the so-called white spaces?

This is a matter of science and engineering. We should let pure science drive the decision and not politics.

If only we lived in such a world.

I know. So the FCC is busy testing devices. Thus far the devices haven’t done well, but inventors will keep inventing and we will keep testing. I can’t predict when or if there will be final resolution of this issue, but we should all remain calm and make sure that if there is any use of white spaces in the future it should be without harmful interference.

Should I put you down as a skeptic at this point given the trouble the devices have had in the testing lab?

I think in the long run technology tends to solve these problems. I just don’t know what the long run is. I don’t know how to define the long run. I don’t know if that means next month or five years from now. So I tend to be optimistic that technology will resolve this issue so that it’s win-win for broadcasters and for new technologists.

Most broadcasters would say that Martin has been too aggressive in enforcing the broadcast indecency statute. Would you agree?

Well, I voted for all of the indecency items that are now on appeal. Within a couple of weeks of my being sworn in as an FCC commissioner, we were all invited to the signing ceremony where President Bush signed into law the new federal statute increasing [idecency] fines tenfold. The directly elected representatives of the people had passed legislation calling for increases in the fines. The FCC is trying to discharge its duties as mandated by Congress and the system is working. We will hopefully get guidance from the Supreme Court soon and we will have a clearer road map as to what we can and cannot do in terms of enforcing that statute.

But you sort of like where the FCC is right now. You’re not breaking ranks with the chairman on this issue.

I’m not. However, I think it’s important for us to wait and see what the courts do and that will give us more guidance. If they pare back our authority, then I will be faithful to that order.

Now, as we all know, broadcasters like regulations, the ones that benefit them. You have opposed multicast must carry. What’s your problem with it?

First of all, I don’t think we’ve got the statutory authority to do that. The relevant part of the statute was enacted in 1992 before multicasting was even envisioned. Second of all, there’s another First Amendment problem, this time for cable companies. The Turner decisions upholding must carry—there are were two of them at the Supreme Court—were both 5-4. They are very fragile decisions. With the changes on the Supreme Court since then, we would see possibly that 5-4 majority go the other way. So there’s a very real chance that the entire must-carry regime could be struck down if we were to enact multicast must carry here at the commission.

Maybe this is something that the broadcasters don’t want to mess with then.

They might not want to go there. You’ve got to be careful what you wish for.

Do you see any chance of that getting resurrected at the commission with Martin getting so cozy with the Democrats?

I don’t want to speak for the other offices. I guess anything is possible.

But nothing is shaking there.

Not that I’ve heard, but you never know. Sometimes I’m the last to know.