FCC, TV, Internet Set For Big Changes in 2009

Barack Obama, Broadband, Cable Television, Digital, FCC, Internet, Net Neutrality


David Ho

Cox News


January 28 New York

From an Obama administration plan to give all Americans broadband to the nation’s looming switch to digital television, the communications landscape is expected to see big shifts in 2009.

At the heart of much of the change is the Federal Communications Commission, which soon faces its own shake-up as at least one commissioner departs and Democrats take charge.

That could mean policy changes at an agency that oversees everything from cable providers and radio airwaves to public safety communications and broadcast indecency rules.

Overall, experts say, President-elect Barack Obama’s tech-savvy team will be more involved in telecommunications issues than the Bush administration was.

“Obama looks at these issues as part of the solution to unemployment challenges and as an economic stimulant,” said Andy Lipman, who leads the telecom-media practice at the Bingham McCutchen law firm in Washington.


The new FCC will begin taking shape in early January as the term of Republican Commissioner Deborah Taylor Tate ends. The president appoints commissioners for limited terms, with the party in power getting three of five spots, including the chairmanship.

Republican Chairman Kevin Martin will likely leave the agency when the new administration takes office, and Obama is expected to appoint one of the commission’s two Democrats – Michael Copps or Jonathan Adelstein – as interim chairman. One of them could get the long-term job, but many names have circulated as potential candidates.

While Senate confirmation could take months, Obama’s FCC chairman will arrive with a well-defined agenda, said Ben Scott, policy director for the advocacy group Free Press.

“The president-elect has been so clear and detailed about what he wants to do in telecom and media policy, whoever becomes chairman is going to inherit that set of expectations,” he said.


Perhaps the biggest expectation involves improving the availability of high-speed Internet access. That goal is likely to be a part of the huge stimulus package that Obama and his Democratic allies in Congress ambitiously want to enact soon after he takes office Jan. 20.

“It is unacceptable that the United States ranks 15th in the world in broadband adoption,” Obama said this month. “Here, in the country that invented the Internet, every child should have the chance to get online. … That’s how we’ll strengthen America’s competitiveness in the world.”

Figuring out how to make that happen has prompted considerable debate, with lawmakers, consumer groups and tech companies chiming in.

“They need to create some kind of mechanism that encourages industry to quickly start deploying faster and farther,” said David Kaut, an analyst with the Stifel, Nicolaus & Co. investment firm. “There’s going to be a lot of scrutiny that it produces jobs in the near term and not just jobs already scheduled.”

The Telecommunications Industry Association and other players favor tax breaks and grants to encourage network building.

One floated proposal involves supporting a broadband rollout through a $7 billion fund that draws on monthly phone bill fees to subsidize calling service in rural and poor communities.

Digital TV

As wrangling over broadband plays out, another mammoth change takes center stage on Feb. 17 as the nation’s TV broadcasters cut off analog signals. The goal is to offer new digital channels with improved picture and sound quality while freeing up radio airwaves for uses such as wireless broadband.

To watch digital programming on older analog sets, consumers need converter boxes. The government is offering coupons to help pay for them.

But when the digital deadline comes, “inevitably you’re going to have lots of people with problems,” Scott said. Recent surveys indicate many consumers remain confused about how it will work.

Key lawmakers told the FCC’s Martin this month that his agency should make smoothing the digital transition the No. 1 priority in the weeks before the inauguration. Martin promptly canceled a meeting on other issues.

The digital changeover has “sucked the oxygen” out of every other telecom topic before the FCC and will dwarf everything else in the first few months of 2009, Lipman said.

Net neutrality

One issue facing a priority shift is net neutrality, or the idea of an open Internet where network providers don’t interfere with Web content and treat all traffic the same.

In August, a precedent-setting FCC decision found that cable giant Comcast Corp. violated federal policies when it blocked customers from sharing online videos and other large files.

Obama has made net neutrality a top communications priority and some lawmakers would like it to be part of a national broadband strategy.

However, the urgency behind government action has faded in recent months as the online content and network sides have come closer together, Lipman said.

He said the issue could flare up if Comcast wins a legal challenge to the FCC ruling, but that decision is a year or two away.


The Obama FCC also is expected to apply more scrutiny to mergers while resisting telecom deregulation and weaker media ownership rules.

The new commission may swing back toward President Bill Clinton’s FCC, which exerted tighter control over industry, said Jeff Kagan, an independent analyst in Atlanta. He said companies complained then that regulations could not keep pace with changing technology.

“When the Bush administration took over, the pendulum swung all the way to other side,” resulting in enormous consolidation, Kagan said. He said the challenge for the Obama administration is finding a middle ground.


One industry looking forward to change at the FCC is cable, which has battled with Martin over a variety of issues including ownership limits and his push for “a la carte” programming, where cable subscribers buy only the individual channels they want.

Some in the industry worry about new net neutrality restrictions, but many FCC watchers expect pressure on cable to ease and the a la carte issue to fade as broadband becomes the top priority.

Lipman said cable companies typically do better with Republicans in power, but without Martin “paradoxically cable will probably end up doing better in the Obama administration.”

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