Federal Communications Commissioners Tom Wheeler and Ajit Pai appeared before a House subcommittee Tuesday to address lawmakers concerns over what Republicans describe as a lack of transparency in the agency’s rulemaking process, and the widening partisan gap at the FCC.
Chairman Wheeler and his Republican colleague used the hearing as another opportunity to continue their ongoing agency boxing match over a round of upcoming agency actions including rules for next year’s spectrum incentive auction and television and unlicensed spectrum bundling.
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“For the nearly five years that I’ve had the opportunity to chair this subcommittee, as you all know I’ve consistently pushed to make the FCC a better, more transparent agency,” Oregon Republican Chairman Greg Walden said. “And yet it seems like the chasm between commissioners deepens over time.”
To highlight the the broad impact of those decisions and Republicans’ pushback on Capitol Hill, California Democrat and ranking member of the House Energy and Commerce Subcommittee on Communications and Technology Rep. Anna Eshoo noted in her opening remarks Tuesday’s appearance was Wheeler’s eighth before Congress in a year — a record for an FCC commissioner.
“I want to talk about your budget. House appropriators have really screwed the FCC in my view, and I don’t think it’s funny. I think it’s serious,” Eshoo told Wheeler. “There are so many things that are reliant on dollars, and I’m not talking about adding a load of extra dough, I’m talking about the agency being able to carry out its responsibilities.”
Last month the House passed an appropriations bill capping FCC’s 2016 budget at $315 million — a reduction of $25 million compared to 2015, and $73 million less than Wheeler asked for to facilitate moving the agency’s office space to a more affordable location and pay to enforce new rules including net neutrality.
Riders included in the bill prevent the FCC from enforcing the net neutrality rules called for by President Obama last year and adopted by the commission in February. The White House is expected to veto the bill, which will likely result in another last-minute omnibus spending bill to avoid a government shutdown, according to Eshoo.
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Wheeler replied he spoke with everyone in Congress willing to listen about the need for a budget increase, which he argued would be offset by FCC fees, a reduction in full-time employees and contractors, the closure of 16 field offices across the country and $190 million in rent savings from what the agency currently pays for its office space in Washington.
In the end, Wheeler lamented, the FCC will have to “live with the number Congress gives us.”
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The focus of Thursday’s hearing was the long-awaited 2016 spectrum auction, when wireless carriers will bid on airwaves bought back from broadcasters to feed the growing U.S. demand for big bandwidth mobile services like video streaming and photo uploading.
Commissioners will vote on the rules governing the auction next week — rules the chairman touted and Pai criticized.
“For nearly two years, all the interested parties have been jockeying for auction rules that benefit their position,” Wheeler said in his prepared remarks. “Now is the time to end the back-and-forth, make some hard decisions, and finalize our auction rules.”
Wheeler delayed the vote on those rules earlier this month over concerns from his fellow commissioners about a plan to place TV stations in the “duplex gap” — the airwaves that separate mobile data uploads and downloads. Wireless carriers and broadcasters who favor opening up more spectrum for unlicensed use worry the move could cause interference problems.
“Right now, commissioners are simply being asked to take on faith what we are being told, which is essentially that unless we adopt every aspect of the chairman’s proposals, the incentive auction will end in apocalyptic failure,” Pai said.
The Republican commissioner predicted interference concerns and a lack of data released by the commission on the plan will drive down bidding on spectrum, reducing the compensation to broadcasters for the airwaves they’re surrendering in the auction.
Pai said his ideas and those of fellow Republican Commissioner Michael O’Rielly for improving the auction — like offering broadcasters more money to buy more spectrum, thereby reducing spectrum overlap and interference, or moving broadcasters into the uplink portion where they encounter less interference — were largely ignored in the rulemaking process.
“Time and time again, Commissioner O’Rielly and I have offered ideas for improving auction rules and/or procedures,” Pai said. “Many of these ideas have been quite modest. Often, we receive no response at all. When we do receive a response, it’s almost always the same: no. There is no reason why there should be a party-line divide on largely technical matters.”
Among Pai’s concerns are reforms to “Designated Entity” subsidies to help small and minority-owned businesses purchase spectrum — reforms Pai described as “loopholes through which even minimally competent attorneys could drive a truck.”
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While the rules forbid bidding practices like those used by DISH in January to bid on spectrum through small subsidiaries and secure more than $3 billion in small business subsidies, the reforms allow entities to obtain subsidies for spectrum — meant to bolster competition and network expansion to underserved areas — and lease all of that spectrum to larger providers.
“Under the new rules, Donald Trump would be allowed to own most of a DE, get a taxpayer-funded discount on spectrum, and then lease all of that spectrum to AT&T or Verizon,” Pai said.
The auction rules the FCC will vote next month include a request by T-Mobile and DISH to increase the 30 MHz of spectrum reserved for smaller providers, which larger carriers like AT&T and Verizon oppose.
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“With more than 70 percent of low-band spectrum in the hands of just two providers, we want to make sure that multiple providers have a meaningful opportunity to acquire these valuable airwaves,” Wheeler said.
According to a senior FCC official Wheeler is expected to recommend against expanding the reserve.
