Julius Genachowski isn’t the only member of the Federal Communications Commission who is leaving the FCC. Commissioner Robert McDowell also announced his departure a couple of days ago after serving since 2006. The Republican McDowell and Democrat Genachowski found common ground on numerous issues and praised each other on their way out, but the two were also at loggerheads in some high-profile cases. The biggest in McDowell’s mind was the net neutrality debate, the commissioner told Ars on Friday. The FCC in 2010 approved net neutrality rules that prevented Internet service providers from blocking lawful traffic and banning discrimination against competitive services running over the ISP’s networks.
Wireless providers were exempt from the rules, angering many consumer advocates. McDowell, though, didn’t want neutrality rules at all, and he said that net neutrality was the biggest failure under Genachowski.
“I just think it was needlessly disruptive and a diversion of FCC resources. But it remains to be seen what the courts think of it,” McDowell said.
He elaborated:
First of all, I’ve been a strong advocate for a free and open Internet. What I opposed really focused on, first of all, there is no market failure that needed to be addressed. Second, the FCC did not have the statutory authority to do what it did. Third, if there had been a problem there were laws already on the books that would have addressed the problem.
There wasn’t a problem before the rules and there’s not a problem with any danger of a closed Internet in this country after the rules. For those who think the rules have preserved an open Internet, that’s sort of like a rooster taking credit for the sunrise.
When asked if net neutrality has caused any harm to businesses, McDowell said it’s not clear yet. There’s been no obvious harm, he said, because the FCC hasn’t yet taken any enforcement actions against companies for violating the rules. However, he said capital expenditures in broadband have remained flat even as the economy grew slightly between 2010 and 2011. It’s too early to tell if that is in any way connected to net neutrality affecting wired service but not wireless.
“Spending has always gone up unless there is an economic downturn, and between 2010 and 2011 there was no economic downturn, there was slow economic growth,” McDowell said.
He argued increases in network efficiency wouldn’t explain the slow spending, because networks are always getting more efficient. “There’s a shift to expenditures into the wireless space and one could argue that’s natural progression, and it probably is,” McDowell said. “But did that come at the expense of deploying fiber because fiber is subject to the net neutrality rules while wireless is not? We don’t know the answer to that, those are questions I’d like to have answered.”
The FCC’s biggest success
As for the FCC’s biggest success under Genachowski, McDowell pointed to the 2011 reform of the Universal Service Fund. He called this “the first federal entitlement reform since the 1996 Welfare Reform Act was passed by the Republican Congress and signed by Bill Clinton.”
The reform involved changing a fund designed to subsidize rural phone companies. “We eliminated duplicate subsidies for more than one company serving the same area,” McDowell said. “And we introduced competitive market incentives such as reverse auctions for the awarding of some of the subsidies. And then most importantly, we repurposed it to support broadband.”
McDowell acknowledged that Genachowski probably wouldn’t cite the fund’s reform as his greatest achievement, yet Genachowski worked across party lines to get it done in a 3-1 vote.
“Julius worked hard, relentlessly to find consensus,” McDowell said. “He took a risk in trying to make that happen. There were a lot of constituencies that have interests in the universal service program and it was fraught with political peril. He had the courage and the perseverance to make it happen.”
Many of Genachowski’s critics from the more liberal side of the aisle criticize him for being too conciliatory to corporate interests, favoring industry over consumers as we noted in our story Friday. But Genachowski gets criticism from multiple angles. TechFreedom, a conservative tech policy think tank, said “With the support of the equally personable Republican Rob McDowell, Genachowski’s legacy could have been progress on a range of issues where broad consensus exists, like eliminating the regulatory barriers that slow down broadband deployment.”
In TechFreedom’s view, that didn’t happen. The organization blasted the net neutrality decision and said Genachowski should have cleared more spectrum for mobile broadband providers.
However, McDowell praised Genachowski for being “a gentleman to work with. He was able to get past our disagreements quickly and move on to the next issue. And that’s how it should be.” And in a statement about McDowell’s departure, Genachowski returned the compliments. “Rob McDowell has been an extraordinary colleague—deeply knowledgeable about the vital and growing communications and tech sector, creative, wise, and a great partner on the Commission. … I’m proud that Rob is both a colleague and a friend.”
The future of the FCC, according to McDowell
More than 90 percent of Commission votes have been unanimous, McDowell said. Besides net neutrality, cases where McDowell dissented include the FCC’s wireless data roaming rules, a decision forcing Comcast to carry the Tennis Channel, and the closing of a “terrestrial loophole” that kept HD content off FiOS.
“The vast majority of what we do is unanimous,” McDowell said, although he expressed hope that the FCC will place fewer restrictions on mergers in the future. Under Genachowski, the FCC blocked the AT&T/T-Mobile acquisition and placed conditions on others.
“I think some of the merger conditions that were forced upon companies had nothing to do with the merger,” McDowell said. “I look at it as ‘what merger-specific harms are coming about’ and our conditions should be narrowly tailored and perhaps sunsetted to address those harms. For instance, the Comcast/NBCUniversal merger had a lot of conditions in there that were not related at all to the transaction. But others, we just saw T-Mobile/MetroPCS a few days ago, that one had a minimal amount of conditions and was handled well.”
One thing the next commissioner has to oversee is an auction to repurpose TV broadcast spectrum. That spectrum could be sold to wireless carriers for exclusive use, and some of it could go to unlicensed users to improve technologies like White Spaces. McDowell thinks the FCC will be able to appease both the carriers and White Spaces technology proponents.
“I’ve been a strong proponent of unlicensed use of spectrum, especially the unused TV White Spaces,” he said. “But I think the statute really compels us to auction what we harvest from the broadcasters, unless there is some technical reason to not do so. The short answer is that means there will still be plenty of leftover spectrum for White Spaces use. There will still be these gaps for unlicensed use. I think it could be a win-win scenario, I don’t think its a zero sum game that licensed wins, unlicensed loses, which is how some people are trying to paint it.”
President Obama will have to nominate replacements for both Genachowski and McDowell. The first quality that the replacements should have, McDowell said, is “a deep and detailed understanding of the issues that the FCC will face, substantive expertise first and foremost.” Second, he hopes the replacements will be “patient” with the fast-moving marketplace, and let it run on its own instead of imposing extensive regulations.
“None of us can predict the future when it comes to innovation,” he said. “The last thing you want is making a rule which freezes in place the status quo, which will likely change rapidly. Sometimes regulators succumb to the temptation of thinking they are smarter than the marketplace or thinking that a nudge from government will produce a better outcome than the market would have delivered on its own without interference.”
McDowell, the lobbyist?
What’s next for McDowell? It won’t be lobbying the FCC, at least not right away. “I can go work pretty much anywhere but there are rules barring your contact or advocacy with the FCC,” he said. “There is a two-year outright ban on advocacy, and other Obama administration restrictions on lobbying.”
Former Republican FCC Chairman Michael Powell is now CEO of the National Cable & Telecommunications Association. Given McDowell’s political views and experience, a similar lobbying job could be in his future, but he said that he has not yet decided what he’d like to do.
“I honestly do not know,” he said. “There’s not a job I’m gunning for. I’m starting with a blank sheet of paper.”
