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FCC Chair Grilled By Congress Over Favorable Treatment of AT&T, Verizon

Commission's Treatment of Cable, Telecom Companies Not Even-Handed?

By Martin H. Bosworth
ConsumerAffairs.com

March 14, 2007

Broadband Access • Comcast to Cap Internet Usage for Customers • Comcast to Slow Internet Speeds for Heaviest Users • Report: Metered Broadband Bad For Consumers, Businesses • FCC Votes to Punish Comcast for Content Blocking • Comcast Tries to Polish Its Image • Communications Industry Urges Congress to Act on Broadband • Comcast Cuts Deal With Vonage on Internet Traffic • Court Upholds FCC's Video Rules • Report: U.S. Broadband Adoption Slowing • Critics: FCC Inaction Slows Economic Development • Few Are Neutral in Net Neutrality Battles • Google Petitions FCC Over Verizon's Use of Wireless Spectrum --- More ...

An especially vigorous House panel grilled the Federal Communications Commission (FCC) today, with Commerce Committee Chair John Dingell (D-MI) asserting that the FCC was "overstepping its authority" by imposing its video franchising rules on states and municipalities.

Referring to the FCC's recent order to states to streamline the approval of new video franchises, Dingell said that "[i]f reform of that regulatory structure is necessary, then it is Congress' prerogative to take such action as we have done before."

The FCC's rules make it easier for Verizon, At&T and other would-be competitors to get local cable TV franchises. At the same time, they limit the authority of states and municipalities to oversee the new entrants and protect consumers.

Under the new rules, local communities would have a time limit of six months to approve new entrants into a market for video, and 90 days for companies that already provide other services. The rules also free new franchises from requirements to "build out" new services to an entire community, meaning that new entrants could choose to serve only the more affluent sections of a city or region.

Critics of the rules say they were designed solely to benefit AT&T and Verizon, with little regard for consumers or other players in the marketplace.

"[Franchise reform] is not the role of the FCC. The Commission chose to ignore the well-settled divisions of responsibilities, that is unwise," Dingell said.

At another point, FCC chairman Kevin Martin was asked by Telecommunications Subcommittee chairman Ed Markey (D-MA) why the commission did not investigate reports that the National Security Agency (NSA) had illegally acquired the phone records of Americans. Martin responded that the agency had been prevented from investigating due to "national security" concerns.

Markey said that Martin should expect to be a "frequent visitor" before the committee, and Dingell agreed, suggesting that the committee should hold oversight hearings of the FCC on a monthly basis.

Dingell's comments were typical of the increased scrutiny the Republican-led FCC is facing in a Democratic Congress, at a time when the FCC is involved in numerous issues ranging from public-interest rights for digital television to the possible reinstatement of caps on subscribers to cable companies. The FCC is planning to issue a new order codifying that cable companies cannot serve more than 30 percent of potential subscribers in the United States.

The order stems from a 1992 ruling to prevent mass consolidation of the cable industry and reduce subscriber choices. Cable companies such as Comcast and their lobbyists have challenged the 30-percent cap in recent months as unnecessary, given the proliferation of alternative entertainment services that provide video.

Cable companies also objected to the franchising decision, saying it represented a giveaway to their competitors in the telecom industry, and that they would negotiate for the streamlined rights as well.

Martin's friendliness towards telecom companies was demonstrated by his heavy push for the merger of AT&T and BellSouth to form the country's largest telecom company. The merger was stalled over objections from Democratic Commissioners Jonathan Adelstein and Michael Copps, but was passed after AT&T agreed to support "net neutrality" for its basic Internet services -- a concession Martin opposed and intimated he would not enforce.

That stance drew criticism from Committee member Anna Eshoo (D-CA) during the hearing. Rep. Eshoo said it was "rather extraordinary" that Martin would state his intent to not enforce the net neutrality provision of the agreement. Martin insisted that he would do so.

Eshoo was particularly critical of Martin's style of running the FCC, claiming that companies had complained to her of Martin's "heavy-handed manner."

"I continue to hear complaints that the commission is unresponsive, insular and even capricious at times," she said.

The FCC has also been criticized for burying or suppressing reports that would contradict their political objectives.

During a push by Martin to enable greater consolidation and cross-ownership of local television stations, an FCC report surfaced that claimed local news stations benefited from local ownership. The report, commissioned by Martin's predecessor, Michael Powell, was ordered destroyed. Martin claimed he had never seen the report.

The FCC recently terminated another study that found wireless emergency 911 services did not work effectively for cellphones when called from inside buildings.

The report's author, Dale Hatfield, presented his findings to the FCC, but was told the study was being discontinued. That didn't satisfy Rep. Mike Doyle (D-PA), another Telecommunications Subcommittee member. Doyle said that Martin was "strangely silent" on the matter, which he found "puzzling," and promised to pursue it further.

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