FCC: How will changing of the guard impact big telecom issues?

From universal broadband to 'Net neutrality, FCC's Julius Genachowski's team will have its plate full

Once Julius Genachowski officially takes over the FCC later this month, he will have to deal with both immediate challenges, such as the impending transition from analog to DTV, as well as more long-term goals, such as deciding whether to impose 'Net neutrality rules and bringing broadband to underserved regions.

Now that Julius Genachowski has been selected  by President-elect Barack Obama to chair the Federal Communications Commission, he can expect to be a very busy man over the next four years.

Once Genachowski officially takes over the FCC later this month, he will have to deal with immediate challenges, such as the impending transition from analog to DTV, as well as more long-term goals, such as deciding whether to impose 'Net neutrality rules and bringing broadband to underserved regions. As if that weren't enough, Nemertes Research analyst and Network World columnist Johna Till Johnson says that the decisions that Genachowski and the FCC make over the next four years could very decide "the fate of the Internet."

But before diving into the specific issues on the FCC's plate, it's useful to have some basic background information on its incoming chairman. Genachowski had previously worked at the FCC as the chief counsel to former FCC chairman Reed Hundt and has also been a senior executive at the IAC/InterActiveCorp e-commerce company, as well as a member of the boards of directors for Internet companies such as Expedia and Hotels.com. During the 2008 presidential election, Genachowski served as chairman of the Obama campaign's Technology, Media and Telecommunications policy working group, and he is a leader on the Obama transition team's policy working group on technology, innovation and government reform. Obama and Genachowski have known each other since the early 1990s, when the two men worked at the Harvard Law Review while students at Harvard Law School.

Although Genachowski's background is more in the legal realm than in the technology domain, Johnson says that she is cautiously optimistic because Genachowski seems to have a good grasp of the big-picture issues facing the telecommunications industry.

"One of things I liked about Genachowski is that when he was working for the Obama campaign, he accurately articulated the biggest problem facing the United States from a technology standpoint, which is the underinvestment in technological research at the educational and university level," she says. "We're still living off the proceeds of the research and development investments we made in the '60s and '70s."

The issues at stake

Genachowski's most immediate challenge will be to oversee a successful transition from the old analog television broadcasting system to the new digital system that is due to officially switch over on Feb. 17. So far, President-elect Obama has called upon Congress to delay the switch in order to give U.S. consumers more time to educate themselves about the transition and to learn what equipment they may need to buy in order to receive digital signals on their old analog televisions. Outgoing FCC Chairman Kevin Martin, however, has said that it would be a mistake to delay the DTV transition and has instead proposed extending the deadline for consumers to purchase discounted digital converter boxes through the government's converter box coupon program. No matter whether Congress decides to extend the DTV deadline, the switch is certain to consume the first few months of the FCC's time as the commission works to figure out how many Americans are still in the dark about how to purchase a DTV converter box.

After this, the FCC will likely turn its attention to two topics that have generated a lot of headlines in recent years: 'Net neutrality and universal broadband. In the former case, 'Net neutrality is the principle that ISPs should not be allowed to block or degrade Internet traffic from their competitors in order to speed up their own. Several consumers' rights groups, as well as large Internet companies such as Google and eBay, have led the charge to get Congress to pass laws restricting ISPs from blocking or slowing Internet traffic, so far with little success.

The major telcos, meanwhile, have uniformly opposed 'Net neutrality by arguing that such government intervention would take away ISPs' incentives to upgrade their networks, thus stalling the widespread deployment of broadband Internet. In order to keep maintaining and improving network performance, say 'Net neutrality opponents, ISPs need to have the power to use tiered networks to discriminate in how quickly they deliver Internet traffic.

'Net neutrality advocates have been quick to praise Genachowski's nomination, as they see him as someone who will be a reliable ally in their cause.

"Expect Genachowski to turn his attention to bringing more choice to a broadband market controlled by a cartel of phone and cable companies," writes Tim Karr, the campaign director for media advocacy group Free Press. "He's also expected to pry open valuable spectrum to broadband innovation and access, something his predecessor, the current FCC Chair Kevin Martin, said was a part of his own legacy at the agency."

Karr also says that Genachowski has been one of Obama's biggest influences in his decision to publicly endorse 'Net neutrality in the past and that Genachowski has held tremendous sway in what he describes as Obama's pro-'Net neutrality tech and media platform.

On the service provider side of the equation, however, there is considerably more caution with regards to 'Net neutrality. Matthew Polka, the president of the independent service provider industry group the American Cable Association, says that while his group shares Obama's vision of maintaining an open Internet, he also says that service providers need to be given some leeway in how they can manage their networks.

"Because our members operate in more rural areas, they have fewer customers per mile and so their cost to deliver broadband to those subscribers is higher," he says. "While customers in small markets and rural areas want the same amount of broadband in rural America as what they have in Times Square, there is cost in building out the infrastructure that our members have to manage and pay for. So if your aim is to get broadband out there, you have to be sensitive to the companies that provide it."

Obama has indeed made giving all American citizens access to broadband Internet a cornerstone of his economic stimulus package, although Johnson says that the mere concept of universal broadband poses some inherent dilemmas that have to be resolved. In the first place, Johnson notes that unlike electricity- or water-delivery systems, Internet connectivity is a constantly evolving technology that requires carriers to make constant upgrades. The danger in investing large sums of money in Internet services for rural and underserved communities is that by the time the broadband infrastructure is built, it could already be outdated.

Johnson says that if free markets really can't provide rural communities with broadband access, then the government should simply issue a nationwide tax aimed at funding the necessary deployments and upgrades that a universal broadband program will require. Otherwise, she says that the government could spend billions of dollars on a broadband network that will soon be left in the dust by the networks that are constantly being upgraded by private carriers.

"If universal broadband is a real goal, then let's put a line item in the budget saying that this is a tax we all have to pay," she says. "Basically we can say directly that it's a tax so we can have people pay for it directly. Right now it's treated as a kinda-sorta tax."

Changing the tone

But beyond the new FCC's stance on important issues, telecom industry observers hope that Genachowski will help to restore the FCC's role as a leader in advancing smart American technology policy. The outgoing FCC chairman has been criticized by many for what they have called a dysfunctional decision-making process at the FCC, and the U.S. House Committee on Energy and Commerce recently issued a report alleging that Martin instructed his staff to rewrite a previously issued report on "a la carte" cable offerings within weeks of becoming FCC chairman in March 2005. The committee also alleged that Martin put significant pressure on his staff to come up with a different conclusion than that of the original report, and that he reassigned the project to other staff members when he didn't get the conclusion he wanted.

"Genachowski's biggest job is going to be the restoration of what has become a broken commission process," says Polka, who says that the FCC under Martin lacked public openness and often acted in an opaque and secretive manner. "Genachowski will have to work well with other people who may or may not agree with him, and he will have to make constructive moves forward without politicizing the commission as we've seen in more recent years."

Johnson, meanwhile, hopes that Genachowski will import what she says is some much-needed technical knowledge to the FCC that will serve as a better guide to making decisions.

"The FCC has historically been clueless when it comes to understanding how the Internet works," she says. "I have a fair amount of hope that Genachowski understands tech, although I admit that it's only a hope because he doesn't have an engineering background. . . . Even so, it should be better than the FCC has been than under Martin's tenure, although it's hard to be any worse."

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