Thomas Crowe, Esq.
With the 44th President sworn in, significant changes in telecommunications policy loom at the Federal Communications Commission (“FCC”). Wireless dealers, agents, and service providers stand to be affected by this shift.
The announcement of Julius Genachowski as President Obama’s likely nomination for FCC Chairman and a regulatory backlash following a trend of financial and regulatory failures strongly suggest that the Obama FCC will be engaging in substantially greater regulatory scrutiny than at any other time during the past eight years under the Bush administration. In other words, the days of deregulatory initiatives at the FCC seem to be over.
New FCC Chairman
Julius Genachowski’s likely nomination is an important signal suggesting a return to a more proactive FCC. Genachowski previously served as Chief Counsel to former FCC Chairman Reed Hundt during the Clinton years. During this time, he helped garner approval for Chairman Hundt’s proposal that television broadcasters generate a minimum amount of children’s education programming per week. He also played a role in the implementation of the Telecommunications Act of 1996, a major overhaul of the original Communications Act of 1934, which included the creation of the Universal Service Fund (“USF”).
In addition to his actions at the FCC, Genachowski served as senior technology advisor for Barack Obama during his Presidential campaign, leading its successful online strategy. More importantly, Genachowski influenced the development of Obama’s Technology and Innovation Plan. Key points in the plan include the need to encourage diversity in media ownership, safeguard consumer privacy, and a direct call to protect network neutrality, all of which point to increased regulatory scrutiny for the wireless and other communications sectors. The plan also calls for the overhaul of the USF program to support broadband development, a regulatory step which would have major implications for the communications industry.
Genachowski’s background as a New York media executive and venture capitalist also make him an interesting choice for FCC Chairman. He worked for eight years in various senior positions at Barry Diller’s IAC/InterActive Corp, and has served on the Boards of Expedia, Inc., Hotels.com, and Ticketmaster, Website Pros, and The Motley Fool. He has also co-founded investment and advisory firms for digital media companies and web and mobile entrepreneurs.
Given Genachowski’s 20 years of telecommunications experience and his significant contributions to Obama’s telecommunications agenda, it is no surprise that he will likely play an important role in the FCC’s expected direction of increased regulatory scrutiny. In fact, it has been reported that Genachowski turned down the position of Chief Technology Officer in the Obama administration after he learned that it would not include a strong regulatory role.
Deregulation Backlash
The arrest of Bernard Madoff in December 2008 may stand as the turning point in a paradigm shift away from the laissez-faire philosophy that has prevailed in Washington for the past eight years. The subprime housing crisis had already begun to call into question the hands-off approach of the federal regulatory agencies under the Bush administration. After the Securities and Exchange Commission failed to discover Madoff’s alleged Ponzi scheme (notwithstanding numerous complaints and separate investigations), it has become abundantly clear that federal regulatory agencies must take a more active role in protecting the public interest.
The shifting regulatory climate is obvious and will undoubtedly extend beyond the financial sector. A fierce backlash to rampant deregulation is likely to sweep across all federal regulatory agencies. There is little doubt that the FCC will follow this trend, and the increased regulatory scrutiny will be felt by the wireless communications sector. Wireless dealers, agents, and service providers will likely need to conform their business models to more stringent regulatory requirements, rules, and structures that will likely emerge from the FCC under Genachowski and on the heels of a paradigm shift away from deregulatory models.
While the precise shape of the Obama administration FCC has yet to crystallize, the appointment of Julius Genachowski and the backlash following a trend of regulatory and financial failures make clear that the new FCC will be an active one indeed. Wireless dealers, agents, and service providers are likely to be affected both by specific actions that the FCC will take on issues like consumer privacy and USF reform, as well as increased regulatory scrutiny across the board that appears inevitable.
January 26, 2009
This article is provided for informational purposes only, and is intended neither to provide nor to substitute for legal advice.
| This article was authored by the Law Offices of Thomas K. Crowe, P.C., a Washington D.C.-based specialty law firm serving the communications industry. Specialty services cover agreements with distributors and providers, FCC licenses, USF reporting and disputes, FCC Enforcement Bureau matters, CPNI, CALEA, state licensing, and more. Contact the firm by phone at 202-263-3640, by email at .(JavaScript must be enabled to view this email address), or via the firm’s website, www.tkcrowe.com. |