‘Uphill’ Slog Seen For Republicans’ Bill to Remake FCC

Republican senators seeking to limit FCC power over the Internet plan to introduce legislation Wednesday designed to stop the FCC from applying common carrier regulations to broadband, said telecom industry officials. Under the Freedom for Consumer Choice (FCC) Act, the commission couldn’t regulate unless it first showed harm to consumers from a lack of competition and it weighed the possible costs of action against the benefits. Passing the legislation is a long shot in the current political climate, telecom industry analysts said.

The FCC Act is sponsored by Sen. Jim DeMint, R-S.C., and supported by Republican Sens. John Ensign of Nevada, John Thune of South Dakota and Orrin Hatch of Utah. The bill is based on DeMint’s proposed Digital Age Communications Act from 2005, which was never voted on.

"I doubt this bill is going anywhere this Congress, but members introduce such legislation all the time to lay down markers,” said Stifel Nicolaus analyst David Kaut. Ensign, who’s the Senate Communications Subcommittee’s ranking member, and the supportive senators are “serious players,” but the lack of Democratic support means the “odds are uphill” for the bill to become law, said Concept Capital analyst Paul Gallant. But the bill’s outlook could improve if Republicans add seats in November’s elections, he said. Regardless, the bill is a “shot across the bow at a time when the FCC is seriously engaged” in the debate over its broadband authority, Gallant said.

Economic regulation of communications markets would be “presumed unnecessary absent circumstances that demonstrate the existence of a significant threat of abuse of market power that poses a substantial and nontransitory risk to consumer welfare,” a draft of the bill said. And FCC decisions would be “based on jurisprudential principles grounded in market-oriented competition analysis such as those commonly employed by” the FTC and Justice Department in enforcing the FTC Act and antitrust laws.

The FCC Act would make illegal “unfair methods of competition” and “unfair or deceptive practices” related to electronic communications networks or services. The FCC would specifically define those two terms. But the commission couldn’t declare an act or practice unlawful on either ground unless it presented “clear and convincing evidence” in a rulemaking that “marketplace competition is not sufficient to adequately protect consumer welfare,” the practice “causes or is likely to cause substantial injury to consumers,” and the matter isn’t avoidable by consumers or outweighed by benefits to consumers or competition.

Any FCC regulations would carry a five-year sunset under the legislation. The commission could renew the regulation by opening a new rulemaking and finding that the rule was still needed. The FCC would be required to issue decisions 120 days after deeming complete complaints that include supporting testimony or 210 days after deeming complete applications without testimony. The applicant could waive the time limits, and the FCC could extend the deadline “under extraordinary conditions” after notice and a hearing.

The FCC would have power to “research and investigate” any communications provider or related entity and require them to answer questions. The commission could make public parts of the information but couldn’t reveal “any trade secret or any privileged or confidential commercial or financial information.” The commission could provide protected information to law enforcement agencies under conditions of confidentiality.

The U.S. Chamber of Commerce backed the Republicans’ bill in a July 15 letter to DeMint from Bruce Josten, the chamber’s executive vice president of government affairs. Josten wrote: “The bill correctly recognizes that without evidence of a market failure and consumer harm, the [FCC’s] current push to regulate the Internet is not justified and would jeopardize the tremendous investment, innovation, consumer choice, and job creation evidenced in today’s broadband marketplace.”