House Republican Asks Why Genachowski Cares About Political File Disclosure

Republicans in the House and FCC took aim at Chairman Julius Genachowski for his proposal to require broadcasters to post political files online. At a budget hearing Monday of the House Appropriations Subcommittee on Financial Services, the plan was criticized by Chairman Jo Ann Emerson, R-Mo., and FCC Commissioner Robert McDowell. Genachowski defended the FCC’s authority to make the change and highlighted the commission’s progress freeing up spectrum and deploying broadband.

Genachowski defended the FCC’s budget request of $347 million for FY2013. The FCC received $340 million from Congress in FY2012, a middle ground between the FCC’s original request of $354 million and the House Republicans’ counter offer of $319 million. Few agencies give a better “return on investment” than the FCC, Genachowski said. The FCC is asking for a 2 percent budget increase, reflecting the rate of inflation, he said. Genachowski said the FCC plans a few new initiatives, which he described as a technology effort “to save money” and a public safety effort “to save lives.”

McDowell said the FCC would commit “mission creep” by requiring broadcasters to post political files online: “The political file is a tool for examining transparency in campaign spending rather than broadcaster behavior.” It may make more sense for Congress or the Federal Election Commission to take on the issue, he said. “In the wake of the Supreme Court’s decision in the Citizens United case, is it not the role of the legislative branch to debate and craft new laws in the campaign finance arena that would focus on the entities spending the money rather than having an agency, which has no expertise in campaign finance, regulate in this area?” If it’s the FEC’s job, the FCC may violate the Paperwork Reduction Act by moving forward, he said.

"Why do you care about this?” Emerson asked Genachowski. Also, Emerson said she’s “confused” because she thought much of the information is already available online. “Is there a problem … to correct?”

Congress required broadcasters in 2002 to disclose information about political ads and asked the FCC to carry out the provisions, said Genachowski. The FCC proposal is part of “a broad effort to move from paper to digital.” The political file is the last piece of disclosure purely on paper, and “common sense” is to put it online, he said. The FCC hasn’t proposed expanding requirements beyond broadcasters, because broadcasters have unique obligations as “public trustees,” he said.

Emerson asked if the next step is requiring disclosure for all ads, not just political ones. “That wouldn’t be the next step,” Genachowski said. The FCC is not trying to expand disclosure, he said. But Emerson said she’s not convinced: “I understand what you're saying, but it still does not compute to me."

The proposed political file requirement could cost TV broadcasters $15 million upfront to implement, and $140,000 per year in recurring costs to maintain the information in real-time, McDowell said. The costs are likely to “be offset by cuts to local programming and newsgathering,” he said. That could “undermine long-standing federal policy to promote local programming,” he said. Also, the proposed rules could have the “unintended consequence” of encouraging “price signaling and other anti-competitive conduct by broadcasters that could produce harmful market distortions,” he said. The FCC will look at costs and benefits, Genachowski said.

Ranking Member Jose Serrano defended the FCC proposal. In the country’s history, no businessman has ever supported a new regulation forcing him to take additional steps, the Democrat from New York said. “To me what the chairman has said and what Commissioner McDowell has not … is that everybody is putting [information] online. Why not this also?"

Rep. Mario Diaz-Balart, R-Fla., questioned an increase in FCC staffers earning more than $150,000. It jumped from 46 in 2008 to 535 in 2011, he said. Genachowski replied that the FCC has hired advanced engineers and retention has been high. Diaz-Balart also asked why the FCC seems to be denying an inordinately large number of Freedom of Information Act requests. FOIA.gov shows that the new FCC is denying more FOIA requests than in the past and compared to other federal agencies, including the CIA, he said. The FCC recognizes its FOIA obligations, Genachowski said.

Implementing the world’s first voluntary incentive auctions will require a “great deal of work and effort by the agency,” Genachowski said. The FCC is analyzing the “complex law” passed this year by Congress, “assessing the challenges ahead and developing a plan for implementation,” he said. McDowell hopes the FCC will take a “hands off” approach to spectrum auctions to avoid “harmful, unintended consequences,” he said. “I am committed to working with my colleagues to ensure that our auction rules are minimal and ‘future proof,’ allowing for flexible uses in the years to come as technology and markets change.”

McDowell urged more work on the Universal Service Fund to address the steadily increasing contribution factor, which stood at 18 percent in the first quarter of this year. “We need to abate this automatic tax increase, and find a way to decrease and control the contribution factor,” he said. McDowell wants Genachowski to “initiate, and conclude, contribution reform as early this year as possible,” he said. Genachowski agreed contribution should be addressed but didn’t commit to a specific timeframe. The chairman said the FCC’s USF distribution changes will spur wired and wireless buildout and result in universal broadband by the end of the decade.

McDowell warned against efforts by other countries to increase international regulation of the Internet. Several foreign nations -- including Russia, China and Iran -- are pushing to give the ITU regulatory jurisdiction over Internet governance, he said. “These efforts could ultimately partition the Internet between countries that live under an intergovernmental regulatory regime and those member states that decide to opt out. Such a legal structure would be devastating to global free trade and rising living standards. It would also create an engineering morass.” Genachowski said he opposes “international proposals that could stifle innovation.”