FCC's Simington: Create Orbital Debris Removal Incentives

In talks with corporate governance lawyers, FCC Commissioner Nathan Simington has begun promoting how the FCC's cyber-trust mark could help reduce operations costs, making suppliers from trusted nations more competitive against Chinese suppliers. In an extensive interview with Communications Daily last month, Simington also discussed "smart and targeted" reforms of linear video distribution regulation (see 2409120059), his new practice of dissenting from monetary forfeitures (see 2409060054) and how he sees U.S. industrial policy in the context of China (see 2408200041). In addition, he touched on incentivizing commercial orbital debris removal. The following transcript was edited for length and clarity.

What do smart, targeted, linear video regulations look like? What should this FCC do?

In the United States, we've never had a media regulator per se, because of the First Amendment. So instead, it's been the FCC that stepped into that position because of our spectrum authority. And when you think about it, that's sort of a weird basis on which to do things. And it's left us in a situation where, unlike virtually every other developed country, we do not have a media regulator, and there's no such thing as general jurisdiction media regulation.

Instead, to the extent that there is any media regulation at all … it's through the spectrum and broadcast licensing power, right? And that just doesn't comport with people's intuition about how things ought to work.

So, it seems like there's clear constitutional authority for doing what we have historically done. But no one really asked: What if this just diminishes in importance? What if the consumption of media moves to other venues where there's no clear commission precedent to regulate those?

Video distribution goes solely IPTV, for example, or something of that nature.

It would in fact be a market distortion, where people would have a very easy way to get out from under a regulatory thumb entirely. And that's just changed the medium of transmitting. It's as simple as saying, "Hey, if you do this, you have to maintain a political file, if you don’t [do this], you don't." It's not that the political file is necessarily expensive to maintain, but there's no [business] benefit to doing it. We could easily apply that to competition as well, and say, "Does it make sense to have nationally and indeed, internationally consolidated YouTube and Netflix and whatnot and to insist on the ownership cap for broadcast?" I get the argument [that] it's free, it has the public service requirement. But if Netflix introduced a free tier, we still wouldn't impose the public service requirement.

Do you have thoughts on what smart, targeted regulation could look like?

It's an interesting question, because I don't know that the current outcome is really reflective of what Congress consciously chose at any point. I don't think anyone in Congress sat down and said, "You know what we're going to do? We're going to ensure that there's a very strong regulatory framework for broadcast and no regulatory framework whatsoever … for all the means of linear video transmission." I don't think that was planned. I think it just happened, and no one in Congress really knew what to do about it. That's the reason I keep making reference to the current state of First Amendment jurisprudence. It's not exactly because I expected to change ... but it's interesting to -- every so often -- just look at what you think you know and ask why you think you know it.

If Congress was sufficiently motivated to address the question of providing the commission with the means to regulate linear videos [similar to] broadcast, then you can easily see them asking, "Well, isn't there a wireless step at some point in virtually every transmission chain? Is there a spectrum scarcity argument to be made on that basis?" I think that's sort of a harebrained argument, but I don't think the contours of the possibilities have really been explored yet, and instead we've got a punt that winds up entrenching the status quo.

It seems like it's a problem that the current Congress probably is unlikely to address, [although the Allow States and Victims to Fight Online Sex Trafficking Act and the Stop Enabling Sex Traffickers Act] sort of came out of nowhere from the perspective of some people in the tech community, right? And it was very much a cross-party coalition to get that over the line. And it's not inconceivable to me that something similar might happen as we test the limits of what First Amendment jurisprudence really means.

But you were asking, am I calling for any regs right now? I think the furthest the commission could probably go would be to reopen the [FCC Chairman Tom] Wheeler NPRM from 2014 and just ask ... "What's the state of the market, and can we get some comments on whether virtual MVPDs are recognizable as MVPDs within the statutory language?" I think that's about as far as we can go. And I don't think [Chairwoman Jessica Rosenworcel] is even going to do that.

You also brought up, as the rationale of your dissents on fines, the idea of examining what we know and whether it still holds.

I'm not asking necessarily to relitigate the merits of Jarkesy within FCC proceedings so much as to explore whether the FCC enforcement process, in all of its aspects, comports or does not comport with Jarkesy. Obviously, there's going to be a maximalist and a minimalist position. The maximalist position is going to be "Jarkesy means nothing. We keep doing what we're doing." There's going to be a minimalist position -- "we can't do anything and can’t collect the fine." I think there's probably enough diversity of process and appeal that exists, both practically and formally, within the commission, and we can explore those. It's also a certainty that every single enforcement action post-Jarkesy is going to be appealed. You'd be crazy if you didn’t. You'd fire your counsel if they didn’t raise the question. But I'm seriously worried that the agency is going to wind up tying itself up in a process that we can't defend, and then that that's going to cause us immense harm down the road. So I would really like a clarification.

Opportunity Knocks

Concerning your opining about U.S. industrial policy, does that indicate your interest in serving in government outside of telecom?

It's not inconceivable. I'm far from an expert on a lot of these things. If you look at those papers cited, I'm very much reliant on unmasking information from a wide variety of sources. If someone were to say, "Do you think you could handle running one of those trade agencies in Commerce?" Not really. I'm not a trade scholar. I know enough to raise the alarm. I got onto this question in the first place by asking, "What does the future look like?" So my team and I spent some time looking into 5G adoption in China. Obviously, there is a very high rate of base station penetration in China and a lot of very good PRC [People's Republic of China] tech in that area. And the conclusion I came up with is that China never looked at it as consumer technology. Chinese consumers don't have 5G phone plans by and large. Where China has all the base station penetration is in private networking: factories, hospitals … and if you read [the 3rd Generation Partnership Project] Release 17 specs, it reads much more like an industrial control, secure networking spec than it does a cellphone spec. China's uptake of 5G was almost entirely driven by smart manufacturing. [At the Barcelona Mobile World Congress in February], from what I understand, Huawei had put an enormous emphasis on its industrial products. And I think that represents a huge change away from the consumer orientation that you see in our Western cellphone-driven culture, where there's just so much money to be made in cellphone plans that it's not attractive yet to chase B2B opportunities. My conclusion was no one was ever going to make money in the United States until we have B2B applications. What are the B2B applications? I just read more and more until finally I had enough to write an article. I don't think I have a lot that's necessarily all that original to say, but I think that the telco world should be thinking about this topic, because I think 4G was sort of anomalous in that its uptake was consumer driven, more than it was business.

So some top telecom executives have confirmed that's now how they're starting to look at it as well, that LTE was anomalous and not signaling a general trend in adoption. So what are the actual implications for the next FCC? What does this tell us about what the FCC is, really? Likewise with the cyber-trust mark. That's not really a traditional FCC responsibility, but I viewed it as an opportunity to make parties that don't think of themselves as FCC regulatees aware that they need to have an FCC desk now and think about connecting with us. So you might say I wanted to start a conversation.

What you're talking about also raises significant questions about FCC expertise in this area.

Absolutely true. The FCC is an agency that was built around the phone industry and the broadcasting industry and both of those have changed so radically. It would not upset me at all for all the substance of the cyber-trust mark to take place on the level of bilateral negotiations, between industry stakeholders and OEMs with the FCC overseeing … but not taking an active role.

My question is, what if you have companies that can’t compete on the sticker price, but could compete, or think they could compete, on total cost of ownership, because you have got to figure, with many devices, the security overhang that you buy with the device is vastly worse than the device's actual price, particularly if you're a utility. The utilities are certainly not looking at their internal comm systems and saying the only suppliers for these essential communication tools are Chinese.

But why did that happen? It's not because Motorola can't make those products. It's just because these guys have the lowest manufacturing price. Well, if we have to buy a national security overhang, maybe it's worth it. So when you buy this, you can go to your insurer, and you can say, "Hey, Motorola is taking this tranche of risk off of our plate." So I'm starting presentations to corporate governance groups at major law firms, just helping them to understand the infrastructure and ecosystem effects that we're looking for more than the technical aspects of telecom.

Do you want to be chairman?

I think Brendan [Carr, fellow GOP commissioner] would make a fantastic chairman, and I think he's the obvious person to be asked if the Republicans win [the presidency in November]. I didn't even know I wanted to be commissioner until someone came up with the harebrained idea of asking me to do that. So, there are certainly a lot of … valuable things I think I could do one day as chair. But on the other hand, I think it would require a lot of campaigning to get that done, and I'm not sure how much appetite I have for that. I think in a lot of ways my higher value add would be getting initiatives like these, like the [cyber-trust mark] one that I was talking about, getting things like that happening on the private side, so that people come to Brendan with much more intelligent questions, and he doesn't have to bang his head on the wall so much. If someone were to ask, I'd have to consider it, but it's not my prime focus at the moment,

But you’re interested in staying at the agency?

For the time being. We'll have to see what happens. Every election that we've had is weirder than the one before, and it's not clear when that trend is going to end. 2016 was a damn weird election. 2020 was an unprecedented election. [In] 2024 all bets are off. I don’t think we’ve ever seen a president just sort of informally step down. I came from a primarily non-telephone background to the commission. I feel like I pulled off a pretty interesting trick by focusing on nontraditional areas and getting some interesting stuff over the line. I'm proud of a number of major initiatives that have come out of my office, and, I think, that would only have happened because they came out of my office, maybe.

Do you have an agenda for 2025? Are there certain things you anticipate being policy priorities?

Some things I think would be very bipartisan, very uncontroversial. I think the next commission of whatever composition could benefit from addressing orbital debris. I think the path forward is to provide mechanisms to commercialize the existing pilot programs that [the European Space Agency and Japan Aerospace Exploration Agency] and others are doing. It's not something where the commission necessarily needs to have a technical solution so much as a business solution that would then apply to all regulatees. Then orbital debris companies are able to rapidly scale. They have a guaranteed client and funding phase. I think there's a lot that we could do as far as specific regulatory proposals. I think it's something where we would need to get the satellite industry there emotionally, where we would maybe need to have seed money from national governments or the ITU or somewhere, in part to address the fact that many of these operators are not operating in orbits that are primarily impinged by existing [problems] of debris flows. So, I think, there's a conversation to be had, but the important thing is getting it started.