Is Genachowski Good or Bad for Cable?

It was always the worst kept secret in Washington’s telecom circles, but the official nomination of Julius Genachowksi to chair the FCC—at a time when most cable operators and programmers are struggling either on Wall Street or Madison Avenue (or both)—begs the central question: Will this guy be good or bad for cable? The obvious answer is that no one really knows. And that’s primarily a good thing because it means that he’s a relatively clean slate with perhaps few preconceived notions about cable’s status as a good or evil force in the world. The last FCC chief had been a commissioner for a while when he took over; cable execs knew his reign would be a bit chilly even if they failed to predict the magnitude of the rancor that would ensue as he pushed a la carte, dual must-carry and countless other initiatives the industry almost universally pegged as antagonistic and unfair. But those days are over. Kevin Martin’s out, and Genachowski’s in. But still the question: Is this good or bad?

The general consensus is that anyone is better for cable than Martin. That seems a relatively safe bet, although it’s impossible to know what kind of free reign Genachowski will have when it comes to “regulating” the industry in one way or another. Martin—despite his tendency to harass and harangue cable—was restrained at least somewhat by a Republican president who generally frowned upon heavy regulation of business. But in the end, he was hamstrung by Congress, which hauled him up to the Hill several times to berate him for his mercurial tendencies (That majority staff report from the House Commerce Committee was perhaps the final statement of dissatisfaction). Now it’s Genachowski’s turn to face the gauntlet of critics, detractors and almost inevitable opposition from entrenched camps on various policy decisions. Just part of the job.

The cable industry is of course trying to start fresh with the new chairman. NCTA pres/CEO Kyle McSlarrow called him “an excellent choice” who “combines the policy savvy and real-world experience that will be necessary to confront both the challenges and opportunities presented at a time of incredible change sweeping the media, communications and technology marketplace.” ACA pres/CEO Matt Polka similarly described him as “a good choice” but qualified it by saying “we hope the FCC will appreciate that small, independent cable operators have made the investment needed to provide high-speed Internet access to millions of Americans living in rural communities in all 50 states. We look forward to working with Genachowski on developing new approaches to broadband deployment following his Senate confirmation.”

Indeed, broadband could be a hot issue for Genachowski as he takes over the Commission. Not only is he now a venture capitalist on several boards of Internet companies (suggesting he “gets” the whole digital revolution thing), but his arrival comes as more than $1 trillion of stimulus (including several billion for broadband deployment) starts to trickle its way out into the economy. The FCC will be front and center in determining how chunks of that money are allocated. Small cable ops have a big stake in that for obvious reasons. But that’s not the only thing on the Internet agenda. Everyone will recall that President Obama embraced the idea of strong net-neutrality rules when he campaigned for high office—even if he and his advisors failed to clearly spell out exactly what that would mean for the industries involved. Now it’s showtime, and Genachowski will be the man largely determining whether net neutrality moves to the front of the telecom policy debate. Sure, Congress and Obama will be the primary drivers, and they have their hands full with the economy and several big Obama initiatives around healthcare, energy and the real estate mess. But Genachowski has only one focus: telecommunications. He can drive the issue forward in a more surgical way, perhaps laying the groundwork for new policy in the coming months and years.

So far, Genachowski has elicited support from some net-neutrality fans, including Free Press, whose exec dir Josh Silver called him “an excellent choice,” noting that “throughout his career, he has shown a deep understanding of the central role of technology in shaping our 21st-century economy and democracy.” Even Skype—which would benefit enormously from any rules precluding network operators from ratcheting traffic down for certain applications or for certain users—was upbeat about Genachowski’s arrival. “The success of the Obama campaign clearly demonstrated that the Internet is a platform for empowering citizens and disrupting existing ways of doing business,” said Skype pres Josh Silverman. “Likewise, change is coming to the FCC and we are looking forward to working with Chairman Genachowski to put innovation policy to work for all Americans.”

Ask any cable executive whether “disrupting existing ways of doing business” sounds like a comforting thought amid basic sub losses and a Wall Street routing. Probably not. But it’s simply too early to know how Genachowski will ultimately view cable’s role in the telecom/Internet lexicon. One thing going for cable is that he started out in Washington years ago but has spent the most recent decade in the world of high finance and dealmaking under business titans like Barry Diller and, more recently, as part of a venture capital firm funding start-ups. He understands the economic reality of running a business, especially in a downturn, and he may become more of a friend to cable than the industry now imagines. But then again, maybe not. One thing is clear: He probably won’t be worse for the industry than Kevin Martin. At least that’s cable’s hope.

[CableFAX discussed Genachowski’s nomination in a recent Webinar, which is available on-demand by clicking here]