The Politics of Inertia

BY ALICIA MUNDY As the Senate Commerce Committee hearing on telecom issues entered its fourth hour last Tuesday, a reporter sneaking out was begged by a Federal Communications Commission staffer: “Take me with you.” It was that kind of hearing. And only the first of many to come now that Big John McCain is back in the saddle. By the time this 108th Congressional session is over, not only the FCC, but the broadcasters, network moguls and, most assuredly, the cable guys will be pleading to escape his hearings — and all of them will have their posteriors in a sling. The past 18 months have been a time of relative peace and prosperity for the communications industry in Congress (if you don’t count Adelphia, Charter and WorldCom). True, Sen. McCain (R-Ariz.) was ranting about cable rates, media mergers and sex and violence on television, but at the time, the Republicans were out of power in the Senate. He was just a ranking and rankled minority member. But on Jan. 14, Big John was back along with those nasty little issues he loves so well. Although the topic was ostensibly wireline competition, it didn’t take long for McCain & Co. to start in on the FCC’s pending rulings on media ownership and broadband access. McCain differs from the outgoing chair, Fritz Hollings (D-S.C.), in one major way: McCain sets an ambitious agenda and likes to hold many hearings. Before the dust had settled after the midterm elections, he’d already announced his targets: the financial crisis in the communications industry; spectrum policies; the FCC reauthorization; media consolidation; cable rates; broadband deployment; the digital TV transition; ownership diversification; and consumer uses of digital content. He also announced his intention to “assess whether broadcasters are meeting their public interest obligations…and consider legislation to provide free airtime to political candidates.” Prior to the election, McCain had introduced a Telecommunications Diversification Act to give tax breaks to little companies, including broadcasters. Lately, he’s been heard backing legislation to control radio monopolies. Under normal circumstances, media moguls hearing all this might faint on the spot. But there’s a better-than-even chance that none of them, including cable cowboys, will face any real crises this term. Why not? Because, with McCain running Commerce, it’s a kind of crapshoot. One week his No. 1 concern is media consolidation, the next, he’s courting the big networks. McCain isn’t running for president right now, and telecom sources say that means he can concentrate on issues such as media monopolies and his current passion, cable rate hikes. But he’s got a lot on his plate, and his attention wanders. If there is, as Hollings calls it, “a wall problem,” (that’s war problem in standard English), McCain will put telecom on the back burner. He certainly used the Jan. 14 session to grumble about high cable rates. He called for a GAO study on rates last year and is awaiting that report. Meanwhile, he’s just been handed ammunition by the FCC; its new report on video competition cites a huge gap between low inflation and high cable rates. So there will be hearings on this, and they won’t be pretty. But then what? First, McCain may chair a powerful committee, but he’s not part of the big picture politics of the GOP. Putting it more bluntly, he lacks enough Republican allies on his own committee to do anything drastic. Ted Stevens (Alaska) isn’t a big fan of Big John. Trent Lott (Miss.) once called McCain the White Rat. Over on the Democratic side, Hollings has a lot in common with the populist McCain on media issues. But it’s hard to imagine Hollings going out of his way to make a Republican look good. And can you see the White House backing McCain on cable regs? In your lifetime? Furthermore, even McCain has acknowledged that just questioning cable rates and other media issues doesn’t mean he’s interested in regulating them. Being for a free market generally means no new regs, certainly not rate regs. Still, dozens of cable lawyers and lobbyists have been diagramming each of his sentences on the subject. One said breathlessly, “If you look closely at his statements, you can see him talking about breaking up expanded basic service into news and sports packages.” Sure you can. Like the White Album, if you play his statements backwards, you can hear him singing about the digital spectrum giveaway. There’s always the chance that McCain and Hollings, now the ranking Democrat, will propose a mandate of a la carte pricing and low-cost packages. Conveniently for cable, that sort of idea would quickly become mired in details and counterproposals. It will be election year before that issue comes together, by which time McCain’s attention will have wandered back to free airtime for politicians and the sins of the broadcasters. That’s why it was so amusing to watch the clucking and hand-wringing at the Jan. 14 hearing while Republicans as well as Democrats began to hammer FCC commissioners about media consolidation and radio monopolies. Chairman Michael Powell, carefully, slowly, pointed out that it was this very committee that had lifted restrictions on radio ownership and media consolidation in the 1996 Telecom Act. Politicians can be obtuse, and it’s hard to know if they understood what he said. It might have been more effective if he’d just stood up and snapped, “This is the fruit of your own loins; you must take parental responsibility here!” Don’t count on it. They may grumble about media mergers, but there’s no will to revisit the Telecom Act. (Though it would be nice if they’d remove that Biennial Review mandate from the FCC to-do list.) Over on the House side, Billy Tauzin (R-La.) talks tough about cable rates and the digital transition, but he’s no regulator. He’ll have a bill on the digital transition this term; so will ranking Democrat Ed Markey (D-Mass.). Markey’s planned legislation will differ from Tauzin’s in that it will address must-carry. He’s likely to propose a version of digital carriage by cable operators that would include free multicast channels from broadcasters. We could spend a lot of time talking about House and Senate digital transition ideas, but there’s only one thing media folks need to know: Little, if anything, will proceed with these legislative moves, according to numerous lobbyists and analysts — unless there’s a budget crunch. “If there’s a fiscal crisis, like from a war with Iraq or oil prices,” said a broadcast insider, “then Congress will go after the analog spectrum, and they will push the digital transition through as fast as possible to get that spectrum back and make some money from it.” However, there is one issue gaining traction, at least in the Senate: sex and violence in TV, movies and music. It’s the pet peeve of Sam Brownback (R-Col.), who will take over the Science and Technology Subcommittee. Brownback needs watching. His reach is growing to include some broadband issues and digital rights. (The latter is what the Commerce Committee calls “copyright,” which they can’t really handle because “copyright” is the realm of the Judiciary Committee now under Orrin Hatch (R-Utah), so they have to call it something else.) But Brownback’s already put “The Media’s Impact on Public Health” on his subcommittee’s agenda. The planets are starting to line up on this matter. Hollings has been a proponent of family viewing hours on TV. Joe Lieberman (D-Conn.), another decency proponent, is running for president. McCain himself said scathing things to Hollywood types two years ago in a hearing he held on this subject, and he’s ready to roar again. And they’ve all got allies in the two Dems on the FCC, Michael Copps and Jon Adelstein. If any of these guys accidentally tune in to The Shield, you can expect that cable as well as broadcast executives will be called on the carpet to explain themselves. As for ownership issues, if the FCC decides to lift the network cap of 35%, the losers will go to court and to Congress. But broadcasters and station group owners lost when Trent Lott gave up his majority leader seat (he was a college buddy of Eddie Fritts, president of the National Association of Broadcasters). There’s sympathy for raising the cap even among Democrats such as John Kerry (D-Mass.) and John Breaux (D-La.). On the House side, Markey, who fought to get the 35% cap in the Telecom Act of 1996, fears that limit may be in peril. That leaves copyright as the last and messiest issue, and the one closest to legislative “fixes.” There are a few bills floating around, and there is a movement in the House for fair use by Rick Boucher (D-Va.) and John Doolittle (R-Calif.). They’re the sponsors of the Digital Media Consumers’ Rights Act of 2003, the aim of which includes reaffirming the Betamax standard. However, the property rights side will probably prevail. It’s hard to muster a lot of support for the rights of consumers to tape Everybody Loves Raymond in hi-def when Viacom is threatening a digital blackout. The recent plug-and-play agreement between cable MSOs and set makers pleased Congress enough that they won’t want to upset it. Meanwhile, the broadcast flag to prevent piracy is getting a lot of support in Congress from Hollings, Tauzin, Markey, John Dingell (D-Mich.) and Fred Upton (R-Mich.). There’s been no word from McCain here; Brownback indicated opposition to legislating it. But if the FCC approves a broadcast flag, it’s unlikely the opponents led by the Consumer Electronics Association and various consumer advocates will be able to turn that around on the Hill. Take note: Copyright battles could produce an unusual sleeper issue over PVRs such as SonicBlue and ReplayTV (already the focus of lawsuits) and TiVo. Disney’s Preston Padden says it’s no Mickey Mouse argument that if you automatically remove the commercials, you’ve changed the original programming — and thereby violated copyright. Asked about that seemingly elliptical logic, a broadcast lawyer laughed. But then got very quiet. “You know, that’s a pretty interesting argument.” Watch out for this one.