Julius Genachowski, the current Federal Communications Commission (FCC) chairman, is stepping down. Tom Wheeler will be nominated by President Obama to replace him. If approved Wheeler faces several issues that will impact telecommunications companies like TDS Telecommunications Corp. (TDS®) and customers across the country.
Genachowski announced he was leaving in March, just days after Republican appointee Robert McDowell, an FCC commissioner, also announced he was leaving.
Wheeler was one of about a dozen names rumored to be in the running for the job. His nomination doesn’t come as much of a surprise. What’s important now is how Wheeler plans to address the critical issues facing the nation’s communications industry.
I think his nomination is much more issues based than personalities based. I can assure you that TDS will work aggressively to develop a positive relationship with Wheeler as he moves through the confirmation process.
I believe there are three critical issues facing the nation’s communications industry that Wheeler and his FCC colleagues will have to address if he’s confirmed. They include further reforms to Universal Service, rural call completion, and retransmission fees for the distribution of video content. All of these issues directly impact TDS and its customers especially those in our most rural markets.
Universal Service is the long standing public policy goal that all Americans should have access to equivalent communication services at comparable rates regardless of location. In November 2011, the FCC released an order aimed at modernizing the program. However, reform has been slow, particularly for smaller rural companies. The commission decided to deal with large, price-cap carriers like AT&T and Verizon first, mobile providers second, and rate-of-return carriers like TDS last. But the process stalled.
The delay in the process has essentially put network and operating investment decisions on hold. Now, many telecoms, including TDS, are playing the waiting game and it’s had a chilling impact on future network investment.
Rural call completion is the second issue. Smaller telecoms like TDS have been dealing with it for more than two years. What happens is someone outside of a TDS market makes a call to someone inside a TDS or other rural market. The call is then transmitted by other routing carriers. Some of these routers knowingly take steps to delay or even fail to terminate calls. The result is dropped or incomplete calls, dead air, and fast busy signals.
Residential customers are missing important calls and their safety is being jeopardized. Businesses are missing sales calls, productivity is falling, and their reputations are suffering. It is TDS’ hope that Mr. Wheeler, along with his fellow commissioners, will correct this matter quickly.
The negotiation of retransmission fees rounds out the list. This is a new and evolving issue for TDS as we continue to introduce TDS TV and as we look to the future with our recent acquisition of Baja Broadband.
For most television providers retransmission fees are one of their biggest expenses. Broadcast networks charge cable and satellite companies to access their signal and content. In many cases, broadcast companies hold all the cards making negotiations difficult at best for all but the largest video providers. As a result the cost per subscriber to carry local networks, popular sports affiliates, and pay channels is doubling every negotiation cycle, pricing cost-conscious consumers out of the market.
What TDS is trying to accomplish with our corporate advocacy is either get Congress to revisit these laws and bring in more of an arbitration process or have the FCC do it on their own by taking action to compel good faith negotiations.
Genachowski will go to work for the Aspen Institute once he steps down. According to their website they’re an educational and policy studies organization based in Washington, D.C.
Wheeler, a venture capitalist and former lobbyist for the cable and wireless industry, is 67-years-old. Most experts believe Wheeler’s nomination will coincide with the nomination of a Republican commissioner to make the confirmation process easier.
Stay tuned as we follow the FCC confirmation process and the early actions the newly comprised commission takes regarding universal service, rural call completion and the negotiation of retransmission fees. The FCC is charged with protecting the public’s interest. They have their hands full!
Drew Petersen is the vice president of External Affairs & Communications for Madison, Wis. based TDS Telecommunications Corp. (TDS®) Drew joined TDS in 1997 as a member of the Government and Regulatory Affairs department. On the federal level Drew is responsible for directing TDS’ legislative and regulatory initiatives in Washington D.C.