Did someone "deep six" an FCC document on localism?

On September 12th, FCC Chair Kevin Martin appeared before the U.S. Senate Committee on Commerce, Science and Transportation for his reconfirmation hearing. Senators grilled him on net neutrality, media ownership, and the Universal Service Fund. Here are excerpts from the discussion, starting with Republican Committee Chair Ted Stevens, United States Senator from Alaska:

Senator Ted Stevens: If I may I'd like to ask a couple of questions before I go manage a bill on the Floor.

Mr. Chairman, Net Neutrality was the most hotly debated portion of our communications bill. It is the subject that is holding up the communications bill and may lead to its total defeat after 19 months on that bill.

I want to ask you, have you seen any abuse by cable companies or telephone companies in providing access to the Internet? Do you have a system in place for monitoring and identifying such abuses?

Kevin Martin: Well, Mr. Chairman, the Commission adopted a set of net neutrality principles last August in which we talked about the importance of consumers being able to have access to all the information that's available for free over the Internet. And we continue to make sure and monitor the situation over the marketplace to see if we've identified any particular problems. And there's only been one instance that has been brought to the Commission's attention where there was a telephone company who had preventing consumers from getting access to some of the content that is on the Internet. And the Commission took action in that instance and we were able to reach an enforcement agreement with them to have them stop doing that. So we reacted swiftly to it.

So I think the Commission has continued to monitor the marketplace, has been vigilant about it, has tried to continue to make sure we were enforcing the net neutrality principles to make sure that consumers weren't having access blocked.

I am obviously aware of the debate that occurred with this committee on net neutrality. I think certainly one of the helpful proposals that I think was included in your bill was the prospect of the Commission continuing to do ongoing monitoring and actually to official issue a notice asking for people to comment and identify any other problems that might be occurring, even if they haven't been brought to us in the context of a complaint. And so I have asked the staff to prepare for doing a notice seeking public comment on that, just as the draft legislation that came out of this committee would propose. We do have in place some other steps to monitor.

Senator Stevens: Do you think you have any existing authority to take action if there is a problem developed before this bill becomes law?

Kevin Martin: I do. I do. The Commission does have authority under Title 1 of the Communications Act, and indeed last summer the Supreme Court actually in affirming the Commission's "Brand X" decision, determining that cable modem service was an information service, stated that the Commission has ancillary authority to adopt additional rules over the infrastructure providers of broadband access if they needed to. So I think we do have that authority.

Senator Stevens: On Universal Service, Senator Sununu has mentioned that already, in our bill, we do develop a new concept for universal service, and eliminate the concept that only long distance users pay into Universal Service Fund. We understand that you have discussed a "reverse auction" concept whereby rural telephone companies, wireless companies, other competitors would compete for the right to use the Universal Service Fund support.

The rural telephone companies in my state [Alaska] have serious problems with that concept. Could you explain that? And is this something you believe you could do without any further authorization?

Kevin Martin: There are significant problems with the Universal Service Fund, both on the number of carriers and providers that contribute into the fund, and on the way that the current resources are distributed. The Commission has tried to take action on both and I think there's additional steps we need to take on both, both on broadening the base of people that are contributing to make sure that we've got an assessment rate on a broad base that's as low as possible. There's various proposals in front of us. I've talked in the past about trying to assess people based upon telephone numbers.

But I also think that we need to do additional work on the distribution side. Currently we've seen a significant increase just during my time at the Commission on the number of carriers that are receiving so-called Competitive Universal Service Grants. When I arrived at the Commission that was less than a million dollars. It's close to a billion dollars that are being distributed to competitive carriers today. That's putting an incredible strain on the Universal Service Fund, and I think that we need to make sure that we are distributing the Universal Service resources in the most efficient manner possible.

I grew up in a rural area of North Carolina. My mother still lives on the gravel road where I grew up. My address was Rural Route 3, Waxhaw, North Carolina when I was growing up. So I appreciate and understand how important it is to make sure that people in rural areas don't get left behind. But we have to do so in the most efficient manner possible. And I think a reverse auction methodology is a serious proposal we should consider.

Senator Stevens: Well by definition an entity with a fixed system, an embedded system, having a wireless competitor, would always lose. I don't see how if you put it on a competitive basis, existing technology can possibly survive against a new technology. So you automatically have a revolving door as far as Universal Service is concerned.

Kevin Martin: I guess I hope that we develop a system that actually encourages the development of the best new technologies. We should be determining what's the adequate level of service that people in rural areas deserve to be able to have. But then we want to make sure that we have a system that doesn't freeze in place on system of technologies but rather encourages the most efficient technology to be able to go in and serve those consumers. I think we need to make sure that we don't do so in a way that causes significant problems for carriers. We need to have a lengthy enough period of time to allow them to recover the resources that they've invested. But I think that we want to have a system that encourages the deployment and moving to more efficient technologies.

Senator Stevens: But a small, rural carrier in a small community that's met the needs of that community for years facing a national company that comes in and just wants to replace it completely with a wireless system and do that nationally in many areas has got an enormous advantage over the local provider. I would hope you really take a look at the concept of continuity and community presence because the absentee owner, once they get the ability to serve, they have no further interest in that community, as the local provider, the home grown provider, who started the system, does.

I really think that it's going to be a system whereby the existing local providers are just going to be wiped off the map, quick! And I hope that's not the case. . . .

Senator John Sununu: Do you think that the Internet should be regulated with the same regimes that we regulate other communication mediums. Do you support taxing Internet access, and should the FCC be allowed to regulate Google video and Youtube?

Kevin Martin: No. I don't think that the Internet should be regulated in the same manner as other telecommunications networks have. And I actually have been opposed to any kinds of taxes on Internet access. And indeed I've been opposed to any extension of our Universal Service requirements to people who pay into the Universal Service Fund, extending those Internet access. I think that would only discourage people from subscribing to Internet access services if we raise those prices on it. It's one of the reasons why I have been trying to focus on a telephone number based methodology which—telephone numbers are the key to using the public switched telephone network and I think that that would be a more equitable means to pay for that those are taking advantage of that public switched telephone network.

So no, I'm opposed to taxing Internet access and I don't think they should be regulated the same.

Senator Sununu: And Google video, and Youtube? Video services? Should the FCC have the power to regulate those?

Kevin Martin: No I don't think that's necessary at this time. . . .

Senator Byron Dorgan: Chairman Martin, you were part of a troika in the FCC that said it was ok to create new ownership rules so that in one major city, one company, one company could own eight radio, three television stations, the newspapers and the local cable company, and that would be just fine. No problem at all. The Federal courts found a problem with that.

You still feel that way? You are now beginning a new ownership rulemaking process, but do you still feel comfortable suggesting that in one major American city it's fine for one company to own eight radio stations, three television stations, the cable company, the dominant newspaper. That give you pause?

Kevin Martin: Yes that gives me pause. And I'm not so sure that I was even comfortable when we made the decision previously.

Senator Dorgan: But you voted for it.

Kevin Martin: I did because I thought that that was what the record indicated in certain of the largest markets you should be able to purchase under the record that we had in front of us. But were we all concerned about the impact of changes in media ownership requirements? Yes. Did it make me comfortable then? I wouldn't say no. Does it give me pause what we should be doing? Sure. And I think that the Commission is diligently trying to go back and reinitiate that media ownership process. And do so with an open mind on what we should end up doing. And go out and start that process by not only receiving comments but by doing public hearings and listen to what the public has to say about where we should go on media ownership.

Senator Dorgan: Chairman Martin, do you think that there has been substantial concentration in virtually every area of the media?

Kevin Martin: When you say "increased," I think it depends upon what measurement you are measuring that against. In general I would say that, yes, there has been increase, but I think there has been some areas where there obviously has been a decrease. The availability of news and information, for example, by the Internet is significant and wasn't available previously, depending on the time frame you are looking at. Obviously in the television area there's a significant amount of sources of news and information because of cable that wasn't available prior to cable, when some of these rules were put in place, so it depends upon the time frame you are measuring. But yes, in most recent that has been some if you are looking at the most recent time.

Senator Dorgan: Would you agree or disagree with this? Right now the media conglomerates, about five of them, essentially, Viacom, Disney, Time-Warner, and News Corp, and NBC-General Electric, control the big four networks, 70 percent of the prime time television market share, most cable channels, as well as vast holdings in radio, publishing, movie studios, music, Internet, other sectors. And whenever someone talks to me about all of the Internet opportunities and so on I've talked about many voices, one ventriloquist. You can cite many voices, one ventriloquist.

Would you agree with me that we have seen very substantial concentration of the media in almost every area in recent years?

Kevin Martin: In recent years we've seen more concentration, since the 1996 [Telecommunications] Act passed in which the Commission changed some of those rules there's been signficant increases.

Senator Dorgan: Do you believe that increased concentration in most cases will likely be moving against the issue of localism and that . . . localism is essential and center to the notion of what broadcasting is about?

Kevin Martin: I think that localism and competition and diversity are the three central central tenets of what broadcasting is about. But I think localism is certainly one of the most important.

Senator Dorgan: And you have a localism proceeding underway. In fact, Chairman Powell started it and just dropped it, or just sat there and nothing happened. You have resurrected it. . . . When do you expect it to be concluded?

Kevin Martin: What we first ended up doing is compiling the record that had started to be gathered by Chairman Powell. Put that, all of the information we had gathered into the media ownership proceeding, to make sure that people have an idea of what the information was that we had gathered on that, and we have one outstanding hearing on localism, separate from media ownership, that Chairman Powell had committed to doing that's outstanding that we never been done either.

Senator Dorgan: It would make much more sense to complete the proceeding on localism rather before you decide on ownership, wouldn't it.

Kevin Martin: We will make sure we complete the last hearing.

Senator Barbara Boxer: I want to follow up on localism. . . . When the FCC released its media ownership decision in '03 Congress and the courts criticized the Commission for serious problems. In then Chairman Powell's words, in the months that followed, we heard the voice of public concern about the media loud and clear: localism is at the core of these concerns and we're going to tackle it head on.

You said, Mr. Martin, what local broadcasters provide in terms of local news and information to the community is really important. And you were quoted in U.S.A. Today in October '05. I appreciated that because I certainly agree with that. You still feel that way about the importance of localism?

Kevin Martin: Oh yes. I do.

Senator Boxer: Now in August '03, the FCC established a localism task force to study issues like the impact of media consolidation on local news programming. It is now three years later and we haven't seen the release of any report or any policy recommendations from staff. What has happened to that?

Kevin Martin: When the localism task force was started under the previous Chairman, they had committed to having a series of hearings . . . I think the final hearing was supposed to be in Maine, and at the end of that hearing they would release a report that summarized all the hearings that had occurred up until then. That was never completed by Chairman Powell. When I took over as Chairman it was already supposed to have been completed; the Commission had already promised to do that by the end of '04, I mean by the end of '05. But we didn't end up completing it and so at this point we do need to do another localism hearing which I've committed the Commission to go do, and I've asked the staff to go back, they had not done the summary that they had promised and I asked the staff to go back and draft a summary of that so that we will be able to make that publicly available.

Senator Boxer: Well, let me tell you why I have a problem with your answer. I think that there's work that has been done, and it's been stiffled. And I don't know who stiffled it, but I have a copy of a draft report, dated June 17th, '04, "Do local owners deliver more localism? Some evidence from local broadcast news." And I ask that a copy of this be placed in the record.

Now according to this report, have you seen this report?

Kevin Martin: I haven't, and I wasn't Chairman in June of '04.

Senator Boxer: You haven't?

Kevin Martin: So I have not see that. . . .

Senator Boxer: Well, I'm going to ask you to please go back. I'm going to ask all the Commissioners if they saw this report. Because according to it, local ownership, and this is a quote, adds almost five and one half minutes of local news and almost three minutes of local on-location news, that's almost five minutes for each 30 minute local news broadcast. In the course of a year this means that locally owned stations provide almost 33 more hours of regional news, news that's directly relevant to viewers.

Now, this is national security, for God's sake. This is important information about issues that are key to the people. I would suspect your own mom who lives in rural America. So I don't understand who deep sixed this thing. I want to get to the bottom of it and find out if any Commissioners saw this.

And now we're starting all over again. Well, bless your heart and I'm glad you did it but I don't have great confidence. You know it seems to me, and maybe I'm just a cynic. I've been here a long time, that this comes out with a very clear response to the question of conslidation versus localism. . . . non-biased, compiled, clear, defended, and it never sees the light of day? Thank you whoever sent this to me, I don't have a clue. . . .

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