07/24/2017

Effros: Regulatory Gridlock Creating Uncertainty for Cable Industry

It’s always fascinating here in Washington to watch the various factions on any particular issue switch back and forth, and essentially at times, reverse positions and arguments when the situation suits them. Of course this usually happens when there’s a change in administration, which we have just had, but not always.

In the current political climate—since we seem to have a President who cannot really be considered to be “aligned” with the long-standing positions of either political party (think of the Republicans’ long-held antipathy toward Russia or the total reversal on international trade agreements)—looking at what Congress and the various lobbying groups are doing and saying becomes even more either enlightening or confusing. I’ll stick with amusing.

The preference of recent Democratic administrations to write federal rules that supercede state regulations has long been in evidence. The call by Republicans for “state’s rights” has equally been a mainstay… except, of course on things like marijuana laws, where the federal prescriptions, according to most “states rights” folks should overrule the states! As you can see, this can get very confusing.

The “reversal” that I mentioned earlier is becoming evident in the new political focus on state and local political races, as the Democrats hope to gain back some leverage they lost over the past decade. So now the Democrats have become interested in state politics and the Republicans have focused on maintaining power in Washington. But what does all that mean for us? Well, to begin with, it’s predictable that we will see more battles at the local level over franchise requirements. Localities want to take back some of the power that had resided in the FCC, and a recent court decision suggests that they may, indeed, be able to do that.

The battle over municipal ownership is far from over as well. In that situation the federal rules were used in reverse, to try to override the states and give authority to municipalities to do what the feds wanted… that is, the construction of competitive, preferably magic fiberto-the-home systems favored by the tech industry “edge” providers. The courts nixed that effort, but the fight still goes on in each state legislature as to whether the municipalities should be allowed to get into the highly risky business of building competitive telecommunications infrastructures. The economic history of those builds, as revealed in a recent study, is not good. Many municipal “overbuilds” have run into serious financial trouble.

What is becoming clear, however, is that the fighting in Washington is going to result in somewhat of a “freeze” on federal regulatory developments. No matter who “wins” the “net neutrality” fight, for instance, it’s clear there won’t be major regulatory intervention for the next several years as the FCC “forbears” and the inevitable legal battles over what Title of the Communications Act should apply play out in court. Both the Democrats and Republicans in Congress say they intend to wait all that out, that now is not the time to try legislating to clear it up. Too bad.

So even though the relative positions may change, the result will be the same. We’re going to essentially have regulatory gridlock. It may not be quiet, it may result in viral rulemaking comment wars, but it’ll still be gridlock! Can the industry operate in that sort of environment? Sure. We’ve been doing it for years. Uncertainty may be difficult for business, and gridlock does not lead to certainty, but it’s the best we are going to get for some time to come.

http://www.cablefax.com/regulation/effros-switching-sides