Special TechComm Election Forecast: What to Expect in the 111th Congress

    6 November 2008

    Conventional wisdom might suggest that addressing advanced communications and technology issues is not central to stimulating an ailing economy and should not be a priority for the 111th Congress. But President-elect Barack Obama views technology development and improvements to the nation’s communications infrastructure as two important and long-term drivers of economic growth. The high-tech sector is responsible for creating millions of jobs.  Development of advanced information technologies by the high-tech sector also is critical to future growth in other sectors, notably health care and energy. President-elect Obama plans to double federal funding for technology research (including information technology, nanotechnology, and biotech) and believes that encouraging technology research, innovation and investment will ensure that U.S. technology companies are competitive and so that 21st century jobs grow in America.

    President-elect Obama also believes that working to become a global broadband and Internet access leader (we are presently ranked 15th in the world), and advancing nationwide broadband as both a strategy and a priority, will result in billions of investment dollars flowing to the technology and communications sector. His goal is to make high-speed Internet access available to all Americans, specifically focusing on rural and unserved areas, schools, libraries, government, low-income households, hospitals, and the disabled. Reform of the Universal Service Fund will be a key enabler of President-elect Obama’s national broadband policy. In his view, the Universal Service Fund should support not just universal service for voice, but also universal access to affordable broadband.   

    We expect the President-elect’s vision for technology and broadband development to be supported by the enhanced Democratic majority in Congress and at the Federal Communications Commission (FCC). Technology and communications policy, and related business opportunities, should be transformed over the next four years.  

    Communications Leadership 

    In the early days of his administration, President-elect Obama will nominate individuals to Chair the FCC, to become the nation’s first Chief Technology Officer (a new cabinet position focused on ensuring that our government has the right communications infrastructure, that our nation’s IT network is safe and secure, and that our first responders have a wireless interoperable network), and to serve as the Assistant Secretary of Communications and Information at the National Telecommunications and Information Administration (NTIA), the person who will be the President’s principal advisor on telecommunications and information policy. Among these organizations, the FCC likely has the greatest ability to effectuate the President’s communications goals.     

    A New FCC 

    We expect the new Chair of the FCC to share the views of the President-elect’s top advisors on communications policy (Former FCC Chairmen Reed Hundt and Bill Kennard)--investment and modernization of the nation’s technology and communications infrastructure will enhance our economy and our global competitiveness.  The lineup of potential FCC Chairs include Blair Levin, former Chief of Staff to Chairman Hundt; Julius Genachowski, former Chief Counsel to Chairman Hundt and Special Counsel to Chairman Kennard; and Larry Strickling, currently working with the Obama Campaign, who held several positions at the FCC, ultimately serving as Deputy Chief of the Wireline Competition Bureau. Either of the current Democratic FCC Commissioners (Michael Copps or Jonathan Adelstein) also could be tapped. 

    Although the five-member Commission will likely change by just one member (the Chairman), the current Republican majority will switch to a Democratic majority. Commissioner Copps will stay until his term expires on June 30, 2010. We believe Commissioner Adelstein, whose term expired June 30, 2008, will be easily reconfirmed by the Senate. On the Republican side, Chairman Kevin Martin’s term does not expire until July 1, 2011. He could choose to stay on as a Commissioner, but his plans are unclear.  Republican Commissioner Robert McDowell will stay on, with a term expiring on June 30, 2009. The last FCC Commissioner, Republican Deborah Taylor Tate, is serving under an expired term and is expected to leave the Commission when Congress adjourns this year.    A

    New Congress 

    We do not expect business as usual in the major Senate and House committees with jurisdiction over technology and communications issues. We expect senior openings and leadership changes, as well as membership changes and expanded Democratic membership ratios given the outcome of the election.  

    Senate Commerce Committee 

    Commerce Committee Chairman Daniel Inouye (D-HI) may lead the Appropriations Committee should Senator Robert Byrd (D-WV) vacate it. Senator Inouye’s successor would be chosen from the senior members of the committee: Senators Jay Rockefeller (D-WV), John Kerry (D-MA), and Byron Dorgan (D-ND). Given the conviction of Senator Stevens on bribery charges, Republicans may be selecting a new Ranking Member even if he wins a razor-thin election victory. 

    Senate Judiciary Committee 

    Senator Patrick Leahy (D-VT) is expected to continue to serve as Chairman and Arlen Specter (R-PA) will continue to serve as Ranking Member.  Intellectual Property issues will continue to be handled at the full committee level, while technology issues will vary.  Some technology issues will be handled by the Terrorism, Technology and Homeland Security Subcommittee, which should be chaired by Senator Diane Feinstein (D-CA) if she chooses not to pursue an opening on another major subcommittee.  The subcommittee minority side will be led by Senator Jon Kyl (R-AZ).   

    House Energy and Commerce Committee 

    Chair of the House Energy and Commerce Committee, John Dingell (D-MI), will retain his post, as will Ranking Member Joe Barton (R-TX). We expect Representative Ed Markey (D-MA) to continue to chair the House Telecommunications and Internet Subcommittee, though it is possible he could leave Congress for the Administration or a Senate run.  In that event, Representative Rick Boucher (D-VA), an early supporter of President-elect Obama, would likely succeed him. The committee’s membership also will shift, in the wake of retirements for Representatives Barbara Cubin (R-WY), Vito Fossella (R-NY), Chip Pickering (R-MS), Mike Ferguson (R-NJ), and Heather Wilson (R-NM). 

    House Judiciary Committee 

    Representative Howard Berman (D-CA), Chair of the Judiciary Subcommittee on the Courts, the Internet and Intellectual Property, will give up the gavel to chair the House Foreign Affairs Committee. Representative Berman was a champion of the content industry. He is likely to be replaced by Representative Jerrold Nadler (D-NY), who is likely to be more consumer and technology friendly in his approach to legislating. Representative Howard Coble (R-NC) will likely continue to serve as Ranking Member. 

    Major Legislative Issues

    National Broadband Strategy

    In President-elect Obama’s view, a national broadband strategy is good not only for our economy but also for our democracy. By connecting all Americans to each other, our government and the world, he believes we can enhance democratic discourse, competition and economic growth.  To bring broadband to every community, President-elect Obama believes we need a combination of Universal Service reforms, wireless spectrum reforms, promotion of next-generation facilities, technologies and applications, and new tax and loan incentives. President-elect Obama also believes we need to meaningfully redefine “broadband” for the 21st century. Today, the FCC defines “broadband” as just 200 kbps, a standard so low that it stymies federal policy efforts to enhance broadband access.  

    Congress will almost certainly engage in a debate over a national broadband strategy in 2009. Countless congressional hours were spent in 2008 working on more than a dozen broadband measures seeking to encourage broadband deployment, preserve the ability of local governments to offer broadband, and allow tax payers to earn tax credits for broadband installations and connections. A bill by Senators Rockefeller and Obama sought to deploy a nationwide next-generation broadband network by 2010 with the capability of transmitting data at 10 Mbps in each direction by 2015.  Representative Anna Eshoo (D-CA) introduced a companion bill in the House.  

    Of note, Congress passed the Broadband Data Improvement Act in late 2008, which President Bush has since signed into law. The law provides for Commerce Department grants for designated state entities to identify and track the availability and adoption of broadband services. In addition, the law directs the FCC to issue an order within 120 days of the law’s enactment that would revise or update, if necessary, the existing definitions of advanced telecommunications capability, or broadband; and establish a new definition of second generation broadband to reflect a data rate that is not less than the data rate required to reliably transmit full-motion, high-definition video. 

    Universal Service Reform 

    Nearly a dozen measures addressing Universal Service reform were introduced in the last Congress. In view of the national broadband goals of President-elect Obama, Universal Service reform is certain to garner attention this year from Congress, the FCC, and the Administration. The President-elect favors a plan to change the Universal Service Fund from a program that supports voice communications to one that supports affordable broadband, with an emphasis on reaching unserved communities.   

    President-elect Obama’s vision for Universal Service reform is mirrored in legislation proposed by Representatives Boucher and Terry (R-NE) that would modify USF to broaden the base of contributions, assist with broadband rollouts and cap growth of the high-cost fund.  Notably, the members’ Universal Service Reform Act of 2007, H.R. 2054, would require USF recipients to deploy broadband with a download speed of 1 Mbps or greater within five years of enactment. 

    The FCC also will address Universal Service reform this year, including the management and the administration of the Universal Service Fund by the Universal Service Administrative Company (USAC).  USAC has come under Congressional scrutiny for how it processes funding requests and awards, numerous audits and reviews of USF recipients, and inconsistent policies that often result in funding delays and nonpayment of USF recipients.  The FCC just recently tried to advance changes to the Universal Service Fund to shift contributions from a system based on usage and interstate revenues to a flat-rate system focused on the number of phone numbers served.  The item is still circulating at the FCC.  

    Net Neutrality 

    President-elect Obama believes the Internet has been successful because it is “the most open network in history.”  He supports the principle of net neutrality and preserving open competition.  With strong Democratic majorities in Congress, look for Congress to continue to push to codify net neutrality principles, originally advanced by the FCC in 2005 as an expression that consumers are entitled to access lawful content and run any applications and services they wish on the Internet.   

    We expect Representative Markey to press ahead with the Internet Freedom Preservation Act of 2007, H.R. 5353, introduced last year. The measure calls for a national broadband policy that establishes “open” broadband networks and safeguards against unreasonable discriminatory favoritism for, or degradation of, content by network operators based upon source, ownership, or destination.  Markey’s bill will need a new Republican advocate, since his co-sponsor, Representative Pickering, retired. 

    A companion bill (S. 215) in the Senate offered by Senators Dorgan and Olympia Snowe (R-ME) also is likely to resurface. The legislation would enact enforcement mechanisms against service providers that block Internet access or content, including an expedited 90-day review before the FCC of complaints. The bill has the support of 11 influential co-sponsors, including Senator Obama and Judiciary Chairman Leahy. 

    We also expect that the FCC will step up action against violators of net neutrality principles in 2009.  Last year, the FCC ruled that Comcast impermissibly blocked customer Internet traffic and ordered the company to change how it manages its network and how it discloses network management practices to customers. 

    Patent Reform 

    In order to be globally competitive, President-elect Obama has supported patent laws that protect legitimate patent rights but don’t stifle innovation and collaboration. Congress has been struggling with overhauling the nation’s patent system for some time. Efforts to enact patent reform legislation in the 110th Congress stalled over important provisions regarding how courts may calculate infringement damages. Patent reform may take a new turn in the 111th Congress with Representative Berman chairing the House Foreign Affairs Committee instead of the IP Subcommittee. In any event, we expect patent reform to surface early in 2009.  Legislation in both chambers would establish a federal system akin to those in Europe and Asia that award patents on a first-to-file basis, rather than the existing system that awards patents to the first person to make a showing that she is the inventor. Opposition to the legislation rests primarily with patent holders; patent users support the legislation.   

    On the issue of damages, different approaches have emerged. One proposal backed by Representative Berman would permit plaintiffs to recover damages based on the value of the patent’s contribution to the infringing product.  An alternative proposal supported by Senators Leahy and Specter would allow courts to award damages on the entire market value of the product if the infringing invention’s specific contribution is the predominant basis for the product’s market demand.

    In addition, the House and Senate bills differ on how to challenge patents after they are granted, abuses by so-called “patent trolls,” and forum shopping. Certain jurisdictions—especially the Eastern District of Texas—have become havens for plaintiffs in patent cases. While the House and Senate versions differ slightly, both require that patent litigation occur in a location where either the plaintiff or the defendant has a significant presence.   

    Orphan Works 

    Leading Members will revive legislation to address so-called “orphan works”--works protected by copyright, but whose owners cannot be found. Potential users of orphan works often fail to use them out of concern that they may be found liable for statutory damages. Senate legislation introduced last year by Senators Leahy and Orrin Hatch (R-UT) would enable users to use orphan works if, after a thorough, documented search, the copyright owners are unable to be located.  A companion bill was introduced in the House by Representatives Berman and Lamar Smith (R-TX). This is one of the few areas in which there is a broad consensus between content owners and traditional fair use advocates, such as libraries and universities. All of them need access to orphan works for creating new works without fear of liability. Given the effort invested on the issue so far over the past two Congresses, we expect legislation on orphan works will be enacted in the 111th Congress. 

    Health Information Technology (“Health IT”)

    Committee leaders in both the House and Senate have advanced several different versions of Health IT legislation, but privacy and funding concerns have derailed attempts to enact a bill. Health IT remains a bipartisan priority, however, and renewed legislative action is expected in the next Congress. 

    President-elect Obama also supports Health IT.  He has pledged $10 billion a year for five years to fund adoption of electronic healthcare records and other standards-based electronic healthcare information to move our healthcare systems from paper, which is expensive and makes it difficult to coordinate care, to electronic form. President-elect Obama views information technology as critical to improving healthcare and reducing costs. He would task the Department of Health and Human Services with adoption and implementation of standards. 

    Health IT could be subsumed in a larger debate about overhauling the nation’s healthcare system, another priority of the new administration. During its last session, Congress devoted considerable energy to passing legislation that would permit electronic medical records to travel with a patient from provider to provider, including a framework for developing a minimum set of interoperability standards for securing exchange and use of electronic health information.  ASenate bill, S. 1693, did not advance beyond committee approval, largely because of concerns that its privacy protections were too weak.  A House bill, H.R. 6357, was reported favorably out of committee, but stalled when Ways and Means Health Subcommittee Chairman Pete Stark (D-CA) voiced concern about the absence of an enforcement mechanism. 

    Broad adoption of an interoperable, standards-based health information network will depend on financial incentives for providers who implement and use Health IT, as well as on technology providers that build the network architecture to transmit health data. A bill introduced by Representative Eshoo would authorize grants for the purchase of qualified Health IT systems. 

    Consumer Privacy and Data Protection 

    Privacy law and policy involves balancing individual rights against government and business uses of information.  During the Bush administration, and after September 11th, the pendulum swung sharply in favor of making personal information accessible for the benefit of government and commercial interests.  Now, with Democrats regaining critical government leadership, expect the pendulum to swing back toward heightened concerns over individual privacy.  President-elect Obama has expressed concern that our open information platforms can leave citizens vulnerable to violations of their privacy and that government and businesses must be held accountable when privacy is compromised.  

    “Deep packet inspection,” used to target advertising, and data mining, are likely to re-emerge as issues in the next Congress.  Lawmakers devoted significant time to such matters late last year. In the Senate, the Commerce Committee held two hearings to explore the privacy implications of online advertising.  Senator Dorgan presided over the second hearing and noted that consumers are concerned that their online behavior is being tracked and that a lack of robust competition in the broadband market makes it necessary to ensure that consumer privacy is protected. Executives from leading telecommunications carriers told the committee that their companies did not engage in such practices and that the industry should be allowed to police itself. 

    The House Energy and Commerce Committee also expressed concern over data mining, and sent letters to more than 30 telecommunications and Internet companies to determine whether they target online advertising based upon consumer search queries and web surfing habits. The responses to those letters may serve as the basis for oversight hearings in early 2009. 

    Public Safety 

    The President-elect is committed to improving the communications capabilities of our nation’s public safety agencies and first responders who are saddled with outdated technology.  One of the priorities of the nation’s first CTO will be to ensure that public safety, first responders and government agencies use best-in-class technologies and the right infrastructure in order to enhance our safety, their effectiveness and government service. The FCC, the Department of Homeland Security, the NTIA and Congress all have grappled with how to improve the communications capabilities of our nation’s first responders and public safety agencies; we expect these issues to continue.   

    In 2009, we expect the FCC to complete examination of how best to authorize wireless spectrum for public-safety and homeland security needs.  Despite significant efforts by Chairman Martin in 2008, the FCC was not successful in assigning 20 megahertz of 700-MHz spectrum (the “D-Block”) intended for first responders.  It also has not completed authorizing spectrum set aside at 4.9 GHz for homeland security.  Earlier in 2008, the Commission failed to secure a minimum bid for the sale of the 700 MHz D-Block spectrum, due largely to its controversial mandate that the spectrum must be shared by commercial and public safety interests.  Commissioners must now decide how to re-auction that spectrum and a rulemaking is pending.   

    Satellite Home Viewer Act 

    The makeup of the House and Senate Judiciary Committees also will affect reauthorization of the Satellite Home Viewer Act, which sunsets in December 2009. It provides the legal framework through which cable systems distribute broadcast television signals. The reauthorization debate is certain to be contentious, pitting program owners receiving royalty payments against users. 

    The advent of digital television and the rapid growth of the Internet as a major video programming distribution outlet both call into question the current statutory licensing systems. In 2008, the Copyright Office recommended that Congress abandon the cable compulsory license that permits cable operators to retransmit both local and distant radio and television signals to  subscribers and another license that permits satellite carriers to retransmit distant television (but not radio) signals to subscribers. The Copyright office suggests that Congress should adopt a new statutory licensing system built around digital television technology and other distribution mechanisms.     

    Digital Television 

    The digital television transition is certain to receive early attention from Congress as television stations are required to cease broadcasting analog video on February 17, 2009. The shut-off has Congress uneasy as they prepare for a backlash from constituents who have not planned for the digital conversion and may lose their analog television signal. FCC Commissioner Robert McDowell acknowledged that congressional action would be necessary to permit television stations to broadcast analog advisories beyond the February deadline.   

    Representative Lois Capps (D-CA) introduced in late 2008 a bill that would allow a brief extension through March 3, 2009 of analog broadcasting authority to permit broadcasting emergency information. Her Short-term Analog Flash and Emergency Readiness Act, H.R. 7013, also would allow broadcast of English and Spanish information about the DTV transition and steps viewers can take to convert digital television service, including a phone number and Internet address to obtain more details.  

    Communications Taxes  

    With economic issues front and center in 2009, we expect lawmakers to reintroduce various measures from the 110th Congress seeking to reverse discriminatory taxes on the communications industry. The Cell Tax Fairness Act introduced by Representative Zoe Lofgren (D-CA), for example, would restrict states or local governments from imposing any new discriminatory tax on mobile services, mobile service providers, or mobile service property for five years. Taxes imposed on mobile services, providers, or property that is not generally imposed on other types of services or property would be banned.  Other tax measures of note would curtail the business activities tax on telephone and other communications devices, and would result in a state streamlined sales tax, simplifying state sales and use taxes by creating uniform definitions within tax bases and simplifying audit and administrative procedures. Thirty-nine states currently support the proposal. 

    Return of the Fairness Doctrine and Other Issues of Note 

    There has been some speculation that a Democratically controlled White House and Congress may hasten the return of the Fairness Doctrine. The original Fairness Doctrine, phased out in the 1980s, required television and radio stations to provide balanced airtime to opposing viewpoints or risk fines or license revocation. Conservative talk shows dominate radio broadcasting and if the Fairness Doctrine is adopted, that influence will be diminished.  

    Additional communications and technology issues that may percolate in the new Congress include a national framework for how states regulate wireless terms and conditions, measures to extend the Federal Trade Commission’s reach to mobile authority, spectrum management issues, shield laws for the press, and improvements for telecommunications capabilities for the disabled. Finally, consolidation of the communications industry may slow under heightened scrutiny by antitrust officials in the wake of a series of high-profile mergers last year that included the merger of XM and Sirius, Verizon Wireless’ purchase of Alltel, and Sprint’s merger with Clearwir

    For additional insights about likely policy developments, please feel free to contact Jennifer Richter at 202.457.5666 or email jrichter@pattonboggs.com; Nicholas Allard at 202.457.6465 or email nallard@pattonboggs.com; and Jennifer Cetta at 202.457.6546 or email jcetta@pattonboggs.com.  If you are interested in a complete post-election analysis regarding what to expect in the 111th Congress, and covering Defense and National Security, Energy and Natural Resources, Environmental Policy (including Climate Change), Financial Services, Food and Drug Law, Health Care, Homeland Security, Tax Policy, Trade Policy and Transportation and Infrastructure, please contact any of the above. 

    This information is not intended to constitute, and is not a substitute for, legal or other advice. You should consult appropriate counsel or other advisers, taking into account your relevant circumstances and issues. While not intended, this update may in part be construed as an advertisement under developing laws and rules.