Out of Control Policy Blog

Julius Genachowski: Another Tabula Rasa?

It's rare to see such agreement between free-market groups such as the Progress & Freedom Foundation and left-leaning Free Press, but Barack Obama's nomination of Julius Genachowski to chair the Federal Communications Commission won praise from the heads of both organizations.

Not surprising because Genachowski, like Tim Geithner, Treasury Secretary nominee, and Adm. Dennis Blair, nominee for director of national intelligence, is yet another so-called "post-partisan" figure. While legal council to Clinton era Chairman Reed Hundt, Genachowski comes devoid of the doctrinaire approach of either party. And as with Geithner, Blair and several other of Obama's cabinet choices, only time will tell how much Genachowski's policies will veer away from the largely deregulatory trend that goes back to Clinton.

Some encouraging points:

One, Genachowski is an Internet entrepreneur, and more than any other predecessor, has direct experience with the disruptive changes occurring in telecom, media and broadcasting, and the quest to adapt business models to fit them. As an executive with IAC/Interactive, which can only be described as an Internet conglomerate, as well as his venture capital role in companies such as Expedia.com, which turned the travel agency business upside down, means he's familiar with how fast a newer business models can torpedo last year's hot concept. The hope is he may be less inclined to react negatively when service providers attempt to shift business models, enter into new partnerships, or bundle services. Nor, I hope, will he be predisposed to regulation-by-nostalgia, that is, using bureaucratic methods to prop up businesses and business models whose time has clearly passed.

Two, he's not Kevin Martin. At least at first blush, he does not approach the chairmanship as censor-in-chief. Expect him to lay off the cable industry on issues such as a la carte (which the FCC research staff declared a non-starter) and windmill-tilting against broadcast "indecency." Martin's populist content agenda will take a back seat to more critical regulatory issues that need to be debated: network neutrality, spectrum allocation and universal service.

Questionable points:

One, as Hundt's council, he was a principal-backer of the UNE-P line sharing scheme aimed at "creating" local exchange competition. Again, one hopes that the businessman him understands that UNE-P didn't work because it shifted liabilities–namely the cost of infrastructure–competitors should have been carrying onto the books of incumbent providers. It artificially inflated the value of the competitors operation (most went under in the dot.com bust), made it harder for incumbents to access capital and, in the end, did nothing to stimulate real infrastructure investment and facilities-based competition. Early in his tenure I'll be looking for signs that he learned a lesson here that you can't manage competition by forcing one company to share its capital and assets with another for no compensation.

Two, he nominally favors network neutrality, although the term, in light of Google's backtracking, has now become somewhat nebulous. If a consensus emerges that the there should be no applications blocking, fair enough. It remains to be seen how much he pushes for regulation of network management technology and pricing between service providers and applications providers.

But for now, we'll wait and see.


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