It looks like Congress is close to confirming Julius Genachowski as the new chairman of the Federal Communications Commission. Genachowski’s confirmation hearing was Tuesday, which, as these affairs often do, provided for more senatorial grandstanding than actual policy discussion.
About the best thing that can be said for Genachowski is that he will be one of a very few Obama appointees who has had real experience in the private sector. Notably, Genachowski was chief of business operations and a member of office of the chairman at Barry Diller’s IAC/InterActiveCorp., a major player in e-commerce. IAC/Interactive’s holdings include Ask.com, Bloglines, Evite, and Gifts.com, many of which rely on Web-based advertising models, including targeted advertising, which supports much of the free content on the Web yet has been attacked as violating privacy. In addition, Genachowski co-founded two venture capital firms, LaunchBox Digital and Rock Creek Ventures. This at least raises an expectation that he is familiar with the many different types of Internet business models that have emerged, successful and not.
Genachowski clerked for U.S. Supreme Court Justices William J. Brennan and David Souter and was FCC general counsel under Chairman Reed Hundt. Genachowski also has been credited with devising and implementing the Obama campaign’s new media strategy—use of email, social networking and texting that energized supporters at the grassroots level, raising attendance at rallies and raising voter turnout.
Genachowski’s breadth of experience with the digital economy eclipses any previous chairman’s. This may prove to be a critical hedge against the current climate in Washington, which is titling toward increasing government involvement in every major U.S. industry. Already there is lobbying afoot to extend the FCC’s regulatory purview over traditional telecommunications to cover Internet, new media services and other forms of multimedia that, until now, have been allowed to operate—and flourish—in a free market, even though no one can point to any specific consumer harm that has been fostered by the unregulated market for information services.
During Genachowski’s confirmation hearing, Sen. John D. (Jay) Rockefeller IV (D-WV), chairman of the Senate Commerce, Science and Transportation Committee, spoke of his hope that the nominee would “fix” the agency. Much depends on what the meaning of “fix” is. I won’t argue that Kevin Martin, whom Genachowski would replace, left the commission in shambles. Despite his lip service to deregulation, Martin sought greater control over Internet speech, conducted a vendetta against cable providers and, when it suited his purposes, ignored the findings of the FCC’s own research staff. If fixing the FCC means getting back to its basic, limited role of regulating the use of public airways, that would indeed be welcome. But I fear Rockefeller and the Democratic majority have a much different agenda in mind.
Judging by past statements, look for Congress, and perhaps the president, to push for a far more activist FCC, one that continues the intrusive overreaching that Martin started and represents a complete reversal of 25 years of policy toward telecom and information services that has been the general rule through a series of Republican and Democrat administrations.
Elsewhere, Rockefeller has called for enforced network neutrality, despite that in the five years of debate, there has been only one instance of a U.S. carrier, tiny Madison River Communications, using control of the so-called network bottleneck to shut down an application. Rocky and his friends want to end the exclusive agreements that led to products such as the iPhone (subscription required). Although pro-regulatory analysts said the AT&T-Apple agreement would lead to higher prices and an end to innovation, this week, Apple cut the price of its original iPhone model, which debuted at $400, to $99, while introducing its third upgrade in two years. And despite breathless claims from groups such Consumers Union and Free Press that control of the Internet has fallen into the control of a handful of huge companies, it’s three-year-old Twitter, an outfit few had heard of until recently, that has taken the online lead in driving the historic political events in Iran.
So, again, what exactly is the crisis with the digital economy that it needs a complete D.C. overhaul ?
At least Genachowski can bring into this hyperactive legislative environment a respect for how fast a new idea can change the high-tech playing field. Thus far, the few members of Obama’s team who understand how markets work have not had much influence. Let’s hope that Genachowski can be the exception.