Government shutdown halts the Trump FCC’s deregulation agenda

Chairman Ajit Pai (C) leads a vote on the repeal of so called net neutrality rules at the Federal Communications Commission in Washington, U.S., December 14, 2017. REUTERS/Aaron P. Bernstein - RC18AF078D70

Lost in the headlines of a border wall shutdown is the work the federal government should to be doing to oversee the connective tissue of our economy: the nation’s communications networks. While the government was open, the Trump Federal Communications Commission (FCC) has been notable in its efforts to shut down regulation of the companies it is supposed to oversee. One would therefore assume that pausing what was already a shutdown of oversight would have no real impact. Closing the agency’s doors altogether would seem to be the ultimate definition of success for an agency that has spent the Trump term undoing regulation.

Yet, the companies that have been the beneficiaries of the Trump FCC’s deregulation are now discovering that a government that does nothing cannot serve their interests. Amazing as it may seem to those who have built their careers by proclaiming “government overreach,” closing the doors of the FCC hurts their businesses. For instance, consider the following examples of how the FCC shutdown is hurting telecommunications companies:

  • The proposed merger of T-Mobile and Sprint has stopped dead in its tracks, just as the government asked the companies to rework their economic justifications. The unwritten rule in merger review is that the longer it lasts, the more problems pop up to throw it off track (case in point, the Washington Post expose about how T-Mobile just happened to begin a long string of expense account charges at the Trump Hotel immediately after announcing the merger).
  • The proposed merger of broadcast giants Nexstar and Tribune is also on ice. The same “delay is not your friend” rule applies here as well.
  • Sinclair Broadcasting continues to twist in the wind with a Commission-ordered administrative hearing still pending in response to the allegations that the company made factual misrepresentations to the agency. While it can be expected that the Trump FCC will ultimately cut some kind of backroom deal with Sinclair, the fact of the matter is that as of today, Sinclair remains charged with alleged deception during its attempt to acquire Tribune Broadcasting. Until that stain is removed—which the shutdown prevents—all the licenses of this Trump-friendly broadcaster remain vulnerable.
  • The push for 5G wireless that the Trump FCC calls a national security-tinged “race” with China is slowed if the Commission cannot approve new 5G-capable phones and infrastructure. By law, all radio signal-emitting devices, from baby monitors and remote-controlled toys to 5G equipment, must be approved by the FCC. After almost a month of being shut down, the FCC announced its equipment certification program would reopen for work outsourced to third party labs. This is good for older products for which the measurement has long been established. However, as Axios reported, “products that contain new technology often require additional consultation with FCC staff before receiving certification. With FCC employees still on furlough, that consultation will be on hold until the agency resumes normal operations.”[1]
  • While the private negotiations of the alliance of satellite licensees working on an unprecedented effort to privatize the auction of valuable spectrum for 5G is not directly affected, the FCC has stopped giving informal input to move the process along. The result can only have an adverse effect on the amount of time required to put the 5G spectrum to work.
  • The new spectrum at 3.5 GHz recently made available for 5G and other applications has also fallen prey to the shutdown. Not only is there the equipment certification issue, but the industry has also warned that the companies that build wireless network antennas cannot complete the necessary registration (including coordination with the Federal Aviation Administration, which is also shut down).

The border wall shutdown has also proven a convenient excuse—with mixed success—for the Trump FCC to avoid unpleasant explanations of their activities:

  • The Commission petitioned the U.S. Court of Appeals to delay the February 1 oral argument in the lawsuit challenging the Trump FCC’s elimination of the existing Open Internet Rule. While lawyers preparing for a court case are judged to be “essential” and not subject to the shutdown, the Trump FCC took advantage of the Trump shutdown to plead with the court not to make it defend itself on the planned date. However, the court denied the petition.
  • When it was revealed that wireless carriers were selling their customers’ location information to third parties such as bail bondsmen, the Congress formally requested information from the Commission. The shutdown became a convenient excuse to avoid providing such information, thus shielding the companies involved as well as avoiding exposure of the Commission’s non-actions to protect the privacy of consumers.

Finally, it is important to recognize that the month-long shutdown is not like an extended weekend in its effect on the Commission’s functioning. This is not a situation where employees walk back in and pick up where they left off a few days before. Over the course of a month (or more) so much new has piled up on the Commission’s plate that the first thing to do upon returning is to assess the new pile, the second step is to catch up on other developments in the intervening period, then the third step is to reprioritize. Only after that step-by-step process can the Commission get back to full productivity.

Even if the Trump shutdown ends tomorrow, its effects at the Trump FCC will be felt for a long time to come.

[1] Margaret Harding McGill, “FCC restarts device authorization amid shutdown”, Axios, January 18, 2019