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McDowell Remarks at CPAC

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Released: February 10, 2012












Thank you, Kelly, for asking me to speak at CPAC this year. It’s good to be
back. CPAC has yet another provocative program lined up this year. I wish I could
attend every session. And we have an interesting panel coming up in a few minutes, so I
will try to keep my remarks as short as possible.
The issues covered in the FCC’s portfolio directly affect Americans’ freedom to
communicate, perhaps the most important of our enumerated Constitutional rights. After
all, it’s no accident that the First Amendment sits atop the Bill of Rights.
The FCC consists of five commissioners, including one chairman, who are
appointed by the President and confirmed by the Senate. The statute says that no more
than three of us may hail from the same political party. We serve five-year terms and
cannot be fired by the President. This structure gives the Commission a certain amount
of independence, and thus we are called an “independent agency” that is not part of any
of the three branches of government.
Some have estimated that the FCC has sway over about one-sixth of the American
economy, or $2.5 trillion in commerce – with indirect influence over anything that rides

over the airwaves, including radio, TV, smartphones, satellite communications and such,
and copper, fiber or coaxial cable, among other technologies and media. In short, please
watch the FCC. What we do affects your every day life and your freedom to
A few issues that you may have heard the FCC act on in the past year or two
include: “net neutrality,” or the regulation of Internet network management, which I
voted against; reform of a Congressionally mandated phone subsidy program called
“Universal Service”; and spectrum management, or trying to find ways to allow your
smartphone to work more effectively by auctioning off more of the most useful parts of
the airwaves to use for mobile broadband. Congress is working on legislation to help
bring more spectrum to market, and this issue has been incorporated into the payroll tax
cut extension debate. I look forward to talking about all of these issues more during our
panel discussion, if you’d like.
More immediately, however, the FCC may vote on a proposal to place television
broadcasters’ public inspection files, including information regarding political ads, on a
government-hosted website. The requirement for broadcasters to maintain complex
public inspection files was created more than 40 years ago to provide information about
broadcaster operations and encourage a dialogue with the local community. When the
FCC originally considered creating an online option for the public file requirement in 2007,
we found that the burdens of placing the portions related to political ads online
outweighed the benefits of posting this information. Historically, the political file has
been required to contain all requests for broadcast time made by or on behalf of qualified
candidates, along with the disposition of the request, and information about the price of

the ad, which is proprietary and competitively sensitive information. The Commission is
now thinking about reversing its position from 2007 with little to no evidence that
candidates, their representatives, or members of the local communities served by
broadcasters were unable to access the required information.
I must ask why the FCC is once again proposing to fix what appears to be a non-
existent problem? We also must question whether a requirement to post an online
political ad file truly promotes the public interest obligation of broadcasters to provide
programming responsive to the needs of the local community, or is another motive at
Some speculate that a few are interested in this information so the government
can track political spending in light of the Supreme Court’s Citizens United decision,
which prohibits the government from limiting communications spending for political
purposes by corporations and unions. Keep in mind that, in its Citizens United decision,
the Supreme Court reaffirmed that political speech is core protected speech under the
First Amendment, therefore the Constitution severely curtails the government’s ability to
regulate it. Given this Constitutional context why would the government want to have
such information loaded onto its website to monitor in real time?
Furthermore, is a regulation that burdens the private sector by imposing
compliance costs and forcing disclosure of competitively sensitive business information
while providing marginal, at best, benefits to the public appropriate and truly consistent
with the original purpose of the public and political files?
I am generally concerned that the Commission is once again heading down a path
that is overly regulatory and with unclear justifications. Although there may be a

marginal upside to placing political files online, we must resist imposing a burdensome
requirement to upload all correspondence regarding political ad buys “immediately,” as
the FCC has proposed, which during a busy election season may need updating several
times a day.
The record suggests that this requirement may cost each broadcast station up to
$120,000 to $140,000 on average per year, at least one new full-time job, and the entire
industry $15 million or more in upfront costs just to upload existing political files. The
extra capital and personnel resources needed to maintain an online political file would
require broadcasters to divert funds from their newsgathering operations and local
programming. Such a rule would be especially onerous for small, independent
broadcasters in these hard economic times. This idea is likely to be a jobs destroyer.
Furthermore, there are potential unintended consequences of publishing
competitively sensitive information regarding broadcasters’ advertising rates and
practices. The gathering and distribution of broadcasters’ political ad pricing and lowest
commercial advertising rates may result in anticompetitive practices, such as price
collusion, and would put the government’s thumb on the scale during advertising
Before taking any further steps, the Commission should pause and think through
not only the potential economic effects of its proposals, but the electoral and
Constitutional consequences as well. After all, what’s the rush?
The most important communications issue affecting freedom, however, will not
unfold at the FCC. This struggle will be fought far from our shores. By the end of this
month, a diplomatic process will begin in Geneva that could result in a new treaty giving

the U.N. expanded powers over the Internet. Dozens of countries, including Russia and
China, are pushing hard to reach this goal by year’s end. While American diplomats and
Internet companies have been focused on other important matters, this campaign to
reverse long-standing international consensus to keep governments from regulating core
functions of the Net’s complex systems has been gaining momentum. The potential
reach, scope and seriousness of this effort are nothing short of massive.
Don’t take my word for it, however. As Russian Prime Minister Vladimir Putin said
last June, his goal and that of his allies is to establish “international control over the
Internet” through the International Telecommunication Union (ITU). The ITU is a
treaty-based organization under the auspices of the United Nations. Inexplicably, across
the globe many private sector and government proponents of Internet freedom have fallen
behind this fast moving attempted power grab despite the enormous global economic and
political implications.
If successful, this new effort would upend the Internet’s flourishing deregulatory
model which has been in place since 1988. Since then, the Internet has been insulated
from economic and technical regulation and quickly became the greatest deregulatory
success story of all time.
Since the Net’s inception, engineers, academics, user groups and others have
convened in bottom-up non-governmental organizations to keep the Net operating and
thriving through what is known as a “multi-stakeholder” governance model. This
consensus-driven private sector approach has been the key to the Net’s success. For
instance, in 1995, shortly after the Internet was privatized, only 16 million people used
the Internet worldwide. By the beginning of last year, however, well over 2 billion

people were online – and that number is growing by as much as half a million new users
per day. This phenomenal growth has been the direct result of governments generally
keeping their hands off the Internet sphere.
Today, however, several countries within the 193 member states of the ITU want to
renegotiate the 1988 treaty to expand its reach into previously unregulated areas.
Reading even a partial list of proposals that could be codified into international law next
December at a conference in Dubai is chilling:
Subject cyber security and data privacy to international control;
Allow foreign phone companies to charge fees for “international” Internet
traffic, perhaps even on a “per-click” basis for certain Web destinations, with
the goal of generating revenue for state-owned phone companies and
government treasuries across the globe;
Impose unprecedented economic regulations on the Internet’s global
Establish for the first time ITU dominion over important functions of multi-
stakeholder Internet governance entities such as the Internet Corporation for
Assigned Names and Numbers, the non-profit entity that coordinates the
.com and .org Web addresses of the world;
· Subsume under intergovernmental control many functions of the Internet
Engineering Task Force, the Internet Society and other multi-stakeholder
groups which establish the engineering and technical standards that allow the
Internet to work; and
· Regulate international mobile roaming rates and practices.

A top-down, centralized, international regulatory overlay is antithetical to the
architecture of the Net, which is a global network of networks without borders. No
government, let alone an intergovernmental body, can make engineering and economic
decisions in lightning-fast Internet time. Productivity, rising living standards and the
spread of freedom everywhere, but especially in the developing world, would grind to a
halt as engineering and business decisions inevitably would become politically paralyzed
within a global regulatory body.
Unfortunately, pro-regulation forces are, thus far, much more energized and
organized than those who favor the Internet freedom and prosperity that the bottom-up
multi-stakeholder approach delivers. Regulation proponents only need to secure a simple
majority of the 193 member states to codify their radical and counterproductive agenda.
Unlike the U.N. Security Council, no country can wield a veto in ITU proceedings. With
this in mind, some estimate that approximately 90 countries could be supporting
intergovernmental Net regulation – a mere seven short of a majority. We must awake
from our slumber and engage before it is too late. Not only do these developments have
the potential to affect the daily lives of all Americans, they threaten freedom and
prosperity across the globe as well. Working against this effort is my number one
priority for the year.
Thank you again for having me here today. I look forward to the panel discussion
and taking your questions.

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