And this week on the communicatorsa look at some of the telecommunications and the tech issues that the congress and the fcc may face in 2014. Joining us are three working reporters on telecommunications, Matthew Schwartz is with communications daily, Kate Tummarello is with the hill, and Paul Barbagallo is the managing editor of bloomberg bna, mr. Barbagallo, lets start with you. What do you think on the fcc and the congressional agenda this year . Guest well, i think to start off spectrum. The fcc in 2014 and beyond will be intently focused on spectrum. Congress as well. We will have this month the first spectrum auction at the fcc in nearly half a decade, and well have another spectrum auction later this year, and the biggest spectrum auction, which everybody has been eagerly anticipating, the incentive auction of spectrum in 2015 as new fcc chairman tom wheeler has stated. So that is, as i see it, one of the bigger issues in congress and fcc on the tech front. The wireless carriers have been lobbying aggressively for many years to free up federal airwaves, commercial airwaves to satisfy their consumers appetite for bandwidth. Host how major is this months spectrum auction . Guest well, later this month the fcc will hold the h block spectrum. Many people thought it was going to be a bigger deal. Basically, there isnt going to be only one bidder, dish. For years sprint, nextel had suggested that they were going to bid, but they have not filed an application to bid. Theyve, they have no interest at this point. So its really going to be dish alone buying the spectrum. Not really a spruk auction so much as a spectrum sale. But we will see the fcc in action and how they conduct this auction, and following h block will be aws3 which will be somewhat of a more widelyattended auction, if you will. Host Matthew Schwartz, what else do you see the fcc working on this year . Guest well, what the fcc does this year is going to be determined by a brand new, very dynamic chairman in tom wheeler who used to head the Wireless Association, ctia and the cable association, cta, and hes not afraid to come out swinging. You know, in his book he wrote about Abraham Lincoln and his use of the telegraph, he wrote in the preface that when he was in his 20s, he learned that doing the same thing thats been done previously is just an excuse for not thinking. And by that measure, chairman wheeler has been thinking ever since he came into office. The very first thing he did was turn to his former colleagues at the Wireless Association and say to every carrier if you do not voluntarily come up with a plan to unlock cell phones and let consumers take them to different carriers, i will come up with a plan for you. And thats so far been a trend of what weve seen in the last month and what i expect to see over the next year, is a chairman who espouses competition, says he is more than happy to let the free market take over unless theres problems, in which case he is very eager to flex the fccs regulatory muscle. And that, the first thing were going to see with that is the ip transition and, specifically, the trials. At t has been requesting this for the past year, so has the whirl association. They want trials of deregulation in various wire centers around country as they transfer from the old copper lines into fiber, the old tdm protocols to the ip protocols, switching to internet packets. And this is going to be something where the fcc takes a look and see how well does deregulation work. A lot of people say the wire Center Trials are going to work just fine because the carriers have every incentive of in the world to have the fcc see that deregulation works. But theyre going to be looking very closely for signs of harm to consumers, to Older Americans who rely on things like hearing aids that have traditionally worked with land lines, with copper lines very well but dont necessarily work as well with ip technologies. Theyre going to look to see if what happened on fire island a year ago after the hurricane, the superstorm, where all the wire line technologies broke down and wireless was not a very good substitute, theyre going to look to see whether wireless and ip is a good substitute after at t pulls the copper out in the wire line trials. So hes not going to be afraid to take action if things fall apart during the trials. Host Kate Tummarello, what about the hill . Is there an agenda, a tech agenda on the hill . Guest i would say one of the biggest issues for the tech world is going to be surveillance reform. 2013 was a big year for surveillance, all the snowden leaks, and that will keep coming. The leaks, in fact, will keep coming, weve been told. By end of january, president obama will address his review groups recommendations. They put forward 46 recommendations, some of which the white house is likely to accept, stop at that. But there are some that are getting more contentious and will lay out exactly where the white house stands on some of these issues. On the hill we have two kind of battling groups. Theres the reform surveillance, rein it in, end bulk collection. You see that with representative sensenbrenner and patrick leahy, but then you have the intelligence committees looking to protect the nsa and keep the surveillance programs as they are now. That should play out certainly over the next few months, and well see where president obama stands on things. Host as a larger issue, the issue of privacy, if you could all address that issue and potential legislative or regulatory reforms. Guest well, privacy definitely is moving on many fronts. Theres the surveillance issue and the issue of access to consumer data by governments. Thats something that, like i said, the hill will be looking at. But also even the fcc is jumping in. Theyre considering comments on a petition to have current fcc rules apply to government access to user data. But were also looking at commercial privacy developments. You see multistakeholder events or efforts, sorry, just not moving as quickly as some would like, and the hill is taking up that issue. Just last month senator rockefeller said during a hearing that commercial privacy is an even bigger deal than nsa access to data. This is his last year in office, so if he wants to do something, nows the time. The fcc is one of the organizations that is not as focused on privacy, theyre more focused on the technical aspects. But as ms. Tummarello said, there are comments being sought. The Public Interest groups last month petitioned the fcc to include to expand the privacy measures that it does have with things like consumer, Customer Proprietary Network information so that these sorts of rules apply to the collection of aggregate data. So the fcc is definitely going to be asked to help where it can. But mostly privacy tends to fall more in congress. Guest one agency to watch is the ftc. The ftc is the first and last line of defense with respect to consumer privacy, and they have, they have been able to negotiate with some of the Largest Tech Companies biggest privacy settlements ever. They got twitter to implement its first Information Security privacy practice. So i would say that the ftc will continue to be aggressive on this front using their section five authority under the federal trade commission act. And while many people want the ftc to be a stronger regulator in this area, to actually have, you know, very Clear Authority to be a privacy and Data Security regular regulator, they might not get that authority from congress right now, but they will continue to use their section five authority the best they can. Host couple of court cases that are related to this world. Net neutrality and potentially the aereo case can. Who wants to start . Guest ill take it. For the last few years, Net Neutrality has been the perennial issue. No one knows whats going to happen. Weve long been saying the court could make a decision at any time. It really is true, the court could make a decision today, this week, next week, sometime soon. The d. C. Circuit is currently struggling with whether the fccs open Internet Order which prohibits blocking and price discrimination is too close to whats known as common carriage. The fcc has Broad Authority to regulate Telecom Services, your standard phone lines, and insure that phone companies have to take all comers at the same price. And theyre trying to apply similar rules to the internet. Now, at the oral argument in september, judge david tattle was listening to these rules and said that sounds like classic common carriage. And at least one of the other judges seemed to agree. So most observers agree that at least the discrimination section of the Net Neutrality law will be, um, will be found unlawful. Now,if that happens, its almost certainly going to be appealed to the Supreme Court, so we could find ourselves back again next year saying were about to find out what happens. But chairman tom wheeler sparked some concern by Public Interest groups when he said at an ohio state speech be about a month speech about a month ago that he was interested to see a twosided market develop on the internet where, for instance, netflix could pay for faster access, for better quality to the customers. Now, some Public Interest groups say that that directly contradicted what he said about Net Neutrality, which is that hes a full supporter. Theres ways to realize what we would have said in a way that wouldnt violate Net Neutrality. For example, if he was, if he were thinking of netflix paying for content Delivery Networks or something on the back end that has been excluded from the Net Neutrality rules, but its kind of a technical read to get tom wheeler out of trouble for what he said. Its going to be very interesting to see what happens there. Guest yeah. And one of the really big, interesting aspects of this case is how far the court will go, right . Because Verizon Communications has, you know, they have appealed the fccs Net Neutrality order, and they challenged the order on the basis of authority, statutory authority, but they also forwarded a First Amendment argument as well exclaiming that they are like a newspaper with the right to include or exclude any information that they see facility fit. So the court could overturn the fccs open Internet Order just on the basis of authority, but they could go further. They could, they could rule on verizons First Amendment challenge in which case it would bring into question almost every regulation on the fccs books. Guest and certainly whatever happens at the court will spark some kind of response on the hill. If the Court Strikes down the rule, then we can expect to see democrats jumping in and saying, no, we need these rules, we immediate to protect consumers. There are already democrats who think the rules dont go far enough, and they will definitely be back in action if something happens in court. If Court Upholds the rules, youll probably see the republicans trying to rewrite the law to take that away from them, so itll definitely be a topic there as well. Guest the federal trade commission is more than happy to jump in if the fcc loses authority over that aspect of regulation of the internet. Most of the ftc commissioners have come out over the past year stating that a lot of Net Neutrality disputes are actually Consumer Protection disputes or false advertising disputes. And they feel that there are more than enough tools in their tool box to deal with any Net Neutrality issues. But more broadly, i actually wonder how relevant the net neutral the city rules are going to be going neutrality rules are going to be going forward. Fcc commissioner rosenworcel just betweened a couple days ago and said that 2014 could be the year that more americans access the internet via mobile devices than the Traditional Land lines. Mobile devices are excluded from the Net Neutrality rules. They dont apply to wireless service. And the wireless carriers got that provision through under the guise of the need for reasonable network management. Maybe a few years ago that made sense. Speeds on wireless internet when the rules were put into place, 2009, 2010, were very low. You couldnt really do anything. Today people are streaming netflix, and we are going to continue to see this year wireless carriers come up with new plans to that would be possibly illegal under the Net Neutrality rules as a i plied to wire line. For instance, at t just this week announced sponsored data in which a company like netflix could pay to have their data not count against a users cap. So thats, thats, i think, the idea of the dynamic twosided market that tom wheeler was talking about. Were already seeing that in respect to wireless, and i think were going to keep seeing it there. Host Kate Tummarello, whats the other case . Potentially the Supreme Court taking up the aereo case . Guest yes, next week we will find out. It seems like both sides of the aisle want to see, they both want to be proven right by the Supreme Court. Host whats the case . Guest the case is over aereo which streams broadcast content and other content, and the broadcasters say thats a copyright, and it shouldnt be up to aereo without an an the ten that, they say theyre just providing it over the internet, so theyre not violating the law. Host kate, when you take the temperature on the hill of tech issues, what do you find . Guest theres definitely still some postsopa wariness about jumping into issues that are going to spark this big backlash that maybe theyre not anticipating, so people are definitely being cautious. But with the surveillance stuff, youre seeing, you know, constituents come out and just in just huge droves in ways that really hasnt happened since sew sopa. Thats definitely a momentum that lawmakers are ware of. Guest yeah. And just to add to that, the aereo case is, as i see it, one of the bigger court cases that could potentially transform the communications sector. Michael powell, former chairman of the fcc and now president and ceo of ncta several years ago said the biggest thing thats going to change our space is the aereo case. And we will see potentially the Supreme Court take this up and find out one way or the other whether aereos service is legal under copyright law. Aereo uses dimesized antennas, as kate noted, to capture broadcast signals and retransmit them over the internet, and this has really changed the dynamic of the pay tv marketplace. Fox has said, well, if aereo is not going to pay us a royalty payment, well just become a cable channel. We will cease distributing our content over the air. So guest which is unlikely to happen. Guest right. Guest but its nice bluster. Its nice talk. What this aereo case is, is just a continuation of the continuing clash between old laws and new technology. The copyright act doesnt allow you to take all the signals and copy them and multiply them, but with these dimesized antennas, aereo argues that its actually following the letter of the law. Each user who signs up for their service has an antenna. They argue that the length of the antenna whether theres to your roof or through somebody elses roof doesnt matter. So its going to be really interesting what the Supreme Court decides. And if the Supreme Court approves aereos technologies, then i think were going to see a lot more continued competition, and it might actually spur other companies, broadcast companies to get even more involved in the internet space. Guest yeah. And aereo raises sharp questions about how we consume video content. Theyve, the concept of aereo, netflix, hulu raises really sharp questions about whether the cable model of packaging channels together will be viable in the future. Guest and this is something we could see, um, come up on the hill. The House Judiciary Committee is conducting review of copyright law. Been so far or distracted by its pat innocent efforts, but its patent efforts, but its going to continue examining legislation that could affect the law, and im sure aereo will be part of that. Host could this old laws new Technology Conundrum read to a rewrite of the telecom act at some point . Is there ap appetite for that . Guest there seems to be, even though its a large undertaking and will take some time. The House Commerce Committee announced late last year that they would be rewriting the act. They have a hearing scheduled for january. Theyre Getting Started right off the bat. But its going to take a while before or we see anything concrete on that. Guest i think the big challenge for lawmakers in rewriting the act is finding a problem. The last update to the Communications Act in 96, our phone bills were high. And so it was very easy for lawmakers to stand before podiums and give press conferences about the need for reforming the Communications Act.