Election 2008: Status Quo or New Directions?

Technology policy is not center stage in this year’s presidential campaign. Both candidates — Sens. John McCain, R-Ariz., and Barack Obama, D-Ill. — are consumed with weightier subjects, namely the economy and Iraq. That’s not to say technology isn’t on the nominees’ minds. Obama released his tech treatise almost a year ago, and the use of the Internet and text messaging has been foundational to his crusade. McCain, meanwhile, published his long-awaited tech views on Aug. 14 even as he admitted to eschewing e-mail and not knowing how to surf the World Wide Web (see related article, How Tech-Savvy Are the Candidates?]. Still, he’s leaning on his status as a member and former chairman of the Senate Commerce Committee, which oversees telecom and technology, to speak for him. Meanwhile, Obama, while viewed as more favorable toward CLECs and competition than his opponent, doesn’t have tech-focused public policy experience. He’s counting on key advisers to strengthen his credibility.

Even so, communications executives and even some associations fear that McCain and Obama don’t fully understand the importance of the battles looming on the technology horizon. The past four years have been consumed with megamergers, discontent with FCC leadership, warrantless wiretapping and budding fights over net neutrality. Those subjects are moving to the next level and how they play out will all depend on who takes the White House. The takeaway is this: If McCain wins, expect the status quo of the past eight years. If Obama wins, expect more government input.

McCain vs. Obama

When it comes to just about anything, McCain “is more of a wild card,” than Obama, said Craig Clausen, senior vice president and COO of New Paradigm Resources Group (NPRG), headquartered in Chicago. For instance, McCain might be open-minded and pro-competition toward one industry, “but have a completely different perspective when it comes to telecom.”

McCain’s communications track record props up that view. He voted against the Telecommunications Act of 1996. He has supported à la carte cable programming and opposed the E-Rate program that funds Internet access for schools and libraries. In 2003 and 2004, McCain backed then-FCC Chairman Michael Powell’s quest to reform media ownership rules to allow consolidation, an issue so divisive the White House had to step in. And even though McCain expressed concern over recent Bell mergers, he never voted against one. Yet, he has fought efforts to tax the Internet.

Overall, it’s fair to say, given McCain’s history, that a McCain White House would apply a light touch or “benign neglect,” said Roger Entner, senior vice president for the communications practice at survey and research firm Neilsen IAG.

Obama’s problem is that he has limited communications and telecom policy experience. That leaves him to rely “on the old guard,” Clausen said. The “old guard” roster boasts prominent names from the Bill Clinton era, but Obama still could face skepticism about his ability to oversee technology growth and innovation. “Even when [Obama] was here in Illinois he was not involved in telecom,” Clausen said. Obama’s treatment of communications would resemble “more of what you saw in the Clinton administration,” he said.

Obama would indeed “be more interventionist in the market place,” said Robert Atkinson, president of the Information Technology & Innovation Foundation, a nonpartisan think tank. “On the plus side, if you will, Obama’s administration would be more willing to have a proactive national broadband policy and not just rely on market forces acting on their own.”

Yet, only 18.3 percent of executive respondents to a June 2008 Pike & Fischer survey said the government needs to establish such a policy. Nearly 45 percent said market forces would be sufficient to expand broadband availability and adoption. McCain, Atkinson said, appears more inclined to side with the latter statement.

Sonia Arrison, a senior fellow in technology studies for the free-market think tank Pacific Research Institute, sums up affairs this way: McCain’s greatest weakness is transparency in government. Despite that, he “looks better positioned than Obama on issues that matter most to innovators in the tech community,” Arrison wrote in an Aug. 22 TechNewsWorld column. Arrison wasn’t available for an interview and directed PHONE+ to the editorial. “Obama, on the other hand, has multiple weaknesses, particularly when it comes to taxes, property rights, labor and government waste that harms America’s tech sector.”

The People

The implementation of federal tech policy will fall in large part on the new president’s advisers and the person named to lead the FCC. Both Obama and McCain employ well-known communications industry names.

Obama’s prominent tech advisers include Larry Strickling and Bill Kennard. Strickling was an FCC bureau chief from November 1998 to July 2000; he also worked for Allegiance Telecom (now part of XO Communications). “Just the fact that Obama has him involved in the campaign says volumes,” said Clausen. “If Obama wins and Larry is rewarded with some position at the FCC, I think you’d find a very open-minded individual who is leery of abuses or mindful of possible abuses.”

Kennard chaired the FCC from November 1997 to January 2001. His policies helped shape the wireless phone industry and expand Internet availability.

On the other side of the aisle, McCain’s tech advisers include former FCC Chairman Michael Powell, former HP CEO Carly Fiorina and former eBay Inc. CEO Meg Whitman. Powell led the FCC from January 2001 to March 2005. He and Martin, then a commissioner, clashed over drafting rules governing wholesale access to the biggest local phone networks. Fiorina was the polarizing CEO of computer and printer giant HP from 1999 to 2005. She stumps as McCain’s fundraiser and her name had been circulated as McCain’s possible running mate. Whitman led eBay from 1998 to 2008. During her nearly 10-year tenure she guided the Internet auction company through meteoric growth, including an IPO that exceeded analysts’ expectations.

Net neutrality

No matter what, analysts say the next president will have to get involved in the net neutrality debate. The struggle over whether providers should be allowed to slow traffic or charge for tiers of service has grown too integral to the future of communications networks in America and, by extension, the world. In fact, 26 percent of the nearly 300 executives surveyed by Pike & Fischer ranked net neutrality as the most urgent regulatory dilemma their companies face. Most of those execs work in the content provider and consumer electronics sectors, and most fear heavy-handed Internet regulation.

If Obama wins, “I think we will see much more activist posture,” said IAG’s Entner. Obama’s technology screed calls for an open Internet and that bothers a number of industry groups. Several telecom associations declined to speak with PHONE+ about their take on the presidential race; however, previous lobbying efforts show that USTelecom, CTIA-The Wireless Association, the National Cable & Telecommunications Association and others staunchly oppose government involvement in net neutrality. COMPTEL stands out as the most pro-net neutrality telecom industry association. Key executives were unavailable for an interview.

If McCain wins, he promises to follow in the current FCC’s footsteps regarding net neutrality. For a while, the candidate’s position on the subject remained nebulous. That’s because it took months for him to release his tech policy and there was a chance — given his “maverick” reputation and the presence of certain advisers on his staff — that he might take an unpredictable stand on net neutrality. That notion was shot down on Aug. 14.

Recall that one of McCain’s tech advisers is none other than former eBay head Whitman. She was one of the CEOs — alongside the chiefs of Google, Yahoo! and others — who begged Congress in 2006 to preserve the “longstanding openness” of the Internet. Fast-forward to 2008. McCain, in the debate at Saddleback Church in Southern California, called Whitman one of the “wisest” people he knows. However, McCain apparently ignored Whitman’s pro-neutrality position when he presented a policy that “is basically a repetition of Powell’s four freedoms,” said Blair Levin, telecom analyst for investment bank Stifel Nicolaus and a former FCC bureau chief.

Levin was referring to former FCC head Powell’s “four freedoms,” which champion access to any legal content; the ability to run or use any application; the ability to attach a benign device to a broadband network; the ability to get information about the broadband service. Those are the same four freedoms current FCC Chairman Kevin Martin has put forth as all that’s necessary for governing net neutrality.

Interestingly, despite distaste for excessive oversight, respondents to the Pike & Fischer survey gave Democrats an overall “slight edge” over Republicans, said Scott Sleek, Pike & Fischer’s director of broadband advisory services. Almost 29 percent said the Democrats are more capable of driving technology advances, while 22.9 percent said Republicans are more capable.

Wiretapping

Sources say wiretapping will be another hot potato for the next president.

Obama has promised to eliminate the warrantless wiretapping made infamous by the Bush administration. ITIF’s Atkinson said Obama would apply more caution about government working with telecommunications companies than McCain, who “generally would be willing to err on the side of national security. Obama would be more likely to err on the side of civil rights.”

To be sure, McCain has waffled on wiretapping. Once opposed to telecom immunity, McCain since has done a 180-degree turn and told various media outlets the warrantless wiretapping was appropriate and Constitutional. Why? Because he gets a lot of money from the Bells.

By now, thanks to the Washington Post and other newspapers, it’s widely known that McCain’s advisers include lobbyists for AT&T Inc. and Verizon Communications Inc. — the two telcos that came under fire for going along with Bush’s warrantless wiretapping program. After a long fight, they also secured immunity from prosecution. USA Today reported earlier this year that, of the 66 current or former lobbyists working for McCain, 23 lobbied for telecom companies in the past 10 years. Those lobbyists, according to USA Today, include McCain’s campaign manager, deputy manager and his finance chief.

Despite McCain’s stance, he is likely to show “a greater respect for following the guidelines and the approval process through the FISA courts,” said Entner. But he thinks Obama will do likewise. “I think both candidates would adhere to the rules because … it would give them more credibility and show a departure from the procedures” of the Bush administration, Entner added.

The FCC

Regardless of who wins in November, there’s near-universal agreement that the make-up of the FCC will change. There’s also hope that some long-standing points of contention might be resolved.

Off the bat, the FCC complement of commissioners will shift when Deborah Tate leaves by year’s end. Her term expired in June 2007 and the Senate has not yet acted on Bush’s re-nomination. Sources say the Senate majority is waiting to see who wins the presidential elections so they might achieve a 3-2 Democrat-to-Republican mix. Jonathan Adelstein also is awaiting Senate confirmation of his re-nomination but if Obama wins, some think he stands a chance of becoming FCC chairman.

“Adelstein was [Tom] Daschle’s right-hand man forever and a day,” said IAG’s Entner. “And Daschle and Obama are pretty close.” Daschle was a long-time Democratic senator from South Dakota; Adelstein served as an adviser to him for seven years.

Either way, the open seat will allow Obama or McCain to name a replacement. Plus, current FCC Chairman Kevin Martin is expected to resign. It’s a traditional courtesy in the agency for the sitting chairman to step down when a new president takes office. However, if McCain wins, Levin speculated Martin “will probably” stay on as chairman for some time. The rationale? With Tate gone, the FCC would be comprised of two Republicans and two Democrats. “If I were advising McCain, I’d advise him to ask Martin to stick around as chair until new people were confirmed,” said Levin.

Of the issues facing the FCC, forbearance petitions and USF reform are two of the biggest. Analysts say if McCain wins, there will be little change in how forbearance requests are handled. But if Obama takes office, commissioners are much more likely to examine and reject the petitions. On the USF front, the Pike & Fischer survey found reform is a major concern for executives — in fact, 19.5 percent dubbed it as urgent. But outside of the industry, the USF question — who should contribute and how much — isn’t top of mind.

“Who pays what for USF right now is about as important as if a rice sack falls over in China,” said Entner. “They’re more concentrated on winning. … They probably don’t even know what ‘USF’ stands for.”

USF is difficult to analyze through a partisan lens, said Levin of Stifel Nicolaus. Obama has talked about shifting USF from a voice-centric to a broadband-centric subsidy, Levin explained. Alternatively, McCain has tended to be skeptical of Universal Service. “He has talked about the importance of connecting everyone but it’s not clear what he means by that,” said Levin.

Mergers

As with net neutrality, wiretapping and the FCC, there’s no mystery as to how an Obama or McCain administration would handle service provider mergers.

On Obama’s watch, there would be more scrutiny, said Entner. “The current Alltel/Verizon merger would have taken definitely longer under an Obama administration,” he added. “They’re doing everything they can to finish this up by November.” ITIF’s Atkinson agreed. Obama would be more concerned about mergers than a McCain administration, he said, but that doesn’t mean McCain would just roll over. “He’d be more likely to say mergers are not that much of a problem,” Atkinson said.

NPRG’s Clausen tends to concur, although he posits that McCain would take a slower approach to mergers than Bush and the Kevin Martin-led FCC have done.

Tech Takes the Back Seat

The upcoming elections boil down to this: technology and communications policy, while important to the candidates, isn’t a chief priority. That upsets the executives in the Pike & Fischer survey. “None of the candidates understand technology; I’ve witnessed their ignorance,” one participant wrote. “No candidate understands the broadband issues,” another responded. “Essentially the monopoly is being recreated and large-player dominance is limiting innovation and competition.”

Either way, there is one surety — things will change. The unknown lies in how much.

How Tech-Savvy Are the Candidates?

Every once in a while, a politician sticks foot in mouth and makes the people wonder what he’s thinking. John McCain did just that when he told Politico earlier this year that he’s an “illiterate” who relies on his wife for tech help and that he has “never felt the particular need to e-mail.” That’s not so encouraging in an increasingly electronic- and information-based global economy. McCain also has been derided for an inexpert use of the Internet as a tool in his campaign.

Contrast all of that with Obama’s constant ever-present sidekick, the BlackBerry, plus his mobilization of grassroots support through the Internet and text messaging, and you have a sharp disparity between the candidates in the emphasis on technology in the 21st century. Obama also wants to appoint a CTO to his cabinet if he’s elected. He has said he wants the position to open government by streaming live video of meetings and by incorporating wikis and blogging.

However, one tech drawback for Obama could be his newly named vice president running mate. About the closest Sen. Joe Biden, D-Del., has come to being involved in tech and communications policy is introducing CALEA legislation. He has dabbled in recording industry matters and looked at P2P networks from a homeland security perspective, but his views on technology otherwise remain obscure — Biden sits near the bottom of CNET’s 2006 Technology Voter’s Guide and he refused to respond to the publication’s 2008 survey.

—Kelly Teal