FCC's McDowell says free markets are "cornerstone of democracy"

by Michele Greppi, TVWeek

The "twin cornerstones" of democracy are free markets and free reign for ideas, Federal Communications Commission member Robert McDowell said Tuesday to a room full of Wall Street analysts attending the annual Credit Suisse Media and Telecom Week conference.

When it comes to regulation of an industry, "rarely do we do as good a job as you do," he told the representatives of the private sector.

The new wave of technologies delivering communication, information and entertainment "has become the new wave of democracy," and the delivery pipes "are getting fatter and faster," said Mr. McDowell, who joined the FCC in June. "Never have consumers been so empowered."

Mr. McDowell said wireless technology "may be more disruptive than the Internet," and that companies have the choices of feeling threatened or changing and prospering.

He cited the light regulatory hand that will apply to businesses using the analog spectrum or underutilized spectrum known as white space, which will be auctioned off as part of the TV industry's mandatory switch to digital in February 2009.

Mr. McDowell said that when confronted with evidence of marketplace failures, he favors remedies that "are narrowly tailored and sunsetted."

He outlined question marks casting shadows over the media and telecom landscape. They include:

· Media ownership. "So far, I, for one, have a hunch it is no longer 1975," he said, noting that big media has plenty of competition.

· Video franchise requirements by local governments, which have applied generally to cable operators. Mr. McDowell favors "opportunities to succeed or fail without government, any government, putting a hand on the scale." He said legislation proposed on Capitol Hill this year is not likely to pass. "I think there is still plenty of regulatory underbrush to be cleared," he concluded.

· Set-top boxes and whether cable operators should be banned from leasing them to customers. "The best would have downloadable security at its core," Mr. McDowell said, urging private enterprise to take the lead on working things out.

· Net neutrality, which would prevent the owners of distribution channels from discriminating against competition. It's an issue he said is "ill-defined" and a "Rorschach term."

Mr. McDowell noted that the FCC receives only $3 million from the U.S. Treasury and returns $14 billion. A spinoff or IPO would be great, he said.

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