FCC Chairman Ajit Pai Interview: Media Ownership Rules ‘Quite Antiquated’

Ajit Pai FCC

FCC Chairman Ajit Pai said that the agency is studying restrictions on media ownership, characterizing a number of the rules as “quite antiquated.”

In an interview Monday with Variety, Pai said that an easing of such restrictions “is one of the issues that is under consideration. We haven’t made any firm determinations there, either.”

Many broadcasters have championed the idea of lifting restrictions that limit the number of stations that one entity can own.

“We are studying the issue,” Pai said. “But what I can tell you is that having worked on that question [of media ownership] for a quite a while, I do think that a number of media ownership rules have become quite antiquated.”

Companies are not limited in the number of stations that they can own, but they are limited to reaching no more than 39% of all TV households.

President Trump named Pai chairman of the FCC in January. The new FCC chief is a champion of “light touch regulation,” at a time when the new administration is looking to scale back the influence of administrative agencies.

Pai has already eased FCC limits on shared service agreements between TV stations in the same market. His predecessor, Tom Wheeler, saw such agreements as loopholes that allowed station groups to get around existing media ownership restrictions.

Pai has been particularly critical of a rule that prohibits a company from owning a broadcast and newspaper in the same market. He said that it was “incumbent upon (me) to take a hard look at that.”

“The core of the rules, which were created in 1975, has shown itself increasingly to not be moored to the current realities of the marketplace, and so our goal is to make sure, in this case and all cases, that regulations match the times.”

Trump recently renominated Pai to serve another five-year term on the FCC, an indication that he is satisfied with his approach.

Trump’s administration has championed deregulation, and that may come in conflict with some of the rhetoric of his campaign.

In October, Trump said that he opposed the proposed merger of AT&T with Time Warner, saying that it was too much “power in the hands of too few.” A campaign adviser, Peter Navarro, now director of the National Trade Council, promised that Trump “will break up the new media conglomerate oligopolies that have gained enormous control over our information, intrude into our personal lives.”

Asked whether he agreed that there was a problem with media concentration, Pai said that “we obviously have to take a case-by-case look as to the competitive landscape, and so it really depends on the geographic market, the product and service market that we are talking about. If it is a transaction that is involved, what are the competitive implications of the confirmation of that transaction? And so it is hard to opine in the abstract about a situation like that.”

Pai has also been grilled on a more recent comment that Trump made — calling certain news outlets the “enemy of the American people.”

Last week, when Pai testified before the Senate Commerce Committee in an oversight hearing, some Democrats asked if he agreed with Trump. Pai responded that he did not want to “wade into larger political debates.”

Commerce Committee Democrats, however, followed up with a letter in which they chided Pai for a “lack of response.” They asked him to give written responses to a series of questions, adding that it will “inform our ongoing consideration of your renomination for an addition five-year term on the FCC.” Again, they are asking whether he agrees with Trump’s comment.

Pai told Variety that “we will certainly respond in due course,” but “one of the things that I have consistently stood up for are First Amendment freedoms, and as I stated in a separate statement [from] many years ago, I think that journalists do an important job of informing their communities about matters that are of the public interest, and that is certainly a statement I stood by then and stand by now.”

Still, Trump’s comments were viewed by many in the journalism community as crossing the line as trying to undermine the news media. Pai says that he hasn’t changed his response to the Trump comment. “It’s a bigger political debate that I just can’t get into,” Pai said.

Pai, 44, has served on the FCC since 2012, and he was viewed as a candidate to lead the agency no matter if Trump or any other Republican were elected. During his time, he was known for rigorous dissent of what he saw as regulatory overreach during Democratic control under President Barack Obama, as well as peppering his statements with pop culture references.

Like Wheeler, he sees the industry going through another “golden age of television,” and confesses to be “sacrificing a lot of sleep” to catch up with shows. He just finished season one of Netflix’s “The Crown,” and is hoping to soon start watching season two of “Narcos.” Other favorites include “Game of Thrones,” “The Wire,” “Breaking Bad,” “Mad Men,” “The Americans” and “I hold a special place in my heart for ‘Arrested Development.'” He also says that “Friday Night Lights” is a show in which “I just saw something special on screen.”

“Shows like that really keep you going,” he said.

The son of Indian immigrants, Pai grew up in Parsons, Kansas, and, among other shows, was a fan of “L.A. Law.” “It seemed to capture at the time what lawyers must be like, and now that I have become one, I have realized that it was a much more mundane existence than they had,” he quips.

Not for long.

Perhaps the most contentious issue looming over the FCC is net neutrality, or the set of rules passed in 2015 that prohibit Internet providers from favoring or disfavoring content.

Pai was an opponent of the FCC’s approach, in which the commission, in a 3-2 party-line vote, reclassified broadband service as a common carrier. In wonkish terms, it was known as “Title II.”

The regulatory maneuver won strong backing from public interest groups and, in Hollywood, from the Writers Guild of America.

Now that Republicans are in the majority on the FCC, there is widespread speculation that Pai will take some action to rollback reclassification. He said that they “haven’t made any firm decisions in terms of substance or timing,” but he did say that Hollywood’s content creators have reason to favor a repeal.

“I have been pretty consistent in my view that I favor a free and open Internet, that I don’t think that Title II is the best legal and regulatory framework for securing that value,” he said. “Part of the reason is, I think everyone in the Internet ecosystem — network operators, content creators, consumers and the like — benefit from an environment of light touch regulation. The regulatory framework that we had, starting in the Clinton administration, is an environment in which you see an incentive to spend massive amounts of capital expenditure, build networks connecting more Americans, and I think that is an environment in which everybody can take advantage of the next generation networks in a way they couldn’t previously.”

Still, groups like the Internet Association, representing major Internet companies like Google and Amazon, have vowed to fight efforts to roll back the rules.

In its IPO filing, Snap warned that “if the FCC, Congress, the European Union, or the courts modify these open Internet rules, mobile providers may be able to limit our users’ ability to access Snapchat or make Snapchat a less attractive alternative to our competitors’ applications.”

Pai, however, argued that Snap and other companies “can have the assurance that in a highly competitive wireless marketplace their products and services will be able to find consumers and appeal to consumers in ways they couldn’t have previously.”

Shortly after he became chairman, Pai shelved a report done by his predecessor, Tom Wheeler, that found that certain so-called “sponsored data” plans offered by some wireless carriers raised anti-competitive issues. A worry among some net neutrality advocates has been that major providers like AT&T and Verizon will be able to favor their own or affiliated content by exempting it from a subscriber’s data caps.

Pai, however, sees the current wireless marketplace as “highly competitive” to the consumers’ benefit.

“As of a few weeks ago, for the first time, every single national carrier in the United States is offering a new, unlimited data plan or is expanding its old one,” he said. “And so that is a situation that is great for consumers…And it is also good for companies that are supplying content over those networks.”

Where he does see a problem is in the lack of Internet connectivity to areas “from Alaska native villages above the Arctic circle, to small towns in West Virginia, where I have seen the consequences of people not having digital connectivity.”

He announced the formation of a Broadband Deployment Advisory Committee to advise on what regulatory barriers should be removed. He also has talked of “gigabit opportunity zones,” to give broadband providers the incentive to invest in areas where coverage is wanting.

But one move that he made last month quickly became the source of friction. That was when he issued an order that reconsidered the ability of nine companies’ eligibility to participate in Lifeline, a program to provide subsidies so low-income Americans can get voice and broadband service.

Pai said last month that some reports of his action got “sensationalized” to make it seem like they were ending the Lifeline subsidies altogether.

Instead, Pai said that “putting the designations on hold gives the FCC the chance to make sure the process is legally defensible and to avoid potentially stranding customers if the courts ultimately deem the process unlawful.”