The Budget and Communications

It’s Friday, October 4, so we’re not the first to inform you of the federal government shutdown. It is unclear how long the impasse over the Federal budget might go on. During the initial days of the first shutdown in nearly 18 years — when a Republican-controlled Congress battled President Bill Clinton (D) — there was little business getting done in the House or the Senate other than photo opportunities and partisan speeches. So we take a moment today to examine the impact the shutdown is having on telecommunications.

We begin with a nod to the 2 million people most affected by the shutdown: federal workers. Writing in the Washington Post, Max Stier, the president and CEO of the Partnership for Public Service, notes that our current political breakdown follows the epic budget battles that resulted in “sequestration” — the arbitrary, across-the-board cuts that were meant to be so draconian that Congress would surely act before they could take effect. Congress didn’t act and agency heads have had to deal with funding uncertainties. ComputerWorld found, for example, a drop in the number of IT jobs posted by federal agencies each month since sequestration went into effect in March. Before sequestration, agencies were posting well over 200 IT jobs per month, but that number has since dropped to about 150 per month. According to the Office of Personnel Management’s FedScope data bank, the federal IT workforce reached nearly 83,000 by the end of 2012 but has since been on the decline, dropping to 82,400 in June.

The overall result, Stier says, is that instead of focusing on serving the people, officials have spent thousands of hours trying to figure out how to achieve their missions, provide essential functions and meet citizens’ needs with less money and staff. “The critical work of government — and its impact on all — is getting lost amid the political fighting and gridlock,” said Stier. “Congress seems to have lost sight of the fact that an independent, ethical civil service is the tool for addressing our common, national problems.”

Stier warns: “People are being asked to do their jobs without appropriate resources. They are being furloughed. Pay freezes have been in effect for three years. Morale is plummeting. Would anyone run a business this way?”

On September 11, Acting Federal Communications Commission Chairwoman Mignon Clyburn testified before the Senate that if the country wanted to remain a world leader in communications, it should not compromise the funding that supports the FCC's mission. She suggested that budget cuts could lead to a cascade of negative outcomes like slowing the FCC's ability to process thousands of applications for new and innovative devices and services, which could affect spectrum development and auctions. She pointed out that the FCC was already doing less thanks to the sequester and was operating on $322 million in 2013 when it had asked for $346.7 million. The impact of the reduced funding? Not replacing failing equipment, turning off the air conditioning system at 6 p.m. during the heat of the summer, routine shortages in supplies, cancellation of contracts, bare bones travel budgets. Fellow Commissioner Jessica Rosenworcel, at the same hearing, noted that reduced funding means "reduced outreach, delayed decision making, and fewer resources to address hard and persistent problems.”

The FCC pays for its own budget from user fees, so the sequester already is simply siphoning off some of that money. "Instead of building up the industry's foundation, serving the needs of consumers and funding dynamic new products and services, FCC licensees paid an extra $17 million in funds that were deposited directly into the U.S. Treasury," Chairwoman Clyburn told the Senate.

Last week, the FCC released its plan in case of a shutdown. Suspended activities mean: consumer complaint and inquiry phone lines cannot be answered; consumer protection and local competition enforcement are halted; licensing services, including broadcast, wireless, and wireline, cease; management of radio spectrum and the creation of new opportunities for competitive technologies and services for the American public are stopped; and equipment authorizations, including those bringing new electronic devices to American consumers, cannot be provided.

Industry analyst Jeffrey Silva said a brief shutdown probably won't cause many problems. But he added that a prolonged shutdown "could very well lead to a backlog and delays in the equipment approval process, a far more troublesome scenario for manufacturers and other stakeholders.” The FCC processes 16,000 device authorizations a year — up 400 percent from a decade ago. In a good month, that means processing over 1,000 applications. There are some third parties who have permission from the FCC to do the testing elsewhere. But it's not clear that they would be capable of picking up all the slack during an extended shutdown, nor handling all the paperwork that's already in the FCC's hands.

The FCC cannot work on merger and acquisition reviews during the shutdown and, therefore, suspended its merger review shot clocks. (Also see TV Mergers Worth Billions Put On Hold as FCC Shuts Down) Among the deals currently on the clock are Gannett/Belo (currently on day 98), Media General/Young (day 83), Sinclair/Allbritton (day 47), Tribune/Local TV (day 73) as well as Tribune's bankruptcy reorganization plan. "The individual time clock for each pending transaction will be stopped on the day of review that coincides with the last business day before the lapse in funding which is September 30, 2013," the FCC said in a public notice.

Just 2 percent of the FCC staff will be working during the shutdown, including Chairwoman Clyburn and fellow-commissioners Rosenworcel and Ajit Pai. The other retained workers will be handling interference and disaster response issues, treaty negotiations and oversight and technical support.

The Washington Post surveyed federal workers asking if they felt like their role is “essential.” “If you could make a pitch to your boss for why you should continue working during a partial shutdown, what would it be?” the Post asked. This answer came from a Federal Communications Commission attorney-adviser: “It's nearly impossible for anything I work on to have a life-or-death impact on the public, so I'm not 'essential' in the true sense of the word. Telecom policy is simply not going to make a difference in the fossil record. But neither is most of the policy work that Congressional staffers do. If THEY couldn't be deemed 'essential' and allowed to continue working through the shutdown, Congress would NEVER play these games and allow a shut down to happen. But most members of Congress won't feel the financial pain that the average federal employee feels, nor will their staff; playing politics with other people's money is no big deal to them because it doesn't hurt their day-to-day work lives or wallets.”

Asked, “Who is essential?” the FCC attorney answered, “Anyone who works on things that impact the public health and safety -- e.g., the folks who insure that antenna towers are properly secured and marked for safety purposes, the folks who monitor signal leakage to prevent interference with public safety frequencies, that sort of thing. ”

What about a longer shutdown? "If you get anywhere into three or four weeks," said Silva, "that has a cumulative and a compounding effect. It just sets everything back." The longer a government shutdown persists, the longer it will be until the Senate can vote on Tom Wheeler as the next chairman of the FCC and Michael O'Rielly as its second Republican commissioner. As things stand, the Senate Commerce Committee canceled a session this week in which it was supposed to vote on O'Rielly's nomination. Additionally, the longer the shutdown goes on,the more of a backlog the FCC staff will have to deal with when the government does reopen. So the timetable on the FCC's PCS H Block spectrum auction, currently scheduled for January, and the incentive auctions of broadcast TV spectrum could change. The incentive auctions process was always going to have to wait for Wheeler to get confirmed so that he could take charge of the item. However, more delays mean it will take more time for him and his staff to get acclimated at the FCC and to get the ball rolling on his agenda.

Of course, the shutdown impacts many more agencies than the FCC. Here’s what happening at other parts of the federal government:

As we go to press, there’s no end in sight for the budget impasse. We’ll continue to track in the days ahead. And we’ll see you in the Headlines.

By Kevin Taglang.