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THE 2014 MIDTERMS AND

THE 114TH CONGRESSDecember 4, 2014

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Themes

Candidates matter

Money didn’t matter – both sides had enough

Message matters

Get-out-the-vote matters

Pollsters were off again – underestimated margins

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The House

The House stood at 233 Republicans, 199 Democrats, and 3 vacancies.

Republicans were expected to retain control of the House and increase their majority.

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The House – Results

Republicans have retained control of the House and now enjoy their largest majority since 1928.

Republicans: 244 (possibly 247)Democrats: 188Vacant: 3 (two in Louisiana, one in Arizona)

There are 58 new Members in the House. Notably, Republicans picked up 3 seats in New York

and 2 in Illinois. Democrats picked up 3 seats: 1 each in California,

Florida, and Nebraska.

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Key Committee: Energy & Commerce

Fred Upton (R-MI) will stay on as Chairman and Frank Pallone (D-NJ) will become Ranking Member

Greg Walden (OR) (Chairman)Bob Latta (OH) (Vice Chairman)John Shimkus (IL)Marsha Blackburn (TN)Steve Scalise (LA)Leonard Lance (NJ)Brett Guthrie (KY)Pete Olson (TX)Mike Pompeo (KS)

Adam Kinzinger (IL)Gus Bilirakis (FL)Bill Johnson (OH)Billy Long (MO)Renee Ellmers (NC)Chris Collins (NY)Kevin Cramer (ND)Joe Barton (TX)Fred Upton (MI)

Subcommittee on Communications and Technology Republicans:

New Republicans:

Susan Brooks (IN)Larry Bucshon (IN)Chris Collins (NY)Kevin Cramer (ND)Bill Flores (NY)Rich Hudson (NC)Markwayne Mullin (OK)

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The Senate

The 113th Congress had 45 Republicans, 53 Democrats, and 2 Independents.

Forecasts favored Republicans to become the majority in the Senate. 8 races were considered toss-ups The 6 closest races (KS, GA, IA, CO, AK, NC)

were with polling within 3% on November 3rd.

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The Senate – Results

Republicans gained 8 seats – probably 9 (Louisiana)* – the higher end of projections:

Republicans: 53Democrats: 46Independent: 2

*December 6 LA run-off.

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Key Committee: Commerce, Science and Transportation

John Thune (R-SD) will become Chairman.

Bill Nelson (D-FL) will become Ranking Member.

More Republicans will be added to the Committee due to the new composition of the Senate.

Don’t know who will be the Telecom subcommittee chairman or ranking member.

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Considerations from This Election Candidates matter

Governors and state legislatures

Fundraising and spending parity

Demographics and voter turnout

Pollsters: they were right even while they were wrong

What to expect from a GOP-controlled Senate

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Candidates Matter

Republicans ran very strong candidates, while Democrats fielded weaker ones. State examples:

Arkansas – Cotton strong, Pryor weak Colorado – Gardner strong, Udall weak Iowa – Ernst strong, Braley weak Kentucky – McConnell strong, Grimes weak New Hampshire – Shaheen strong, Brown weak In gubernatorial races, candidate weakness was a major

factor in Maryland, Illinois, and Massachusetts.

Reputation can only do so much. Family legacy didn’t matter – AK (Begich), AR (Pryor), NC

(Hagan)

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State Governments

Republicans picked up 3 governorships, placing the totals at: 17 Democratic governors 31 Republican governors.

Republicans also control 68 out of 98 state legislative chambers.

In 23 states, Republicans have total control of the government.

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Money in the Midterms

Spending had a limited impact on the outcomes.

New record for campaign spending – $4 billion.

Both parties had enough money. Republicans outspent Democrats by $110 million.

Key differences in fundraising: Republicans relied on outside allies, while Democrats were more dependent on direct donations.

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Turnout

Turnout of 36.3% of voters – the lowest since WWII – compared with 61.6% in 2008 (Presidential election) 39.9% in 2010 (midterm) 58.2% in 2012 (Presidential election)

Voter turnout held steady for Republicans, who are typically favored in off years, while turnout for Democrats went down.

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Democrats’ Losses

Maintained popularity with black voters (90%) Black turnout down by 9%

Lost ground with Asians (down from 72% in 2012 to 52%)

Turnout Fewer women turned out to the polls than

projected – down from 54% in 2012 to 52% in 2014

Young voters didn’t turn out – 20% of electorate 2012 vs. 13% 2014

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Republicans’ Gains

Gained ground among Latinos (30% 2012 vs. 36% 2014) Many Latinos stayed home; turnout dropped 3%.

Seniors’ turnout increased about 8% from 2012

Midterms typically favor Republicans, as the electorate in off years is typically older and whiter than in Presidential years.

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Message Matters

Democrats did not have a message Trying to distance themselves from Obama

Republicans ran against the President Voter frustration with Obama’s leadership

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Pollsters: Right while being wrongPollsters predicted GOP gains in these midterms., but missed the margin of the victory.

Republican Senate candidates outperformed polls by 5.3%.

Pollsters over-projected voter turnout, especially among women.

Many pollsters assumed that Democrats’ grassroots voter turnout operations would be equal to past years, which did not happen.

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Senate Races

State Last RCP Average

Republican Democrat

Alaska Sullivan +2.4 Sullivan (+3.7)*

Begich

Arkansas Cotton +7 Cotton (+17)* Pryor

Colorado Gardner +2.5 Gardner (+2.5)

Udall

Georgia Perdue +2.8 Perdue (+7.9) *

Nunn

Iowa Ernst +2.3 Ernst (+8.5) * Braley

Kansas Orman +0.8 Roberts (+10.8)*

Orman ✢

Kentucky McConnell +7.2 McConnell (+15.5)*

Grimes

Louisiana Cassidy✻ Landrieu

North Carolina

Hagan +1.2 Tillis (+1.7) Hagan

New Hampshire

Shaheen +0.8 Brown Shaheen (+3.2)

✢Independent candidate✻Likely, pending Dec. 6 runoff

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What to expect from the 114th Congress

Republicans still need Democrats to move legislation in the Senate. This task may be complicated by emboldened House Republicans.

Republicans will want to show they can govern: 24 Republican Senators (vs. 9 Democrats) are up for

re-election in 2016. Many (7) in vulnerable seats – Obama won the state (NH, IL, .

Conflict between young , ideologically-motivated Members and Republican party leaders Several younger Senators have Presidential

aspirations for 2016.

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Key Potential Points of Action Tax Reform

Especially the corporate code.

Entitlement reform Social security, Medicare, Medicaid Through budget reconciliation

Infrastructure The Highway Trust Fund is running out of money

Telecommunications If anything is to be accomplished, Republicans will need

Democrats’ votes, which means net neutrality will be the Democrats’ bargaining chip.

21Rewriting the Telecommunications Act

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A Telecom Act rewrite is a priorityAfter nearly 20 Years, Congress intends to rewrite the Telecom Act to keep up with industry changes.

The alarm industry needs to determine whether it will be involved in the process.

If AICC chooses to do so, they must start now because items in early drafts have a better chance of ending up in the final product.

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Concerns in the rewrite

The difference between now and the ‘96 Act is that service providers (AT&T, Verizon, etc.) are in the alarm business. Ensuring a level playing field is critical to

survival Under the current Act, providers can discriminate,

but not “unreasonably” – up to the point that it is too costly for the customer

Networks regulated under the Act: Wireless is shared – problem for the alarm industry Cable is shared – problem for the alarm industry Fiber optic – not a problem (yet)

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Key issues of a rewrite

The ’96 Act was built on a vision of competition in the telecommunications sector: cable, wireline, and wireless. This has been shown not to be the case. Verizon has focused on wireless, and Comcast on cable. Wireline is fading. If competition had flourished as envisioned, regulation would be less

necessary.

Net neutrality Unless net neutrality is addressed, there probably will not be a rewrite. Possible compromise would be a new Title where service providers are not

regulated but are subject to a regulatory complaint regime.

Expanding an increasingly over-burdened network Interchanges between networks are the choke point – relatively

inexpensive to fix Who’s going to pay for it?

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Regulation of wireless networksRegulations differ for different types of network Wireline = Communications service regulated by

Title II and thus Common Carrier regulations apply

Wireless = Information service = Title I and Common Carrier regulations do not apply This may change, as wireless networks are

subject to the same bandwidth constraints as wireline networks.

Wireless regulation takes place through complaints filed by industry actors as violations are observed.

This process can take years.

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Possible protection: net neutrality

Telecom providers – phone, internet, cable – must treat all signals transmitted through their service equally at a given level of service. If a service provider and competitor both provide a

service, the service provider may not prioritize its own signals or delay its competitor’s.

This does not prohibit paid prioritization; companies can and do charge differently for different levels of service.

Net neutrality is the status quo.

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Net neutrality protections in the ’96 Act

Classifies telecommunications companies as “Common Carriers” and prohibits them from making “an unjust or unreasonable discrimination…for or in connection with like communication service.”

Gives the FCC broad authority to promote broadband access.

The FCC used Section 706 to propose rules which were struck down by the DC Circuit Court.

The FCC is now trying to make new net neutrality rules.

Title II – Common Carriers

Section 706

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Battle lines for a rewrite

There will be a fight over rewriting telecom regulations and net neutrality: Republicans want as little regulation as

possible Democrats are pushing for assurances of

equal treatment of content/signals and access to networks; Content companies and Democrats will be

the alarm industry’s natural allies.

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Key concerns for the alarm industry Equal access to networks and fair treatment of signals

Telecom companies that provide alarm services have incentive and means to prioritize their signals and to delay competitors’.

Expanding network capacity to meet demand – as users take up more bandwidth, there is less for others. This is true for wireless, wireline, and broadband alike. Whose responsibility is it to make the investment?

Is battery backup an issue for the industry?

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Alarm industry provision: ‘96 Act Must be updated to reflect current conditions and the

direction of the industry

Are we satisfied with the regulatory recourse currently afforded for reporting abuses by telecom providers?

Ensuring access to networks and fair treatment of signals for alarm companies

Adjusting wording to account for industry developments such as automobile security and medical monitoring

Because industry allies are concerned about net neutrality, we will have to determine how and if we work with them while not alienating Republicans