Powell boosts deregulation -- for real

Competitive local exchange carriers and independent ISPs looking for guaranteed access to big local phone and cable networks may soon get a chilly reception at the Federal Communications Commission.

In his initial press conference Tuesday morning, newly appointed Republican FCC Chairman Michael Powell said he will take a more purely "deregulatory" approach than his Democratic predecessors. And he indicated a preference for letting capital markets sort out the winners and losers among telecom and Internet providers.

Speaking to about 100 reporters in an hour-long briefing, Powell was careful not to announce his vote on any pending matters, such as the FCC's ongoing inquiry on cable "open access." Powell prefaced his remarks on several issues by noting that they were a "hard question" and saying he wants to reform the FCC's internal structure to enable quicker decision-making.

But Powell did say he doesn't fault the Telecommunications Act of 1996 for failing to bring mass-market competition among "Bell lookalikes." Rather, he said he thought the statute's main achievement was that it "unleashed broadband." The resulting move by AT&T to buy up cable companies forced Bell companies to "bring DSL out of the closet," Powell said. And the ensuing competition among phone, cable and now wireless companies is more important to users than "the third Bell lookalike in the market."

Powell, an FCC commissioner since 1998, was recently named chairman by President George W. Bush. He replaced Democratic Chairman William Kennard, who championed an activist approach to ensure numerous competitors got their shot at high-income and low-income consumers, but who nevertheless recently saw several DSL-based competitive local exchange carriers (CLEC) collapse or pull back.

Powell said the CLECs' problems in the capital markets are largely "an overreaction to the dot-com problem." But in the competition between Bells and independent DSL providers, Powell said there were some "poor implementations" and "poor executions." He pointedly declined to identify whether he was referring to the Bells or CLECs, or both.

"A lot of people show up to gold rushes," Powell added. "Not everybody comes home with the gold."

Powell also questioned whether it was a given that ISP "open access" to cable networks owned by giants like AT&T and AOL Time Warner was desirable. "Openness is not always good," Powell said. "A market works when both consumers and producers have value to exchange... I don't like the knee-jerk assumption that it is discriminatory for a provider to maintain certain advantages."

On carrier mergers, Powell stopped short of agreeing to what have been repeated congressional calls for a fixed timetable for FCC review, such as 90 to 180 days. But he said he could accept specified intervals for making intermediate decisions on mergers to speed up the process.

Powell identified one key need at the FCC: more internal technical expertise. He cited the issue of low-power radio, in which small FM stations have fought furiously against a recent FCC ruling allowing unlicensed schools, churches and others to send out their own signals. After listening to all sides argue about potential interference, Powell said, "I was at a loss [to decide] which version of the engineering to accept."

Partly as a result, Powell did not appear sympathetic to FCC funding cutbacks, a favorite Republican cause in Congress during the Clinton administration. "It's in nobody's interest to continue to have a mission but not have the resources to do it well," he said.

In other issues, Powell:

  • Issued a broad hint to Bell companies to speed up their submissions of long-distance applications, indicating the FCC won't add new barriers. Deregulation is not just a "dessert" to be handed out "after people have eaten all their vegetables," he said.
  • Appeared unlikely to review or overturn last-minute actions by Kennard's FCC, such as a start on regulating instant messaging. This is despite a recent White House memo asking agency chiefs to review actions in the last days of the Clinton administration. The memo was principally directed at cabinet agencies headed by a single secretary or administrator, rather than independent agencies like the FCC with a multimember board. Since Powell was already an FCC commissioner, he said, "I had my shot [on these issues], and if I lost, I lost."
  • Seemed unlikely to recommend reregulation of cable rates, despite recent price increases. Much of the price hikes have been driven by program costs for popular shows, Powell said. "Americans like TV, and they like multichannel TV."
  • Gave lukewarm support to the E-rate program for providing subsidized Internet access and telecom services at schools and libraries. He said he would support and administer levels of funding directed by Congress and the Bush administration but would not champion the program, unlike Kennard, who made school Internet access his signature issue.
  • Showed an aversion to taking steps to regulating TV content, although he says he thinks "there's a lot of garbage on TV." He said consumers have to make more of an effort to find quality TV on their own now that there are so many broadcast, cable and satellite channels. Only elected officials in the House and Senate, not appointed officials at the FCC, should have the power to dictate content regulations, he said. Democratic Commissioner Gloria Tristani, who retains her seat on the FCC, has been pushing for a more active FCC role in this area.
  • This story, "Powell boosts deregulation -- for real" was originally published by Network World.

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