feud at the FCC

[Dave Farber <dave () farber net>]

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From: Anonymous <e_r_murrow () hotmail com>
Organization: Hotmail alias
Reply-To: Anonymous <e_r_murrow () hotmail com>
Date: Mon, 17 Feb 2003 17:07:43 -0500
To: dave () farber net
Subject: feud at the FCC (fyi-html)

Telecoms regulation
When stars collide
Feb 13th 2003 | NEW YORK The Economist
http://www.economist.com/printedition/displayStory.cfm?Story_ID=1580156

A feud at the FCC?
AS COLIN POWELL battles unruly allies in the war on terror, his son,
Michael, faces a revolt of his own. On February 13th, the five commissioners
of the Federal Communications Commission (FCC), America's telecoms
regulator, were due to vote on a proposal to deregulate the local phone
market. As the FCC's chairman, Mr Powell was counting on two fellow
Republican commissioners to get his plan through. But at the last minute one
Republican, Kevin Martin, cut a deal with the FCC's two Democrats to back a
rival plan. Stung by this act of betrayal, Mr Powell has delayed the vote
for a week.

The spat at the FCC has set tongues wagging. Messrs Powell and Martin are
rising stars in the Republican Party. Mr Martin has his own direct
connections to high office: his wife is a spokesperson for Dick Cheney,
America's vice-president. Nor is this the first time that the two men have
crossed swords. His voting record hints that Mr Martin may have gone out of
his way to rankle his chairman, despite their seemingly broad agreement on
regulatory policy. People both inside and outside the commission suspect a
personal feud.

At issue is the 1996 telecoms act, which requires America's incumbent local
carriers (“Baby Bells”) to lease their networks to rivals at discounted
rates. Under the act, the FCC has to justify its decision for each bit of
the network (switches, copper wires, and so on) that it forces the Baby
Bells to rent out. Until now, the FCC has ruled that all bits must be
available—which the courts have twice said is indefensible.

After a year studying the market, Mr Powell has decided that he cannot
defend keeping the Baby Bells' switches on the list. Mr Martin has countered
that, because regional markets differ, the 50 state commissions should
decide which bits stay and which go. This sounds sensible in theory. In
practice, argues Mr Powell, it would lead to confusion, delay and
uncertainty, the last things that the telecoms industry needs. State
commissions do not have the staff to do the work, which could take a year or
more to complete. Meanwhile, investment would be put in limbo because nobody
will know which way each state will jump. As elected officials, moreover,
state commissioners tend to like low, government-mandated prices, and are
likely to gut Mr Powell's attempts to deregulate. One yardstick: AT&T, which
benefits most from subsidised rates, has become an enthusiastic advocate of
states' rights recently.

Mr Powell has answered Mr Martin with a second proposal, which hands a bit
more power to the states. In theory, Mr Martin could resist Mr Powell's
entreaties and try to push his own plan through. But that would humiliate Mr
Powell and embarrass the Republicans. More likely, party elders will spend
the next few days knocking young heads together. If only dealing with the
French were so easy.

 


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