Bush FCC Picks Breeze By Panel

Washington— President Bush's picks for the Federal Communications Commission sailed through last Thursday's Senate confirmation hearing, sending a strong signal that chairman Michael Powell would soon have a Republican majority.

Senate Commerce Committee chairman John McCain (R-Ariz.) said he plans a vote on the four nominees for May 24. Full Senate consideration is expected soon thereafter, provided broader political issues don't lead to delays.

Powell, 38, spent a few hours fielding a range of policy questions for his nomination for a second five-year term. McCain, who normally abides by a one-term rule for FCC members, is making an exception for Powell, a family friend he successfully backed for an FCC seat in 1997.

"It's a new job. He's chairman. [McCain's] against someone repeating the same job," said McCain aide Mark Busey.

In the past, McCain had blocked the renominations of Republican Rachelle Chong and Democrat Susan Ness, who is to leave the FCC no later than June 1.

Bush's other nominees — Republicans Kevin Martin, 34, and Kathleen Abernathy, 44 and Democrat Michael Copps, 61 — introduced their families, read opening statements, answered a few questions and were out the door in about 30 minutes.

"I look forward to voting for you. I don't often say that kind of thing to either political party," said Sen. Jay Rockefeller (D-W.Va.), after extracting promises from Powell and the others that they won't assault the $2 billion annual fund for wiring schools and classrooms to the Internet.

The program, which Rockefeller inserted into the Telecommunications Act of 1996, is funded through a monthly levy on every phone bill. It once was derided by some Republicans as the "Gore Tax," in hopes they could tag the former vice president — and Democrats in general — with a tax-and-spend label.

But as the 4-year-old program matured, it steadily gained GOP converts, especially among governors, and the "Gore Tax" moniker faded fast on Capitol Hill. It's now called the "e-rate" by one and all.

Powell and Abernathy called the program "an extraordinary success" that they would try to improve by minimizing red tape. Martin called the e-rate "an important part of universal service."

During questioning, Powell outlined his views on various subjects, but broke little new ground.

With respect to media consolidation, he said he wasn't a reflexive deregulator but added that the FCC had a legal responsibility to examine ownership rules put on the books decades ago under different market circumstances.

Powell said if there is a strong basis for retaining media-ownership rules, he would do so.

"I'll say publicly if that case can be demonstrated, I don't deregulate for its own sake," Powell said.

If the FCC retains rules without sound reasoning, Powell warned, the courts would strike down those deemed outdated.

"Many of these rules have been increasingly threatened in court because of the government's unwillingness to articulate strong and thoughtful defenses of them," said Powell. If FCC deregulation goes too far, antitrust authorities retain power to curb the size of media giants, he added.

With respect to regulatory parity between cable and phone companies in the high-speed Internet access arena, Powell said cable deployment was prodding phone companies to respond with a competing product.

Powell said local telcos had been reluctant to sell digital subscriber line service because they didn't want to "cannibalize" more lucrative T-1 lines. But pressure from cable operators has made them think twice.

"Phone companies are starting to respond," Powell said. "I think the competitive threat of cable is starting to spur them."

If there was any drama, it came when McCain — who voted against the 1996 telecom law — asked Powell whether the it was working, as local phone companies remain overwhelmingly dominant.

"I don't believe it has failed, no," Powell said.

McCain returned fire with data showing that phone competitors have less than 10 percent of the residential market.

"If the sole purpose of the act was to create market shares that were much higher than that, certainly it has failed. But I think its purposes were broader and more far reaching than that," Powell said.

After the hearing, Abernathy told reporters that she would sell thousands of dollars in telecommunications stocks to comply with federal ethics rules.

She owns telecommunications stocks worth between $450,000 and $1 million, according to her financial disclosure with the Office of Government Ethics.

The disclosure said she owns between $101,000 and $250,000 in Qwest Communications International Inc. stock; between $250,001 and $500,000 in Verizon Communications stock; and between $100,001 and $250,000 in Vodafone Group PLC stock.

"We are divesting everything," Abernathy said. "I don't know how you could ever do this job if you were not willing to sell all of those."

Qwest and Verizon are regional Baby Bell companies heavily regulated by the FCC. Both firms are looking for agency approval to enter the long-distance business.

Vodafone, a London-based wireless carrier subject to FCC spectrum-ownership limitations, is a 45 percent owner of Verizon Wireless.

Abernathy said she would have 90 days from her Senate confirmation to dump the shares.

"During the interim, I cannot participate in any proceedings [involving those companies]," she said.

Under federal income-tax rules, Abernathy would not be required to pay capital gains tax if she reinvests the money in assets she is permitted to hold. But capital-gains tax would apply if she sold the new assets at some point.

"It's deferred until you then sell that," she said.

Abernathy is also barred from participating in issues involving her most recent employer, competitive phone and data provider Broadband Office, for one year. But she told the Senate committee that won't be an issue.

"That may become a moot point because [Broadband Office] recently filed for bankruptcy," she said. "I don't know how many issues I will be precluded from dealing with. So there is one positive sign to that particular action."