FCC Feud Delays Telecom Vote


Michael Powell is chairman of the Federal Communications Commission, but FCC commissioner Kevin Martin last week seemed to be running the joint.

Powell and Martin are young Republicans who have been spatting for at least a year, first over little things and then about matters of real substance. The third Republican in the three-member FCC majority, Kathleen Abernathy, has been less willing to break partisan ranks with Powell.

Because of Martin's internal politicking, Powell had to cancel a public meeting scheduled for Feb. 13. Powell moved the meeting to Feb. 20 after Martin formed a majority with Democrats Michael Copps and Jonathan Adelstein to block key elements of the chairman's blueprint for overhauling local phone competition policies, FCC sources said.

Martin formed his coalition in an effort to sustain rules designed to assist new local phone companies in leasing network facilities from incumbents, such as Verizon Communications Inc. He also wants state regulators to play an active role in deciding when to remove regulatory restraints on incumbents.

By contrast, Powell would like to reduce or eliminate network-sharing obligations on the incumbents, in part because the phone giants claim to be losing money in the their wholesale business, due to below-cost rates set by the FCC and the states.

A plea ignored

As a legal matter, Powell has maintained that changes in federal policy in some cases automatically bar states from sanding the edges on FCC policies with which they disagree.

The latest Powell-Martin flap came just a few days after House Energy and Commerce Committee chairman Rep. Billy Tauzin (R-La.) made a public appeal for GOP unanimity on the commission.

"The first step this FCC ought to take is to rip the rules that were put in place by Al Gore and Reed Hundt out by the roots and throw them away," Tauzin said at a Feb. 5 hearing on the hard-hit telecom sector before the House Subcommittee on Telecommunications and the Internet.

Hundt, a Democrat, was FCC chairman in 1996 when the agency adopted local phone-competition rules that deliberately set low wholesale rates to stimulate competition. He worked closely with Vice President Al Gore in shaping Clinton administration telecom policy.

Tauzin, an ally of the Baby Bell phone giants, claimed Hundt's rules decimated the industry, especially equipment vendors, and that key FCC policies had to be abolished.

In a recent private meeting, Tauzin, who backed Powell for the chairmanship, pressed Martin to side with Powell.

Last week, several GOP senators and at least one Democratic senator also met with Martin to reinforce Tauzin's point.

"The very least our Republican members of the FCC should want is a wholesale change in the overly regulatory approach that was taken by Al Gore and Reed Hundt," Tauzin demanded.

Telecom needs lift

Powell's intent is to lay a regulatory foundation that can begin to turn around a sector that has lost 500,000 jobs and $2 trillion in market value in recent years and remains saddled with approximately $1 trillion in debt.

New entrants, including AT&T Corp. and WorldCom Inc., control about 21.6 million of 189 million total phone-access lines total. Their supporters on Capitol Hill want the FCC to stay the course.

Rep. Edward Markey (D-Mass.) favors the retention of rules that require the Bells to share their networks with rivals. He said the rules would expand consumer choice and drive prices down, especially in the residential high-speed data market.

"I just think it would be a big mistake for us to remove that pressure in order to satisfy a recovering monopolist's desire to go back to the way the world used to be," Markey said. "I think our job is to ensure that we don't have that recidivism they so ardently desire replace the new competitive marketplace that has served our country in a way that revolutionized the economy."

As the bargaining intensifies, Powell is in a strong position. Under a court mandate, all of the FCC's unbundling and line-sharing rules will no longer apply after Feb. 20.