Powell Wants a New Telecom Law


Here's the telecom necrology, as told by Federal Communications Commission chairman Michael Powell: 500,000 jobs obliterated, $1 trillion in debt accumulated and $2 trillion in market value incinerated.

Powell, who's at the regulatory fulcrum of the whole mess, went to Capitol Hill last week to suggest a way out. His answer? Rewrite the Telecommunications Act of 1996 to include incentives for the deployment of broadband links from the street to the home — the so-called last mile.

Although telecom carriers installed high-capacity lines from coast to coast to such an extent that nearly two-thirds of the fiber sits unused, Powell argued that the industry failed at "uncorking the network at the last mile."

Residential access to high-speed-data links could turn the industry around, said Powell, who urged the Senate Commerce Committee to consider changing the law.

"Broadband very likely holds the key to the long-term recovery of the telecommunications industry and, indeed, our nation's long-term economic growth and its ability to compete on the global stage," Powell said.


Changing the law would not be a case of too little, too late. Despite the bankruptcy of WorldCom Inc. and accounting troubles at Qwest Communications International Inc., Powell predicted the industry would survive and ultimately find daylight.

"This market is not collapsing and is not going to fail over time, in my estimation," Powell said.

More immediately, Powell said it was important for Congress to clarify that the FCC can order data carriers to continue to provide service to consumers after those outfits declare bankruptcy. He said there was legal ambiguity as to whether the FCC has the authority over cable operators and Internet-backbone providers that intend to abruptly discontinue data service.

Senate Commerce Committee chairman Fritz Hollings (D-S.C.) said he hoped to help out as soon as possible.

"We'll make every effort possible to do so," Hollings said.

At the FCC, Powell said he was doing his part to help the industry recover from a crash that was induced by what he called "the Internet gold rush." After failing to live up the hype, that speculative rush caused dozens of firms to file for bankruptcy and others to attempt to mask poor results with accounting tricks and fraud.


Powell has proposed deregulating the data services of the Baby Baby phone companies, which have complained that current FCC rules rob them of the incentive to build last-mile broadband facilities because they must be leased to competitors as below-cost rates.

Sen. Byron Dorgan (D-N.D.) said some of Powell's policy pronouncements and leanings give him "heartburn" and urged Powell to more cautiously.

Hollings declared that the "the Bell company crowd" was trying to push deregulation at the FCC because the Bells could not obtain a new law from Congress.

"Please don't do that," Hollings said. "They are playing a sordid game."

Powell said market conditions were such that telecom mergers were inevitable — and that new regulations designed to promote rationale market entry were necessary — but the FCC would not abandon its mission to protect the public interest.

"I believe that when we are done, our record will show a good balance of understanding that it's not regulation versus deregulation. We need both. We need to do both well."