CONGRESS - No Party Hats for Telco Act Birthday

By Kirk Victor, National Journal
© National Journal Group Inc.
Saturday, Jan. 30, 1999

	      It's been almost three years since President Clinton 
signed legislation to overhaul the nation's telecommunications 
laws. 
	     At the time, many lawmakers on both sides of the aisle 
ecstatically proclaimed that the measure would be a boon to 
consumers and would spur job growth and technological innovation. 
	     Their glee was not surprising. The telecommunications 
business is big stuff. It represents a huge segment of the U.S. 
economy, about one-sixth and growing, and the legislation was 
designed to stimulate its growth still more. The measure 
established rules that would ultimately deregulate the 
marketplace, and allow the cable television and long-distance and 
local telephone industries to compete head-to-head. 
	     But a combination of factors--a wave of mega-mergers, 
price hikes that have especially socked cable customers, and a 
number of lawsuits challenging the implementation of the 1996 
law--has led some critics to dispute the earlier rosy forecasts. 
Supporters of the law counter, however, that consumers are 
beginning to reap big dividends, such as additional cable TV 
programming and lower long-distance phone rates. 
	     As the Feb. 8 anniversary of the bill's signing 
approaches, lots of folks on and off Capitol Hill will offer 
their spin on how well it is working. Take Sen. John McCain, R- 
Ariz., who recently formed an exploratory committee to examine a 
possible presidential run. As part of an effort to accentuate his 
well-earned credentials as a maverick, McCain may well decide to 
highlight his willingness three years ago to be the only 
Republican in Congress to oppose the telecommunications 
legislation. His stance offers a sharp contrast to the position 
of Vice President Al Gore, the leading Democratic presidential 
wanna-be, who championed the legislation. 
	     Never one to worry excessively about giving offense, 
McCain, the 62-year-old chairman of the Commerce, Science, and 
Transportation Committee, responded with his usual acid candor 
when asked in a recent interview whether the act is working. ''Of 
course not,'' he said. ''The bill was written to protect special 
interests, rather than to deregulate the industry.'' 
	     McCain gripes that the legislation delegated too much 
power to the bureaucrats at the Federal Communications 
Commission. He is perturbed that the agency has yet to allow any 
of the regional Bell operating companies--the so-called Baby 
Bells--into the lucrative long-distance market. The commission 
has ruled that the Bells have failed to sufficiently open up 
their own local markets, as the law requires, thereby earning 
permission to enter the long-distance market. McCain believes the 
FCC is overdue for an overhaul, and he hopes to accomplish that 
job when Congress considers the agency's reauthorization this 
year. He also hopes to use that debate to open the 1996 law for 
re-examination. 
	     After the Supreme Court on Jan. 25 affirmed the FCC's 
broad authority to set pricing rules for new entrants into the 
local telephone market, McCain argued that the decision 
''underscores the Telecom Act's ambiguity that has led to biased 
rulings by the FCC.'' House Commerce Committee Chairman Thomas J. 
Bliley Jr., R-Va., had a totally different take on the Court's 
ruling. He called it ''a big win for the Telecommunications Act 
and a big win for consumers,'' and added: ''Consumers are now one 
step closer to choosing their local phone company.'' 
	     Contrary to Bliley's upbeat assessment, Rep. W.J. 
''Billy'' Tauzin, R-La., chairman of the Commerce 
Telecommunications, Trade and Consumer Protection Subcommittee, 
thinks there is room for McCain to make some political hay in a 
presidential campaign by pointing to the telecom law's failure to 
benefit consumers. Consumers, said Tauzin, might well be ''very 
unhappy next year. They could be very unhappy with cable pricing, 
they could be very unhappy with monopoly service, they could be 
very unhappy with the fact that there is somewhat of a mess in 
the telephone market.'' 
	     Tauzin has his own game plan for a massive reorganization 
of the FCC, but the notion that the act is broken and the agency 
must be turned around draws a sneer from former FCC Chairman Reed 
E. Hundt. ''Overhaul, from Congress, really means keelhaul,'' 
Hundt, a longtime ally of Gore's, said in an interview. ''It 
really means, 'Let me just beat you up on behalf of some special 
interest until you give them what they want.' '' 
	     Other important lawmakers are likely to rise up against 
McCain and Tauzin as they press to reopen the act and reform the 
FCC. Two of the law's chief authors, Bliley and Sen. Ernest F. 
Hollings of South Carolina, the senior Democrat on the Commerce 
Committee, are not about to sit idly by as their handiwork is 
redrawn. Meanwhile, look for the deep-pocketed industries 
affected by the law to pour a ton of money into lawmakers' and 
Gore's coffers. 
	     Between 1993-98, Hollings and McCain were the top two 
recipients of political contributions from telecommunications 
interests; they raked in $ 382,778 and $ 311,449, respectively, 
according to the Center for Responsive Politics. Tauzin and 
Bliley were the House's No. 2 and No. 3 recipients of such 
contributions in that period, while Gore in the past year racked 
up more than $ 135,000 from such political action committees and 
individuals. 
	
     All that money from telecommunications industries with 
diametrically opposing interests often assures one result on 
Capitol Hill: stalemate. In a year already colored by impeachment 
politics, the chances for success of a major undertaking, such as 
a rewrite of the 1996 law or a wholesale restructuring of the 
FCC, are quite slim. Of course, that never stopped lawmakers from 
trying to score political points.