01-20-2001
WHITE HOUSE: Clues to Bush's High-Tech Plans
In 1994, when George W. Bush launched his campaign for governor of Texas,
Southwestern Bell Telephone Co. spent thousands of dollars to help defeat
him because the company was ringing up billions of dollars a year as a
state-sanctioned monopoly. Soon after he was sworn in as Texas' chief
executive, Bush tapped Pat Wood, the chairman of the Texas Public Utility
Commission, to painstakingly implement federal and state laws to impose
telephone competition. But Bush never became an ally of Southwestern's
fiercest rival, AT&T, the country's dominant long-distance company. In
fact, on Bush's watch, Southwestern Bell became one of only two Baby Bells
to win state and federal permission to compete with AT&T.
Bush's tenure in Texas reveals that he has no loyalties to any of the
telecommunications powerhouses, and he comes to Washington without
commitments on some of the biggest telecom and high-tech policy issues. He
counts no telecom players among his closest advisers, and he has only a
few telecom lobbyists on his 500-member transition team. "I don't
think that those inside the Bush team have spent a lot of time on telecom
issues," said one lobbyist who is close to Bush. But the appointments
Bush makes to key telecom positions in the next few weeks and months will
be critical. "In many ways, the fight over telecom policy for the
next four years will be won or lost right now," one telecom insider
said.
Bush's reign in Texas does offer a few clues to his regulatory philosophy.
In general, he has favored deregulation, but he sometimes supports
government intervention to break up monopolies. Wood described Bush's
approach in an October New York Times article: "You have to fix the
problems of a century of regulation. So you can't just deregulate. You
need competition first, and then deregulation. This is somewhat at
variance with the more strident part of the party, which wanted to
deregulate first. Then you have a deregulated monopoly. Who wants
that?" When Bush signed legislation to cut regulatory fees paid by
Southwestern Bell, he made sure the company passed its savings on to
customers, something the company probably would not have done on its
own.
Bush, his admirers say, knows how to set policy without micromanaging its
implementation. "Governor Bush did two great things to advance
telephone competition in Texas," said Royce Holland, CEO of
Texas-based Allegiance Telecom. "He appointed innovators to the Texas
Public Utilities Commission who were not monopoly-era thinkers, and he let
his commissioners do their jobs without political interference. If
President Bush can do the same for the FCC, we'll have real local
competition across the U.S.," Holland said.
In Washington, the Federal Communications Commission is wrestling with
deregulation and competition, but with a greater variety of players and
technologies than Bush had to deal with in Texas. Bush's appointments to
the five-member commission will go a long way toward determining policies
on such issues as whether the agency will allow the Baby Bells to transmit
Internet data over long-distance lines. Bush will also have to appoint a
new FCC chairman to replace Democrat William E. Kennard, whose
resignation, announced this week, gives Republicans a majority on the
commission. One obvious candidate is Wood. Another is Michael Powell,
Colin Powell's son and one of two Republican FCC members who have
championed deregulation.
Bush and his new FCC will have to take a stand in the telecom debates soon
enough, because the retirement of Rep. Tom Bliley, R-Va., dramatically
shifted the balance of power in Congress toward the Baby Bells. Bliley,
the powerful chairman of the House Commerce Committee, was a reliable
supporter of AT&T and the long-distance phone industry. His departure
leaves the committee in the hands of Rep. W.J. "Billy" Tauzin,
R-La., who is perhaps the Baby Bells' best friend on Capitol Hill. Other
friends include Rep. John D. Dingell, D-Mich., the ranking Democrat on the
renamed Energy and Commerce Committee; Rep. Fred Upton, R-Mich., the new
chairman of the panel's Telecommunications Subcommittee; and Rep. Rick
Boucher, D-Va., who may become the subpanel's top Democrat. House Speaker
J. Dennis Hastert is viewed as a supporter of the Bells, as is House
Majority Whip Tom DeLay of Texas.
On the other side of the Capitol, the Bells have allies in Sen. John
McCain, R-Ariz., the chairman of the Senate Commerce Committee, and Sen.
Conrad Burns, R-Mont., the chairman of the panel's Communications
Subcommittee. Sen. Ernest Hollings, D-S.C., the Commerce Committee's top
Democrat, opposes the Bells' efforts. But the Bells' strongest opponents
may be Sens. Trent Lott, the Republican Leader, and Ted Stevens, R-Alaska,
the powerful chairman of the Appropriations panel.
First on the Baby Bells' list of priorities is legislation that would
rewrite a key section of the 1996 Telecommunications Act and facilitate
building more-profitable nationwide high-speed Internet networks. Last
year, Tauzin and Dingell had their version of the legislation endorsed by
a majority of House members, but Bliley bottled up the bill in committee.
The local phone companies also support legislation to end a complicated
intercarrier compensation system that they claim wrongly forces them to
pay their competitors a few billion dollars each year. Bliley smothered
that bill as well, but Boucher promises that this year will be different.
"We will move most of those bills through the House within a few
months," he said. Telecom insiders predict that the bills will face
stiff opposition in the Senate and may never reach the White House. Still,
it's possible that Congress could ship the two key pro-Bell bills to
Bush's desk by summer.
It is still not clear how Bush will react to those bills, but his
personnel decisions provide some indications. The choice of Larry Lindsey
to serve as Bush's chief economic adviser indicated that Bush will
generally favor a hands-off approach to the economy. But Wood and Powell
are perhaps more inclined to deregulate in steps, rather than tear down
the existing regulatory framework. "Powell is going to be more
deregulatory," said former Rep. Tom Tauke, an Iowa Republican who is
close to Bush and is now senior vice president of external affairs and
public policy at Verizon Communications. "But he is not calling for a
dismantling of the [FCC]. He would not [do] a 180-degree turn, but would
take a different tack." In recent speeches, Powell has said the FCC's
most important task is to promote competition by establishing uniform and
modest regulation of the entire telecommunications sector, in which the
various components-cable television, voice telephones, Internet services,
and wireless services-are regulated differently.
Executives in the broader high-tech sector welcomed former Sen. John
Ashcroft's nomination for Attorney General because of his tough stand
against lawsuits and antitrust regulation. They point to an amicus brief
written by Ashcroft, when he was Missouri's attorney general, in a
landmark 1984 Supreme Court decision. The Court's decision, urged by
Ashcroft, allowed Sony Corp. to sell videocassette recorders, despite
opposition by Hollywood studio executives who feared large-scale piracy of
movies. "We are very strongly supporting Sen. Ashcroft," said
Rick Lane, the high-tech lobbyist for the U.S. Chamber of Commerce. It is
still unclear whether Ashcroft might try to back the government out of its
antitrust lawsuit against Microsoft. Bush spokesman Ari Fleischer said
Bush and his top advisers would soon meet to discuss the issue. "The
President-elect will not rush to litigate, the way some folks in
Washington enjoy litigating," Fleischer said.
Bush must fill by appointment two vacancies at the Federal Trade
Commission, the administrator slot at the Commerce Department's National
Telecommunications and Information Administration, and various high-tech
posts in the White House. One person mentioned for an FTC slot is Wendy
Gramm, wife of Sen. Phil Gramm, R-Texas. Bush has already appointed Gramm,
who is the pro-market director of regulatory studies at George Mason
University's Mercatus Center, to head his FTC transition team. If
appointed to the FTC, she could help reverse a commission decision made
last year to urge legislation on online privacy. To cement links with
California's Silicon Valley, Bush may soon pick Lezlee Westine for a
position under presidential counselor Karl Rove at the White House's
Office of Public Liaison. Westine is now the Republican director at
Technet, a bipartisan lobbying group established by Silicon Valley. The
GOP's links to the high-tech industry on the East Coast are stronger,
partly because Dulles, Va.-based America Online has a long history of
involvement in regulatory fights.
Bush officials are also considering a place for Floyd Kvamme, Bush's
strongest supporter in Silicon Valley's influential venture capital
sector. There also may be room for employees of the high-flying Internet
company Cisco Systems. John T. Chambers, Cisco's chief executive officer,
was the most prominent and generous of Bush's business allies, and a
member of the Bush campaign's high-tech advisory team. Chambers' influence
can be seen in Bush's decision to pick Laura Ipsen, Chambers' director of
government affairs, to serve on the advisory team for the new Commerce
Department. Bruce Mehlman, Cisco's telecommunications policy analyst,
serves on the advisory team for the FCC.
One cause for which considerable support already exists on the Hill is
"open access." Bush will probably have to take sides on the
issue by the end of the year. In that debate, a coalition of lobbyists
from companies that own small Internet networks and intellectual property,
such as movies, have allied to urge regulations that would force large
companies, such as AT&T and AOL Time Warner, to share their cable
television pipelines into consumers' homes.
Industry officials hope that Bush will appoint a technology czar to
oversee the Administration's many high-tech decisions. But so far, Bush
seems willing to appoint only a tech-savvy deputy at the Office of
Management and Budget, someone whose job would be to improve the federal
government's sprawling computer networks.
Brody Mullins and Neil Munro
National Journal
