09-22-2001

Telecommunications: Long Days at the FCC

He's got a stellar resume, friends in high places, allies on K Street-and
a very tough job. Michael Powell, whom President Bush elevated to the
chairmanship of the Federal Communications Commission, must help transform
the nation's ever-expanding telecommunications sector into a deregulated
marketplace. Powell emphasizes his determination to rely on free-market
principles to guide him though the myriad controversies facing the
commission. His critics complain that his approach favors big companies
over consumers who are finding their options increasingly limited by media
mergers. His response: Rely on competition, and support government
intervention only if data show actual harm to consumers. The following are
edited excerpts from an interview Powell gave National Journal in early
September.


NJ: What are your top priorities?


Powell: 1) Broadband policy and the effort to stimulate the efficient
deployment of high-speed access. 2) Competition policy, and efforts to
continue to find balance between competitive companies that will allow
each of them to continue to be significant contributors in the
communications age. 3) We have an obligation to do whatever we can to
continue to facilitate the digital television transition. 4) It is very
important to me to try to put back in place a very competent, fact-based
record from which we can have more-intelligent debates on the proper
regulation of media. 5) Spectrum management policy. 6) And last but not
least-one that is not nearly as sexy, but is 10 times more
important-improved management of the agency, so that it can perform its
function in a period of regulatory uncertainty and vast technological
change.


NJ: What are the hallmarks of a successful FCC chief?


Powell: The first hallmark is that the FCC itself is an institution that
is successful-very efficient, effective, and responsive-that makes the
difficult decisions first, and in a rigorous, fact-based way; that is
courageous enough to make decisions that will make powerful people angry,
and savvy enough to make them in a way in that you can explain and defend
them to Congress.


NJ: What's the government's role in breaking down bottlenecks that are
holding up the emergence of the digital economy?


Powell: The government has always had a role in policing anti-competitive
conduct, where somebody is able to create a market-power stranglehold that
does not benefit consumers. Government has to be willing to be very
aggressive, when necessary, to protect healthy conditions in the
market.


That said, there is an enormous range of disagreement about when and how
that is done. I tend to believe that when you listen to the noise level
rather than the facts, there are many who would invite you to intercede
long before there is a demonstrable basis to believe there is any harm
accruing to consumers. I think it is really important to remember that
consumers are the hallmark, not competitors. If the government starts to
not distinguish between true anti-competitive activity in the eyes and
ears of consumers, and instead tries to maintain competitive balance among
competitors, my sense is that it will quickly become dislodged from any
principle. Then it becomes a battle of supplicants over who has the most
clout, power, money, and ability to persuade the government to protect
their competitive position. I don't think that does anything for
consumers.


NJ: Do you see any evidence of harm to consumers in the broadband area
yet?


Powell: Not quite yet, because I think that broadband is truly in its
infancy. When something like 80 percent of the market is still being
competed for by anybody, it is difficult to make generalized judgments of
anti-competitive harm in a large-scale way-because 80 percent of Americans
don't have the service. You're in an early adoption cycle right now,
which-contrary to the popular wisdom-is emerging quite quickly compared to
any of the other major infrastructure rollouts. I think the most
significant issues in the anti-competitive-effects story are yet to fully
emerge.


NJ: How would you know when you have harm to consumers in the access
area?


Powell: Certainly the most widely used measure is price effect. Also,
there is a concern about degrees of privileged exclusivity, in which
[companies] not just could, but do, more than prefer their own products,
to the direct exclusion of anyone [else's products]. That's a touchy area,
because it is important to recognize that a lot of people will argue about
an issue like that on theory as opposed to facts. Meaning: "They
could, so you should stop them," versus "They do, so you should
stop them."


NJ: Any sign of "do" rather than "could" at the
moment?


Powell: I don't want to answer that question flatly, because we have not
seen one that has prompted us to act yet. But there are a number of areas
we are examining that tangentially touch on this, such as open access in
cable, interactive TV, the ownership structural rule review, and the
review of cable's horizontal ownership caps.


NJ: Is the White House agitated about delays in broadband
deployment?


Powell: I don't know that anybody is not pro-broadband at this point.
There is pretty universal understanding that everyone wants more
broadband, and everyone knows that it may be a useful stimulus to greater
economic productivity. So my sense is that they surely have an interest in
it, but I would not say that it is an interest that has been articulated
or picked up [by the FCC].


NJ: How do you construe "the public interest"?


Powell: The public interest should be effected in every thing a government
agency does, because it only does it in the name of the public. I don't
think I make a single decision that isn't for the public interest or for
an effort to maximize its interest.


NJ: What circumstances would justify FCC action to close a social gap in
access to technology?


Powell: It shouldn't be [linked to race]. The question should be:
"When should the government act?" I am always frustrated by the
idea that you should isolate one part of government from the others.
Congress always is empowered to do most things. The White House is
empowered to do some things, and the antitrust authorities are empowered
to do some things. In my philosophical model, markets can fail, and the
government should look for evidence of such where economics of deployment
are simply unattainable based on the market realities. Then the country
has to deliberate on what it considers to be the social value of
intervention.


NJ: What efforts will you make to assure Senate Democrats that you won't
try an end run around their crowded calendar?


Powell: I'll do with the Hill what I have always done, which is spend as
much time with any and all of them as I can. We try to provide them as
much advance understanding and insight into the direction that we're
going.


NJ: Describe a working day at the FCC.


Powell: They're long. They start when I get up at 5.15 a.m. I usually
spend the morning reading and evaluating items. Then I meet with staff.
That probably takes me to lunch. My outside meetings are only in the
afternoon, often with someone from a consumer group, or industry, or a
company, or with a Congressman.


It is a furious pace. I have worked within government most of my life. I
have been at many different agencies and at law firms, and I have never,
ever witnessed this extraordinary inferno of activity, the tough
questions, the things that fall out of the sky. I have never-and I say
this in all honesty-worked with a group of people who do so well in such
an extraordinarily messy environment. The greatest talent I've had to
continue to develop is explaining really complicated stuff in simple and
digestible terms for the public, for Congress. But the truth is, you stand
here in a meeting looking at the complexity of rate accounting and the
costing of interconnections on the Internet, and it blows your
brain.


Here's the problem in our area: Everything is gray now. We get, every day,
ambiguous questions that affect the future in a way we can only guess at.
So in the midst of that grayness and ambiguity, we have to try to find the
principled thing to hold on to in order to make the best judgment we can.
And industries that have billions of dollars on the line, or political
elements that have real anxieties about the future, or consumer groups who
are concerned about what this might mean-they do what they are supposed to
do, which is argue, and that can involve a whole lot of spin. I really
believe that in most of the hard questions we are struggling with, we'll
never know if we are right until history judges.


Neil Munro

National Journal