The Powell play: a fractured FCC may put the pieces back together with a new post-election chairman

America's Network, Sept 1, 2004 by Al Senia

Hammered by critics and frustrated by technology developments that outpace its ability to regulate them effectively, the Federal Communications Commission stands at a crossroads, with its future direction largely dependent upon the outcome of the upcoming national election.

The federal agency that oversees national telecom regulation has grappled during the term of current Chairman Michael Powell with a spate of complicated technical issues that range from how and whether Internet telephony should be regulated, to inter-carrier compensation for network access, to providing for continued rural network and emergency services funding.

After nearly seven years of service on the FCC and four as chairman, Powell is still laboring to implement a controversial vision that involves spawning new technologies such as VoIP by applying a "light" regulatory touch, while favoring large, incumbent telephone carriers in matters such as inter-carrier network access.

Along the way, Powell has suffered major political setbacks, including court rejection of broadcast ownership deregulation and proposed UNE (unbundled network element) rules. Additionally, fellow Republican Commissioner Kevin Martin sided with the Democratic minority in a key vote Powell lost on the UNE portion of the Triennial Review Order.

"The current direction the FCC has taken in areas like VoIP and cellular policy is not indicative of existing precedent," explains one FCC observer. "A leader has to have a clear vision. Powell knows where he wants the FCC to go. But it is how he wants to get there that has caused the problems."

IMMINENT CHANGE

Whether they agree or disagree with Powell's philosophies and paths, many telecom industry insiders believe his FCC tenure is rapidly approaching a close. If Sen. John Kerry is elected president, Powell--who was nominated to the FCC by President Clinton in 1997 and tapped by President Bush to be chairman in 2001--would be required to step down as chairman. Although unusual, he could opt to stay on as a commissioner.

However, many Beltway insiders expect Powell to leave by mid-2005 at the latest, even if Bush is re-elected. In fact, Washington pundits already are placing bets on Powell's replacement. Adding fuel to the fire is the recent departure of FCC Wireline Bureau Chief William Maher, a curious move that comes at a time when final network unbundling rules are still under FCC consideration. "You're seeing evidence that people are starting to bail out, figuring Powell is set to leave after the election," says one former FCC executive.

Other Washington observers say Powell's departure wouldn't be much of a shock. "I do believe he'll leave in 2005, probably before June, even if Bush is re-elected," says James B. Ramsey, general counsel for the National Association of Regulatory Utility Commissioners (NARUC). "People are already starting to look elsewhere (for a replacement)."

"He's taken a battering, and he is probably tired of it," says Stefan Lopatkiewicz, an attorney who practices before the FCC and various state PUCs as a partner with law firm Dorsey & Whitney.

An FCC spokesman had no comment about Powell's future plans. However, agency spokesmen have issued less than adamant denials to other media organizations, with one telling a Los Angeles Times reporter in June: "We'll see what happens after the election."

KERRY'S OPTIONS

If Kerry gains the presidency, most expect that Michael Copps, the FCC's senior democrat appointed in May 2001, to assume at least the interim chairmanship. Copps served 12 years as chief of staff to Sen. Ernest Hollings (D-S.C.). He has tangled with Powell on numerous issues, including media ownership rules, which Powell wanted to loosen and Copps vehemently opposed. At the August FCC meeting, Copps raised eyebrows by strongly criticizing the FCC progress on homeland security issues, something Powell says he is "very proud of."

Kerry, meanwhile, said on the campaign trail that he would appoint people to the FCC who back media diversity and broader media ownership, a position aligned with Copps. "I understand the world has changed with cable and the Internet and the number of outlets that we have," Kerry said in August. "The concentration of power still remains, I think, a very significant issue."

Others mentioned as potential FCC appointments after a Kerry election include Blair Levin, a managing director at Legg Mason and former staff chief to former FCC Chairman Reed Hundt; Kathy Brown, former staff chief to former Chairman William Kennard; Susan Ness, a former FCC commissioner; and David Krone, executive vice president of the National Cable and Telecommunications Association.

BUSH CHANGES

On the Republican side, Commissioner Kevin Martin would be a likely Powell replacement as chairman. Before appointment to the FCC in 2001, Martin served on the Bush-Cheney transition team and was deputy general counsel for the Bush campaign. However, siding with Democratic FCC members on issues such as the UNE vote could have cost Martin some crucial Republican support.