Deregulation rules dismay FCC chair

Insight on the News, March 18, 2003 by Jaime Dettmer

Colin Powell's son, Michael, chairman of the Federal Communications Commission (FCC), was dealt a blow when the FCC approved new rules giving states expanded authority over the local-telephone market that would allow them to decide what parts of the Baby Bells' networks must be leased to rivals at discounts. The 3-2 vote for the new guidelines was praised by some deregulation advocates, who argue that the result will be enhanced competition. States-rights supporters also were delighted.

But consumer advocates maintain that the method of deregulation employed has not led to decreased phone prices and that the service being provided by new entrants is below par. Verizon, one of the biggest of the Baby Bells, says it has witnessed in recent weeks a huge jump in former customers returning.

Powell proposed the ending of some rules forcing local carders such as Bell-South to lease equipment at discounts. The Baby Bells say rates are too low and discourage investment. After the vote, a dismayed Powell remarked, "We will see more job loss as carriers cut their capital expenditures and refuse to move forward with new investment and growth against this Picasso-esque regulatory backdrop."