Posted:  05/2000

Congress, FCC Move to Opposite Corners on
Reorganization
BY KIM SUNDERLAND

The debate on Capitol Hill over revamping the FCC
(www.fcc.gov) has become relentless. No end is in sight as Congress heads into the waning months prior to the presidential elections.

Deregulation of the telecommunications marketplace–a top priority and passion of several Republicans–can be attained beginning with the FCC, says Rep. W.J. “Billy” Tauzin (R-La.), chairman of the House telecom subcommittee.

According to Tauzin, the FCC is conducting “government by consent decree”–his term to describe how federal agencies only grant certain approvals if companies likewise agree to accept “voluntary” conditions.

A case in point is the 30-some conditions the FCC placed on the merger between SBC Communications Inc.
(www.sbc.com) and Ameritech Corp. (www.ameritech.com), Tauzin says.

Congress repealed the FCC’s authority to oversee telecom mergers, but the commission remains involved under the guise of reviewing license transfers.

“And anytime the FCC can hold applicants hostage and hammer them like this, makes companies vulnerable to these types of shakedowns,” Tauzin continues.

“We need to be ending the business of holding people up and shaking them down,” he says. “This needs to stop in America and we can start with the FCC.”

Tauzin wants the FCC reformed soon, and he plans a markup on an FCC reform bill that lays out specific changes to the agency’s merger review process.

Support for the FCC reform is strong on the Senate side as well. Sen. John Breaux (D-La.) says the Senate Commerce Committee, of which he is a member, continues to look at FCC reorganization. He cited that a “hell of a statement” was made recently by Committee Chairman John McCain
(R-Ariz.), calling the FCC the most inefficient, highly bureaucratic agency in Washington.

While the exchanges between McCain and FCC Chairman William E. Kennard might seem outwardly amusing, it’s really quite controversial, Breaux says.

In delivering his report card to Congress on what he calls the new FCC, Kennard lobbied a little for the commission’s future by declaring that it’s fast becoming a one-stop, digital shop for consumers.

“We are promoting competition in all communications markets, creating opportunities for all Americans to benefit from the communications revolution and managing the electromagnetic spectrum more efficiently than ever before,” Kennard told the Senate Appropriations Subcommittee on Commerce, Justice, State, and the Judiciary.

Kennard spoke to the subcommittee regarding the federal agency’s FY 2001 budget, and submitted a 17-page report highlighting commission milestones and addressing what is needed to complete his strategic plan for a 21st century FCC.

In keeping with the August 1999 draft plan, Kennard said that during the next five years “the FCC must wisely manage the transition from an industry regulator to a market facilitator.”

This plan already is working, Kennard insists. For example, he points to the long-distance market, where competition has grown steadily since divestiture in 1984 of AT&T Corp.
(www.att.com). The FCC’s continuous deregulatory efforts contribute significantly to increased competition, Kennard says, citing how domestic long-distance rates have dropped nearly 56 percent in real terms since 1984. That has saved consumers about $200 billion.

Today, some companies offer services for as low as a nickel a minute, he says.

Kennard adds, competition in the local phone market is growing because of the FCC’s aggressive implementation of the Telecom Act.

“Our biggest challenges in the coming months are to accelerate competition in this sector and to ensure the provision of service to underserved areas,” he told the subcommittee. “Too many Americans still have only one choice in local residential phone service. But the data show encouraging trends.”

Kennard also says the FCC’s “hands-off” policy toward the Internet has helped fuel its tremendous growth, which he says doubles every 100 days.

“As the commission moves forward on the transition from industry regulator to market facilitator, this plan will be continually revised and updated to reflect the changing marketplace.

“The past year has demonstrated that the commitments made in this plan are real,” Kennard says.