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By Thomas Bliley - April 3, 2000 12:00 AM

Tech Central Host James K. Glassman sat down this week with House Commerce Committee Chairman Tom Bliley, who's retiring this year after more than 30 years in public service and three terms as Chairman of the Commerce Committee.

Jim Glassman: Today, there is an abundance of media, telecommunications media. Really, it is hard to argue that there is a scarcity. But the FCC's budget just keeps getting bigger. Can you foresee a time when we can essentially abolish the FCC the way that we did the Interstate Commerce Commission?

Bliley: Well, I suppose that such time would come, but it certainly is not here now. The FCC is needed because of all of the new technologies that are coming online, and if everybody was a saint, we wouldn't need a policeman. But, the fact of the matter is that human nature is human nature, and with business as I frequently say, you know, they all believe in competition. They all believe in free markets. But they each want a fair advantage. The FCC has got to be there as an umpire to see that the playing field remains level.

Glassman: Do you suppose that the FCC has overstepped its authority in the matter of the tax that has been placed on consumer phone bills in order to provide Internet connections to schools?

Bliley: Yes. I think that they definitely overstepped their bounds in doing that. I think that Congress is the only entity that should levy taxes. I mean, that's the way it is. I mean, these guys - without a hearing, without anything - they just slapped this tax on. And I think that that is wrong policy and I think that if you want to provide funds for it, you ought to take that 3 percent tax that's already on, that was put on in 1898 to finance the Spanish American War, and use that to bail out the schools and libraries program.

And while on that subject, I mean, when we passed the Telecom Act of 1996, our intention was that we would get the wires to the door and, of course, they have used that to go in and buy computers, and do wiring inside the schools and everything else. That was not the intent of Congress at that time.

Glassman: So, what can you do about that? Do you have to pass another law to undo this?

Bliley: Yes, the problem is you'd have to pass another law to undo that, and that would be very difficult with this Administration because, I have yet to see them find a tax they didn't like. But the Gilmore Commission has recommended that we do away with the 3 percent tax on phone bills. It seems to be that you could use that as a tradeoff, use some of that money and some of the -- what we Republicans like to refer to as the Gore tax -- to finance it.

Glassman: Could you grade the performance of the FCC, the local telcos, the long-distance telcos, and the Justice Department in regard to the Telecommunications Act of 1996?

Bliley: Well, I think, obviously, with an Act as sweeping as it was, it takes some time for people to get adjusted. I was very disappointed that the RBOCs ran into court when Reed Hundt set out a program of how to go about it and that held up access to the local loop for some time.

The Justice Department, I think, has been fairly responsive. I haven't had any quarrel with what they've done, vis-a-vis the Act.

And the only two raps that I would lay on the FCC is that, one, they are so slow in making decisions and that's bad. And the other is, of course, as far as this tax.

And finally, we recently had a wireless company that was in default on their license. I think it was Nextel. The FCC proceeded to go back and jerk the thing away from them. And I said to Kennard, "Why would you do that when the new owners came and offered to give you a check that day to pay for the whole thing?" It's going into litigation and you know, in the meantime, the technology is on the shelf because nobody can use it.

And, of course, Kennard's response was, "Oh, we think we'll win that case and that we'll get more money for the spectrum license." I said, "I've heard that before." I remember that last time and we got ten cents on the dollar for what we were supposed to get for the spectrum license. And to me that just was a bureaucratic misfire.

Glassman: Can you just give me an idea of when you think there will be sufficient competition in the telecommunications market at the local level?

Bliley: Oh, I think that would be very difficult to give you a finite time when I think that will be, because it will vary highly from region to region. But I think it's coming, I mean, I was in Richmond last Monday and AllTel came in and they are competing now with Bell Atlantic. We also have Cavalier Telephone Service down in Richmond competing. We have Media One.

It will take time, particularly with residential customers. I mean, we have seen it with long-distance and you have all of these long-distance companies coming in and advertising and calling and what not. But the average residential customer, you know, they've been with the telephone company forever and if they don't make a lot of long-distance calls, they don't see any particular reason to change.

Likewise, I think people are satisfied with regard to their local phone service, unless they are into, you know, computers and then, they got another incentive to look at. But most homes don't have computers and so, until that changes, and it is changing because more people are getting online every month, that will be slow.

Businesses are very much into it. They are concerned with the bottom line and they see the value and they are switching fairly regularly.

Glassman: But you agree that the reason that broadband has not come more quickly to consumers has been because there is a bottleneck here with the local telephone companies.

Bliley: The local switch, yes, indeed.

Glassman: And then really that can only be solved through competition?

Bliley: Absolutely.

Glassman: Just one last question. You announced very recently that you would be retiring at the end of this term.

Bliley: That's right.

Glassman: What do you consider your greatest legacy?

Bliley: I think the Telecom Act of 1996 is obviously the most important piece of legislation, but there have been others; the FDA reform bill, Securities litigation reform - which was the only successful override of this President's veto, the Food Quality Protection Act, safe drinking water, there is a whole long list, but obviously at the head of the list would be the Telecommunications Act.
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