TCS Daily

New FCC Chairman Says Innovation, Deregulation Are Top Priorities

By Duane D. Freese - February 6, 2001 12:00 AM

Promoting innovation and a greater reliance on deregulation and markets will be his top guiding principles, new Federal Communications Commission Chairman Michael K. Powell said on Tuesday at his first press conference, during which he also called the Telecommunications Act of 1996 a success.

"There's been so much focus on price" to meet consumer needs, Powell told reporters, when what's needed is for the agency to "provide an environment for innovation to flourish." "Capital markets and free markets allow trial and error," he said. Deregulation, he said, is not "a dessert" to be handed out after the demonstration of a competitive market, but part of producing such a market.

To accommodate the "convergence of markets" as a result of the migration of communications to digital broadband networks, Powell also called for a "rationalization of the regulatory structure." Powell said he has no specific plans yet for that reorganization, but noted that the current FCC is "Balkanized," treating differently "similarly situated infrastructures." That "distorts the evolution of markets," and leads producers to make products to satisfy regulatory problems rather than the best or most cost effective, he said.

As his fourth principle, Powell reiterated that the agency would continue its traditional role of guarding "against genuine consumer harm." "But we must not see consumers as a class that needs to be protected from competition," he said, "but as one of its most vital and indispensable participants if there is to be a viable market."

Powell did not say how he would put his deregulatory principles into effect. But on the Telecommunications Act of 1996, he disagreed with those who say the act is a failure. The 1996 act, he said, "was the final chapter of the AT&T divestiture." If the focus is on local residential service - on creating local "Bell look alikes," it hasn't done as much as many hoped, he said.

"But sometimes there's a silver lining; sometimes the silver lining is more important than what was originally being sought," Powell said. In the case of Telecom Act, he said, that was the unleashing of broadband. AT&T, he said, "aggressively attempted to get into the local markets. ... In that attempt, they did something extremely bold - they bought a cable company."

Powell said that action "brought DSL (digital subscriber lines) out of the closet." And for the right reason, he said, "out of fear - fear of losing customers." He said the broadband revolution also unleashed capital, which despite the current market downturn has still produced a communication success for the nation in building out broadband infrastructure.

As for the local competitors to the Bells who first pushed out DSL service and are now folding, he said, "poor implementation and execution" of the act played a role. "But a lot of people show up for a gold rush," he said, "and not everyone leaves with the gold."

Using the example of the Nasdaq and the failure of dot.coms, Powell expressed little support for "open access" for all communications networks. "It is a very hard question," he said, with timing being a key consideration. He indicated it might be premature to apply open access to cable or other broadband technologies. "Just because the Internet is open doesn't mean that openness is good for everybody," he said. The "blood on the floor" of the Nasdaq, he said, shows that model doesn't always work.

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