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The Message

Fred Harper

Ray Gifford, president of the Washington, D.C.-based Progress & Freedom Foundation, doesn't keep his political sympathies a secret. The stepson of Congressman Tom Tancredo and a onetime appointee of Governor Bill Owens, for whom he served as head of the Colorado Utilities Commission, Gifford is a pro-business Republican through and through. As such, his introduction of Federal Communications Commission chairman Michael Powell at PFF's ninth annual Aspen Summit on August 18 was filled with superlatives that he lessened only slightly as the two sat down for a public discussion of FCC policy. "I'll try not to be too fond an admirer for the next 45 minutes," Gifford said.

"Keep it up," Powell replied with a smile. "We need all we can get."

No kidding. Considering the battering he's recently taken from folks on both sides of the political divide, Powell was sorely in need of a receptive audience, and the summit's hundred-plus attendees (not counting a sizable press contingent) seemed likely to provide one. After all, sponsors such as AOL Time Warner, Microsoft, Intel and IBM believe, as Powell does, that entrepreneurs should have freer rein to pursue profits, especially given the currently sleepy state of the U.S. economy in general and the telecommunications industry in particular. Yet what emerged from Powell's talk, as well as subsequent panels featuring a series of industry leaders, showed that even this crowd often views the FCC with suspicion. Whereas much of the public fears that Powell and company have gone too far, the tycoon platoon is convinced that they haven't gone nearly far enough.

Founded in 1993 to study (and promote) the digital revolution, PFF is generally referred to in the press as a "conservative think tank," although the Seattle Times added "libertarian-leaning" to the mix in a 1998 piece that noted the organization's "strong links" to Newt Gingrich. The foundation's mission statement suggests that, as shorthand, these terms are more than serviceable. According to the document, the group "has been a consistent voice for a market-oriented approach to capturing the opportunities presented by technological progress" and espouses a philosophy that "combines an appreciation for the positive impacts of technology with a classically conservative view of the proper role of government." No need to read between those lines.

The relative specificity of PFF's focus differentiates it from the venerable Aspen Institute, a collective whose Web site, www.aspeninstitute.org, describes its devotion to the comparatively vague goals of "informed dialogue and inquiry on issues of global concern." The institute is currently headed by Walter Isaacson, onetime editorial director of Time magazine, which recently devoted a cover to Isaacson's best-selling biography of Benjamin Franklin -- a coincidence, undoubtedly. Isaacson's reputation as an opinion-shaper is more than matched by the status of the high-rent guests attracted annually to the institute's various festivities. Brainstorm, a gathering co-sponsored by Fortune magazine that concluded August 2, drew ex-presidential party dude Bill Clinton, former Secretary of State Madeleine Albright, Motion Picture Association of America head Jack Valenti and Supreme Court Justice Stephen Breyer.

PFF came up with a Supreme Court justice of its own for this year's Aspen Summit, staged at the town's fabulously palatial St. Regis Hotel. Moreover, the man who accepted the foundation's invite wasn't some namby-pamby moderate like Breyer, but Antonin Scalia, a strict constitutionalist who wrote that the court had "largely signed on to the so-called homosexual agenda" of same-sex marriages and Lord knows what other depravity when it tossed out a Texas sodomy law earlier this year. (Breyer voted with the majority on this issue.) Not that Scalia's views on the potential banning of assorted intercourse techniques had anything to do with his invitation to the summit; even his background in telecommunications, via a bureaucratic gig he held back in the Richard Nixon administration, was largely beside the point. He was present to add name value and to give industrialists the thrill of shaking a very powerful hand. In this respect, Scalia did his part, showing up early at the August 17 mixer where he was to speak and, well, mixing. Powell did the same. Clearly, über-capitalists are their kinda people.

Scalia's brief remarks were initially said to be off the record, although he subsequently gave a reporter from the Rocky Mountain News permission to print excerpts in the paper's August 25 edition. Since he didn't do the same with me, I'll keep the specifics to myself. I feel comfortable stating that he didn't call for all gay people to undergo brainwashing sessions intended to make them feel aroused in the presence of the opposite sex, nor did he reveal that he's secretly a member of the North American Man-Boy Love Association. But that's as far as I'll go. Wish I could go further. But I can't.

Although Scalia was the heaviest hitter to accept the PFF's largesse, he was hardly the only one. After an August 19 dinner, for instance, Viacom president and chief operating officer Mel Karmazin was slated to sit for a live interview with PBS/60 Minutes II conversationalist Charlie Rose -- an indication of Karmazin's muscle, if nothing else. A communications roundtable titled "Doing Business in an Era of Regulatory Turmoil" was also stocked with business titans, chiefly Dennis Strigl, president and CEO of Verizon Wireless; William Daley, president of SBC Communications (and the brother of Chicago mayor Richard Daley); and Qwest chairman and CEO Richard Notebaert. Another chat fest, "The FCC's Tumultuous Year: Freeing Competitive Markets or Entrenching Managed Competition?," was highlighted by the participation of BellSouth's Margaret Greene, Comcast's Joseph Waz and FCC commissioner Kathleen Abernathy. Like Powell and Kevin Martin, an FCC commissioner who was supposed to be present at the summit but had to pull out at the last minute for personal reasons, Abernathy is a Republican. The commission's other members, Democrats Michael Copps and Jonathan Adelstein, weren't on the summit's guest list - omissions apparently in keeping with the turd-in-the-punchbowl approach to party-giving.

 

For folks not extremely well versed in telecom jargon, these discussions would surely have been exceedingly dull. Cosmically dull. Dull enough to register on the Richter scale. The terms bandied about included Wi-Fi ("Wireless Fidelity" technology that allows unplugged Internet connection), ILECs ("Incumbent Local Exchange Carriers"), TELRIC (a pricing formula that stands for "Total Element Long-Run Incremental Cost"), UNE-P ("Unbundled Network Element Platform") and NPRM ("Notice of Proposed Rulemaking" by the FCC). Anyone have a spare box of Alpha-Bits?

Hiding behind these acronyms was the speakers' unhappiness with the FCC's so-called "triennial review" of telephone matters, the broad strokes of which were announced in February but still haven't been made official; Abernathy said the updated policies may finally be put into place this week. The ruling, which both Powell and Abernathy opposed, lets local phone-service providers continue to use the nationwide Bell network at below-market rates and eliminates "line-sharing" directives that permit broadband providers to lease part of the Bell system. In the end, the commission allowed entire layers of federal regulations that telecom types wanted eliminated to remain in place, and individual states now have greater license to step in with regulations of their own.

The assorted CEOs claimed to want deregulation for all, with the members of the Notebaert panel even taking an awkward pledge not to ask for regulation of competitors while demanding the removal of their own government-imposed restrictions. Abernathy, meanwhile, made a vow of her own - to, whenever possible, leave well enough alone.

"There is still a tendency by regulators that despite how competitive a market may be, we still think we can make it better, we can tweak it, add something of value with no unintended consequences," she said. "You have to fight against that tendency. I have to step back and tell myself, 'I know the markets work.' I shouldn't be so hesitant to let go."

That's just what the telecoms want: for the FCC to transform itself from a regulatory agency to a deregulatory agency amenable to letting companies do pretty much as they please in most circumstances, under the theory that the forces of supply and demand will sort everything out in the end. Powell leans in this direction, too, and Abernathy, once the vice president for regulatory affairs at US West, is solidly behind him. "I tend to be in raging agreement with the chairman most of the time," she declared.

For his part, Powell spoke as if he was under siege, repeatedly employing military analogies to explain his plight. "You have to be prepared to be a really muddy infantry sergeant," he stressed. "You have to take three steps forward and get shot back two but keep moving forward. And you have to believe that the fruits of that effort will be something history judges -- not the front page of the newspaper tomorrow."

The biggest headlines generated by the FCC of late concern the loosening of assorted rules governing broadcast outlets. These moves may have snuck up on the average person, but the commission has been working toward the objective for years, with Powell, the son of Secretary of State Colin Powell, serving as the primary agent of change, not to mention chief water carrier for the George W. Bush administration.

Hence, media insiders were not surprised by the series of regulatory modifications approved by the FCC in June along a strict party-line vote; Powell, Abernathy and Martin prevailed over Adelstein and Copps, who spent part of his summer traveling across the country to rally those opposed to the new regs. Among other things, the commission stated that a single entity could own television stations reaching 45 percent of American viewers (up from 35 percent), gave firms permission to purchase multiple TV stations in the same market depending upon its size, and allowed businesspersons to engage in the previously frowned-upon practice of cross-ownership. The latter shift grants companies the right to own a newspaper and multiple broadcast stations or radio-television combinations in most major markets.

 

Considerably more unexpected was the opposition to these revisions by groups representing widely disparate ideological backgrounds, from the American Civil Liberties Union to the National Rifle Association ("Brave New World," June 12). Faced with a groundswell of grassroots displeasure, elected representatives who almost always disagree with each other (e.g., liberal torchbearer Russ Feingold and right-wing lightning rod Trent Lott) rose up as one to decry the FCC's actions. In late July, the House of Representatives voted by a 400-21 margin in favor of an appropriations bill that sported an amendment returning TV-station ownership limits to the 35 percent threshold. Subsequent reports hinted that the Senate might endorse the same provision as early as September, putting the president in an uncomfortable position. If Bush, a longtime supporter of deregulation, vetoes such legislation, he'll please many big-money contributors but could alienate constituents and other Republican allies. Worse, Congress might be able to override the veto, thereby making Bush look both impotent and out of touch -- definitely a bad combination.

With this predicament looming, calls for Powell to resign long before his FCC term expires in 2007 have grown more frenzied. At the summit, Powell brushed off this possibility with a single, casually delivered sentence ("I'm going to stick around"), which he supplemented with remarks that took the backlash he's facing into account.

"I'm a regulator, and Congress writes the rules; we don't," he said. "I think the only responsible policy result was the one we produced. It was the only one faithful to the congressional rules and to the courts. But if Congress has a change of heart or mind, that's their prerogative. In terms of the swirl, I don't personalize policy. This stuff is not part of my personal life. My kids are part of my personal life, not media-ownership rules. Mike Powell should be irrelevant. What's relevant should be what's the best public policy, and we did what we think should be best."

Even so, Powell isn't willing to stand mute on the sidelines. He's particularly galled by proposals to reverse all of the FCC's media-ownership rulings instead of only the one governing TV-station limits. "That is not sound policy, even if you believe in heavy regulation," he declared, adding, "The traction of something like this reveals how emotional and abstract this has become and how little the facts seem to matter." Yet even he acknowledges the political realities of the situation: "Policy-makers should wake up: The public is concerned about the big media. Our responsibility is to channel that concern into something constructive, and the commission is going to put itself back in the leadership position -- to look at those concerns and point them in a more positive direction rather than some of the mudslinging we've seen this summer."

Powell seemed much more comfortable, and much less defensive, when enthusing about various product advances he sees on the horizon, including broadband platforms using laser technology, which he describes as "the stuff of Buck Rogers." Part of his duty, in his opinion, is to not stand in the way of such gizmos making their way to a store in your neighborhood in the near future: "We have a high-tech vision, a relentless desire to empower new technology and new possibilities. We continue to fight to bring those new technologies to market, pursue rule-making that gives the biggest bang for the buck, and new policies consistent with where the world is going... You have to be aggressive in setting a long-term vision and direction. It's important to stick that flag in the ground and say 'This is where we want to go.'"

The problem is, not everyone feels Powell's way is the right way to reach this destination. He even sees the FCC itself as an obstacle at times. "Conflict is almost built in," he said. "You have five members, divided by political party by law. At best, it's a very cumbersome organizational structure for bold decisions to be made quickly. And what worries me more than speed is the ability to be mealymouthed. I've had people tell me that they've read a paragraph we've written and can't tell what it is they're supposed to do. Part of that is because five people negotiated over it." He sees the importance of "insulating the FCC from the politicization that goes on. We have a judiciary that's removed from that process, and while we're not a court, we should be something more akin to one than something that's a mini-legislature. We should make decisions that are credible, and not as a result of a senator yelling at you loudly enough to get you to make that decision."

 

A possible solution Powell floated is for the FCC to be made part of the administrative branch so that everyone would be working together without the nasty disagreements that have tested his patience so often. After listening to this notion, Gifford asked, "Had any dreams about a one-person FCC?"

Looking to the sky, a beatific expression on his face, Powell said, "It has occurred to me."

The audience laughed. But Powell may not have been joking.


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