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Chairman in waiting

Michael Powell is now odds-on favorite to succeed Kennard atop FCC 12/17/2000 07:00:00 PM Eastern

FCC Commissioner Michael Powell is blessed with a keen mind, a good résumé, and excellent timing. That combination will likely unlock the door to the FCC chairman's office.

He has great family connections (his father is Bush insider retired Gen. Colin Powell). He's a Republican at a time when the GOP more desperately than ever wants to show it's more than the party of rich white guys. And in his own right, he has proved himself congenial, energetic, fair and a man of great intellectual capacity.

Capping that is a sharp political instinct that the next chairman must put to use if he is to successfully lead the agency through a tumultuous digital revolution. With William Kennard likely to abandon his chairmanship when President Clinton leaves office and with Republican George Bush, finally, the president-elect, Powell's time may be now.

But although Powell has had an easy three years as the FCC's Republican wunderkind, it's all but certain he'll find the chairman's job a lot tougher.

Powell's strengths were on display Dec. 8 in a speech to the conservative Progress & Freedom Foundation about the debate over broadband policy.

He skillfully navigated the nuances of the debate over the rollout of high-speed digital communications, which could be the overriding issue of a Powell tenure. He showed characteristic eagerness to buck conventional wisdom, suggesting that the FCC shed its past reliance on low consumer prices as a gauge for competitive markets and instead look to the availability of new services. "Competition through innovation is perhaps more important than price competition," he said, crediting the late economist Joseph Schumpeter, a darling of information-age prognosticators. "Government regulation should promote innovation."

But Powell's fluency in telecommunications policy and intellectual heft aren't news to anyone who has followed the FCC during the three years he has been a commissioner. More notable was the display of political cunning that will be necessary to navigate the telcom ocean's shoals as the once disparate sectors transform into competing technologies for delivery of a nearly identical mix of digital information services.

Powell took the podium as the apparent next chairman of the FCC, followed by a rousing endorsement by House Telecommunications Subcommittee Chairman Billy Tauzin (R-La.). The next sound could have been the air being let out of the candidacy of Texas Public Utility Commission chairman Pat Wood, who is said now to be seeking chairmanship of the Federal Energy Regulatory Commission. Wood, though, isn't publicly conceding that the FCC post is out of his reach.

Powell also managed to give a major policy speech, miraculously, without being criticized for being presumptuous in his claim to the post or of Bush's to the White House, given that the Florida recount fight was still at full boil.

Determined not to appear too far ahead of his future boss, Powell last week declined to comment for this article.

Nevertheless, Powell demonstrated in his Dec. 8 speech a most useful skill, articulating clear statements of principle with which few could disagree, while giving not a clue to what action he would take.

After all, his key phrase "promoting innovation" could go both ways, implying either a hands-off approach to broadband regulation or a determination to block major players such as America Online from dictating which technologies succeed through their overwhelming market presence.

"People on both the left and the right see good things they want to see in him," says NBC lobbyist Robert Okun. "He makes people feel comfortable, and they project attributes they like onto him."

Keeping options open and all sides guessing until the last minute is often necessary for building support on contentious issues, and Powell has practiced that tenet since he joined the commission.

His inclination to settle the many key but narrow issues-such as cable carriage of broadcast digital TV signals-is often unclear. But there's no question that a Powell FCC would take on some big issues that have been brought to the fore by the digital revolution but so far have been considered too hot to handle.

For starters, Powell, a critic of the FCC's broad use of the "public-interest standard" to impose conditions on mergers or saddle various industries with unique programming or service obligations, almost certainly would consider relaxing the key media ownership restrictions, such as the 35% cap on national broadcast reach and bans on cross-ownership of local stations, newspapers and cable systems. He also would aggressively pursue a restructuring of the FCC and encourage the agency to step back and let the market settle concerns over programming diversity and consumer prices.

"I do not believe that the commission has justified its decision that the 35% audience reach cap ... or the cross-ownership rule[s] continue to serve the public interest," Powell said in his dissent when the FCC upheld the rules in June. "Such an analysis is critical in light of the challenges facing the broadcasting industry, especially the reality that technical advances in digital capabilities will allow more platforms to deliver video programming."

He also worries about the agency's ability to hamstring the telecommunications industry at a time when new digital services are being developed at great expense. "We should recognize that regulatory intervention necessarily directs the course of a market and may distort it by diverting capital away from certain enterprises and towards others."

Powell's deregulatory mantra has won him a lot of fans in the industry and among Capitol Hill Republicans. "He is the brightest light on the commission, the brightest mind," Tauzin told the Progress & Freedom Foundation. "He always has a logical and extraordinarily clear reason for what he says and does." Tauzin has hounded the current FCC chairman for what he sees as Kennard's pursuing a liberal activist agenda. Powell, on the other hand, could "write the script" for FCC reform, Tauzin has said.

Powell's congressional friends also include Senate Commerce Committee Chairman John McCain (R-Ariz.), who with Sen. Herb Kohl (D-Wis.)-and Powell's help-drafted legislation that would provide tax breaks to telcom companies that sell to minority owners.

Powell has been careful to avoid making any industry angry, but, as the chairman, he'll have to take the heat when agency decisions rile one side or another. "There's a big difference between saying rhetorical things as a commissioner and building consensus on controversial issues as a chairman," said one former FCC official.

Powell also may have to bite his tongue to avoid conflicts with Capitol Hill and perhaps even a new president. He has repeatedly spoken out against the temptation to regulate violent or sexual programming. But post-Columbine worries over the impact of TV violence have prompted some GOP lawmakers to call for tougher ratings or other restrictions. Bush, perhaps in his only telcom-related statement during the presidential campaign, urged a revival of the old Family Hour for TV viewing.

Powell has voiced deep reservations about free-speech constraints, but he may have to temper those remarks to keep GOP teammates on his side.

Of course, Powell's overwhelming faith in the market doesn't go over well with public advocacy groups, which managed to persuade the Kennard FCC to hold the line on industry ownership caps. They warn that accelerated industry consolidation will put the media in too few hands and will give big corporations power to dictate what content gets wide distribution.

Conceding that Powell worries about many of the access issues raised by the groups, they fear that, ultimately, their complaints will have little impact. "He would be a good chairman in the abstract 'good-government' sense," said Andrew Schwartzman, president of Media Access Project. "But I foresee a lot of decisions we would not like that were reached in a very responsible way."

Schwartzman and his allies warn that what they see as Powell's ivory-tower dedication to the market will hurt minorities' and low-income individuals' access to media jobs and service. "I am old enough to have a first-hand sense of the systematic and often irrational exclusionary practices common in telecommunications. I don't think you can eliminate the vestiges of problems without more forceful action than Commissioner Powell supports," he maintained.

Powell, however, has insisted that he is concerned about the harm posed by heavy concentration and discrimination but that most of the solutions should be in the hands of Congress or other branches of government, especially when there is great public debate. "There are only three branches of government, and we are not one of them," he told the American Bar Association in 1998.

More recently, he suggested that, rather than set merger conditions aimed at preventing hypothetical abuses, the FCC step in only when problems actually occur. For instance, he told AOL and Time Warner Chairmen Steve Case and Gerald Levin this summer that they should be hammered by the FCC if, post-merger, they hindered customers from accessing non-AOL-Time Warner Internet content.

He reiterated that view, which no doubt reflects his previous job as a Justice Department antitrust staffer, before the Progress & Freedom Foundation. His own summation of his regulatory philosophy: "We need a greater emphasis on enforcement, rather than 'by the grace of us' regulation."

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