AIDE SEES POWELL LEADING OFF WITH OPERATIONAL CHANGES AT FCC
Look for new FCC Chmn. Powell to act fairly early in his tenure to institute measures to improve Commission’s operations, his senior adviser Peter Tenhula said Thurs. at ComNet’s annual “Town Meeting” panel moderated by attorney Richard Wiley. Asked by Wiley what regulatory initiatives Powell would undertake first, Tenhula said question was hard to answer because Powell’s first priority may be to improve agency’s operations. He said some 80% of FCC’s agenda is “reactive instead of proactive,” such as responding to petitions for rulemaking or acts of Congress, and Powell thinks agency “should be prepared to act on those quickly and efficiently.” Nearly everyone who came in to see Powell and his staff in his first week complained about “process,” such as delays in getting action or items becoming “stuck” in pipeline, Tenhula said.
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Panel focused on regulatory and legislative changes that might occur now that both Congress and FCC are in Republican hands -- and FCC reform continued to take front seat. Howard Waltzman, newly appointed communications counsel for House Commerce Committee, said Chmn. Tauzin (R-La.) was expected to look at variety of procedural reforms, targeting everything from licensing process to merger review to basic “mission of the agency.” Asked about Committee’s view on FCC’s merger review process, Waltzman said concern wasn’t just delay or duplication with Dept. of Justice. There’s 3rd component that troubles Hill, he said: FCC’s practice of requiring parties to agree to “voluntary conditions that are significant new rules.” Merger reform is “the ultimate bipartisan issue,” said attorney Lauren (Pete) Belvin, former Senate and FCC aide. FCC under former Administration had “no internal discipline,” she said. One of FCC’s challenges will be to “reorient itself to a more customer-driven model,” said Bryan Tramont, aide to Comr. Furchtgott-Roth.
Asked whether he thought Telecom Act needed to be revised, Waltzman said it was obvious that “technology has overtaken the legislation” in 5 years since Act was passed. “The biggest frustration is how the Act was implemented during the Clinton Administration,” he said, in answer to another question about slow progress in Sec. 271 approvals. Unless there are changes in FCC’s interpretation of Act, legislative changes may be needed, Waltzman said. Tenhula said he expected to see more Sec. 271 applications soon and faster action now that there’s some “precedent, road maps.” He said incentive-based approach, rather than “stick approach,” was “probably wise.” However, he said he wasn’t sure after 5 years whether “carrot” of long distance entry still was “young enough” to encourage Bells to open their markets to competition.
Asked about lack of “parity” in competitive access rules for cable and telecom, Tramont said it would be wrong to put telecom model on cable because “logical next step” might be to move that regulation to wireless service as well. “I'd rather go the other way,” adopting less regulatory wireless treatment for cable and wireline, he said. “I like parity but I'd like to see it go in a deregulatory direction.” In answer to audience question about public interest benefit of merger conditions, Tramont said if there were service quality problem it should be treated with rules that applied to all parties and not just to 2 companies that happened to be merging.
In keynote speech, Verizon Wireless CEO Dennis Strigl praised FCC’s delaying 700 MHz auction to Sept. 12 and reiterated calls for agency to lift what it said were “artificial” constraints on market for wireless spectrum such as set-asides for small business and spectrum cap. “Let’s not speculate with spectrum,” he said. “We need a policy for radio frequency spectrum that leaves nothing to chance.” Citing spectrum “constraints” such as set-asides, he said: “When spectrum is awarded on a competitive basis, it ensures it’s in the hands of who values it most.” Verizon Wireless was largest bidder in just- completed C- and F-block PCS auction, which raised nearly $17 billion, of which Verizon bid $8.8 billion. It was only major carrier in auction that didn’t align itself with designated entity, making all its bids as standalone company. While declining to comment on company’s bidding strategy, he told reporters after speech: “We were quite successful in the auctions just held. I'm comfortable with the outcome.” While praising FCC Wireless Bureau’s delay of 700 MHz auction, which Verizon Wireless had requested, Strigl said he was “concerned” about extent to which those airwaves were encumbered by analog broadcasters. “This will have a significant impact on the value of the spectrum,” he said, noting agency essentially had dropped out of negotiations for freeing spectrum. “I can’t tell you this spectrum has a high value.”
One positive factor about 700 MHz bandwidth is that it’s exempt from FCC’s spectrum cap of 45 MHz for most markets, Strigl said. While he declined to comment on PCS auction, he said such airwaves were “better spectrum for mobility, better for CMRS use.” He told reporters one reason that 1900 MHz was better suited for mobility was that equipment and infrastructure already had been designed for that spectrum.
Separately, Strigl said Verizon Wireless still planned to take part of company public “later this year,” although he didn’t offer details as to when or under what market conditions. In Oct., Verizon and Vodafone said they were deferring planned IPO for wireless venture because of depressed capital markets. Verizon had filed SEC registration statement for $5 billion IPO last Aug., although actual amount had been widely expect to range much higher.