thenewrepublic.com
....At first, Powell's deregulatory crusade was largely rhetorical, but this year he began to take action. In February, Powell, who enjoys a three-to-one majority on the FCC, announced a "proposed rulemaking" on "telephone-based broadband." According to the FCC's decision, telephone-based broadband services are "information services, with a telecommunications component, rather than telecommunications services." The distinction sounds semantic, but it has profound legal implications. According to the Telecommunications Act of 1996, telecommunications services have to grant open access to their facilities, but information services do not. By defining telephone broadband as an information service--a designation originally intended for content providers like LexisNexis--the FCC removed it from regulation, allowing the Baby Bells to ban other ISPs from transmitting over their lines.
The next month Powell struck again--getting his majority to declare that cable-based broadband was "an interstate information service" and not either a "telecommunication service" or a "cable service." Here again, by defining cable broadband as an information rather than a telecommunication service, Powell permitted cable to ban other providers from using their lines. Moreover, by defining cable as an "interstate" information service rather than a "cable service," he removed it from any local regulation over prices and service. Michael J. Copps, the sole dissenter on Powell's FCC, said of the March decision, "Make no mistake--today's decision places these services outside any viable and predictable regulatory framework." Or as Governing magazine put it, the decision means "local governments won't be able to enforce customer service standards."
Lately, as deregulation has been discredited by scandal, Powell has openly espoused the end to which deregulation was the means. In an interview last month with The Wall Street Journal, Powell admitted that he favored major (supposedly innovation-spurring) consolidations in the telecommunications industry along the same lines of those the defense industry underwent in the '90s. During the '90s the defense industry was reduced from about a dozen to three giant firms: Lockheed Martin, Raytheon, and Boeing. By that logic, the telecommunications industry would consolidate into a handful of firms based on the Baby Bells. But as Mark Cooper of the Consumer Federation of America has noted, the two industries are hardly analogous. Defense firms contract primarily with a single buyer, the U.S. government, which enjoys substantial leverage over them. They are thus intrinsically subject to government oversight. Phone and cable monopolies, by contrast, contract with millions of unorganized consumers who, in the absence of a vigilant FCC, can't exert much influence over them.
If you want an analogy for what Powell is trying to do, you have to look at the Bell system before the breakup of AT&T in 1982 or to the French telecommunication monopoly in the '90s. AT&T was broken up partly because its monopoly was stunting innovation and removing competition. Long-distance prices fell 40 percent in the decade after AT&T's breakup. Similarly, French Telecom once boasted about its Minitel network, which since 1981 provided text-based, monochrome information services. But by the mid-'90s its monopoly held back the introduction of the Internet, a far better medium for conveying information. The U.S. telecom industry could eventually suffer similar obsolescence under Powell's plans for new consolidated regional monopolies.
Indeed, U.S. failure to wire the last mile is already undermining its telecom industry in relation to competitors in South Korea and Canada. South Koreans, for instance, are currently four times more likely to have broadband than are Americans; and South Korean telecom companies are now in a position to leapfrog their American competitors in Internet technology in much the same way American telecom firms leapfrogged the once-formidable Japanese during the '90s. (This, too, was largely because the Japanese were held back by a national monopoly, NTT.) Falling behind in telecom technology won't just mean American consumers have to wait for affordable broadband service. It will mean, as Powell himself argues, that the telecom industry will likely remain in the doldrums--and perhaps keep the overall economy there with it..... |
