FCC's Powell Stands Up to Verizon Threat
By Steven Pearlstein
Friday, July 9, 2004; Page E01
It's time to play the Great Washington Lobbying Game, in which
contestants can win or lose billions of dollars for their companies
and shareholders. Here's today's final bonus question:
You represent a telecom giant with frequent business before the
Federal Communications Commission. The commission has regularly
favored your company, most recently by eliminating an onerous
regulation limiting how much you can charge competitors to hook into
your heretofore monopoly phone network. Now, after more than two
years of study, the commission is days away from approving a spectrum
swap designed to solve a serious problem that police and fire
departments have with interference with their radio frequencies.
Unfortunately, this deal also involves giving one of your
competitors, Nextel, a sweet deal on a prime piece of radio spectrum.
Do you:
1: Make one last, quiet approach to the commission to persuade it to
force Nextel to pay a higher price or settle for a less choice bit of
spectrum;
2: Begin exploring a way for your company to make a spectrum swap on
similar terms; or
3: Write a threatening public letter to the commissioners saying they
will face criminal prosecution if they approve the Nextel deal?
If you answered "3," threaten criminal prosecution, you might want to
consider a line of work other than government relations. Or you might
send your résumé to former attorney general William Barr, Verizon's
general counsel, who did just that in a letter last week that had
commission officials and members of Washington's communication bar
shaking their heads.
"In my view, this is pretty high-risk poker to play with the
commission," said Joe Markoski, a partner at Squire, Sanders &
Dempsey, who has been practicing before the FCC for 30 years. "I've
never seen anything like it."
It's fair to say that yesterday's 5 to 0 vote from the often
fractious commission approving the Nextel deal was nothing less than
a rebuke for Verizon. And it was delivered by none other than
Chairman Michael Powell, normally a Verizon ally, who took the
unusual step of departing from his prepared text to characterize
Verizon's lobbying as the most ruthless he has encountered in nearly
seven years on the commission.
As for the threat that the commissioners might go to jail for
violations of the Civil War-era Anti-Deficiency Act, Powell was
undeterred, saying the risks paled "in comparison to the risks that
our first-responders face each and every day."
It was Powell's finest moment as FCC chairman. In last-minute
negotiations that dragged into the early hours of Thursday morning,
Powell demonstrated a mixture of flexibility and determination that
has often been missing from his leadership style. And in his comments
to a hearing room crowded with $600-an-hour lawyers, he was unusually
eloquent in his plea for people to put aside the normal pursuit of
commercial advantage in favor of enhancing public safety.
Under the deal, Nextel will get its new spectrum, but not without
paying at least $3 billion, more than it had previously offered and
anticipated. And to put to rest the legal objections raised so ham-
handedly in Barr's letter, nothing will happen until the comptroller
general gives the deal his blessing.
But none of that was good enough for Verizon, which will accept
nothing less than total victory. Its lobbyists were already plotting
with congressional allies to try to overturn the commission decision,
even as Barr prepares the inevitable legal challenge that will be
pursued to the Supreme Court, if necessary. A Verizon spokesman even
went so far yesterday as to liken the FCC's decision to the arms-for-
cash swap at the heart of the Iran-contra scandal.
As one old FCC hand told me this week, there is a steep price to pay
at some point for practicing such political thuggery. Yesterday's 5
to 0 vote suggests that Verizon's day of reckoning may not be far
off.
Steven Pearlstein can be reached at pearlsteins@w.... |
