Wsj On Michael Powell

Lynne Kiesling

Following up on Mike’s post, the Wall Street Journal opined about Powell’s legacy:

In fact, Mr. Powell has spent the past four years focused on much more substantive matters regarding the government’s role in overseeing a telecommunications sector that has never been more dynamic.

This is Mr. Powell’s proper legacy, and if he failed to reach all of his goals, some of the blame rests with a White House that never fully grasped telecom’s potential to drive economic growth. Between 1989 and 2001, labor productivity in telecom grew annually by an average of more than 3%, versus a 1.6% pace in the overall nonfarm economy. Information technology alone was responsible for nearly two-thirds of the rise in labor productivity in the late 1990s. …

Mr. Powell’s deregulatory instincts led him to make broadband development and deployment a priority. By declaring cable modem an “information service” in 2002, the FCC was able to block efforts to apply the entire telephone regulation boondoggle to new broadband technologies. Last November, the FCC accomplished a similar goal with respect to VOIP, which enables consumers to make phone calls over the Internet.

The White House ultimately abandoned Mr. Powell when he tried to update media ownership rules in response to a federal court decision that found the current regulations “arbitrary and capricious and contrary to law.” The Administration agreed with the Chairman in principle but went soft after Democrats and liberal interest groups complained that revisions might allow Rupert Murdoch to own a couple more TV stations.

Mr. Powell’s battle royale, however, surrounded his efforts to address the make-believe “competition” spawned by the 1996 Telecom Act, which forced the Baby Bells to unbundle their local phone networks and lease them to rivals at discount rates. The requirements, supported by AT&T and others that subsequently built business models around this subsidy, have depressed investment and limited consumer choice.

The FCC unbundling decision last month split the baby; it phases out some of these rules by 2006 but not all of them, so more litigation is a possibility. And the ruling itself came at least 18 months too late, thanks in part to opposition from Mr. Powell’s fellow Republican Commissioner Kevin Martin.

3 thoughts on “Wsj On Michael Powell

  1. Also, why does the wishes of the artist get so much weight? I’m no longer allowed to listen to just the fourth movement of Bethoven’s Ninth at double speed? And classical music is infamous for gluing together dissimilar music into a single piece.

  2. I can understand that making a career of attempting to “put lipstick on a pig” could be frustrating.

    I do not believe there is an effective solution to the telecommunications issues as long as the owner of the physical facilities is also one of the providers of service over the facilities. There are too many perverse incentives in play.

    Separation of ownership of the physical facilities would provide compelling incentives for the facilities company to attract as many service providers as possible to its facilities. It would also place all of the service providers in the same competitive position, especially if the currently regulated service provider was deregulated.

    The availability of competitive facilities in most areas (cable, satellite, wireless) would also argue for deregulation of the physical facilities.

    However, regulators and the legislators who enable them, seem to prefer the cosmetic approach; and, the pigs seem to like the lipstick.

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