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Subject: Lord of the Ringtones: Arbocks vs. Seelecks
From: Rohit Khare <khare@alumni.caltech.edu>
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I can't believe I actually read a laugh-out-loud funny profile of the 
*FCC Commissioner* fer crissakes! So the following article comes 
recommended, a fine explanation of Michael Powell's extraordinary 
equivocation.

On the other hand, I can also agree with Werbach's Werblog entry... Rohit

> A Trip to F.C.C. World
>
> Nicholas Lemann has a piece in the New Yorker this week about FCC 
> Chairman Michael Powell.  It's one of the first articles I've seen that 
> captures some of Powell's real personality, and the way he's viewed in 
> Washington.  Unfortunately, Lemann ends by endorsing conventional 
> political wisdom.  After describing how Powell isn't really a 
> fire-breathing ideological conservative, he concludes that, in essence, 
> Powell favors the inumbent local Bell telephone companies, while a 
> Democratic FCC would favor new entrants.  I know that's not how Powell 
> sees the world, and though I disagree with him on many issues, I think 
> he's right to resist the old dichotomy.
>
> The telecom collapse should be a humbling experience for anyone who 
> went through it.  The disaster wasn't the regulators' fault, as some 
> conservatives argue.  But something clearly went horribly wrong, and 
> policy-makers should learn from that experience.  Contrary to Lemann's 
> speculation, the upstart carriers won't be successful in a Gore 
> administration, because it's too late.  Virtually all of them are dead, 
> and Wall Street has turned off the capital tap for the foreseeable 
> future.  Some may survive, but as small players rather than 
> world-dominators. 
>
> The battle between CLECs and RBOCs that Lemann so astutely parodies is 
> old news.  The next important battle in telecom will be between those 
> who want to stay within the traditional boxes, and those who use 
> different models entirely.  That's why open broadband networks and open 
> spectrum are so important.  Whatever the regulatory environment, there 
> is going to be consolidation in telecom.  Those left out in that 
> consolidation will face increasing pressure to create new pipes into 
> the home, or slowly die. The victors in the consolidation game will cut 
> back on innovation and raise prices, which will create further pressure 
> for alternatives. 
>
> Lemann is right that policy-making looks much drier and more ambiguous 
> on the ground than through the lens of history.  But he's wrong in 
> thinking that telecom's future will be something like its past.
>
> Friday, October 04, 2002
> 11:17:11 AM  comments {0} 

==============================================================
http://www.newyorker.com/printable/?fact/021007fa_fact

THE CHAIRMAN	
by NICHOLAS LEMANN
He's the other Powell, and no one is sure what he's up to.
New Yorker, October 8, 2002

Last year, my middle son, in eighth grade and encountering his first 
fairly serious American-history course, indignantly reported that the 
whole subject was incomprehensible. I was shocked. What about Gettysburg 
and the Declaration of Independence and the Selma-to-Montgomery march? 
Just look at my textbook, he said, and when I did I saw his point. His 
class had got up to the eighteen-forties. What I expected was a big 
beefing up of the roles of Sacagawea and Crispus Attucks, and, in-deed, 
there was some of that. But the main difference between my son's text 
and that of my own childhood was that somebody had made the disastrous 
decision to devote most of it to what had actually happened in American 
history. There were pages and pages on tariffs and bank charters and 
reciprocal trade agreements. I skipped ahead, past the Civil War, hoping 
for easier going, only to encounter currency floats and the regulation 
of freight rates. Only a few decades into the twentieth century did it 
become possible to see the federal government's main function as 
responding to dramatic crises and launching crusades for social justice, 
instead of attempting to referee competing claims from economic 
interests.

Even now, if one were to reveal what really goes on behind the pretty 
speeches and the sanctimonious hearings in Washington, what you'd find 
is thousands of lawyers and lobbyists madly vying for advantage, not so 
much over the public as over each other: agribusiness versus real 
estate, banks versus insurance companies, and so on. The arena in which 
this competition mainly takes place is regulatory agencies and 
commissions and the congressional committees that supervise them. It's 
an insider's game, less because the players are secretive than because 
the public and the press—encouraged by the players, who speak in jargon—
can't get themselves interested.

One corner of Washington might be called F.C.C. World, for the Federal 
Communications Commission. F.C.C. World has perhaps five thousand 
denizens. They work at the commission itself, at the House and Senate 
commerce committees, and at the Washington offices of the companies that 
the commission regulates. They read Communications Daily (subscription 
price: $3,695 a year), and every year around Christmastime they 
grumblingly attend the Chairman's Dinner, at a Washington hotel, where 
the high point of the evening is a scripted, supposedly self-deprecating 
comedy routine by the commission's chairman.

Of all the federal agencies and commissions, the F.C.C. is the one that 
Americans ought to be most interested in; after all, it is involved with 
a business sector that accounts for about fifteen per cent of the 
American economy, as well as important aspects of daily life—telephone 
and television and radio and newspapers and the Internet. And right now 
F.C.C. World is in, if not a crisis, at least a very soapy lather, 
because a good portion of what the angry public thinks of as the 
"corporate scandals" concerns the economic collapse of companies 
regulated by the F.C.C. Qwest, WorldCom, Adelphia, and Global Crossing, 
among others, are (or were) part of F.C.C. World. AOL Time Warner is 
part of F.C.C. World. Jack Grubman, the former Salomon Smith Barney 
analyst who seems to have succeeded Kenneth Lay, of Enron, as the 
embodiment of the corporate scandals, is part of F.C.C. World. In the 
past two years, companies belonging to F.C.C. World have lost trillions 
of dollars in stock-market valuation, and have collectively served as a 
dead weight pulling down the entire stock market.

This year, an alarmed and acerbic anonymous memorandum about the state 
of the F.C.C. has been circulating widely within F.C.C. World. It evokes 
F.C.C. World's feverish mood ("The F.C.C. is fiddling while Rome burns") 
and suggests why nobody besides residents of F.C.C. World has thought of 
the commission in connection with the corporate scandals. The sentence I 
just quoted is followed by this explanation: "The ILECs appear likely to 
enter all l.d. markets within twelve months, while losing virtually no 
residential customers to attackers since 1996, and suffering about 10% 
market share loss in business lines to CLECs." It's a lot easier to 
think about evil C.E.O.s than to decipher that.


Even in good times, F.C.C. World pays obsessive attention to the 
commission's chairman. In bad times, the attention becomes especially 
intense; and when the chairman is a celebrity F.C.C. World devotes 
itself to full-time chairman-watching. The current chairman, Michael 
Powell, is a celebrity, at least by government-official standards, 
because he is the only son of Colin Powell, the Secretary of State. 
Unlike his father, he has a kind of mesmerizing ambiguity, which 
generates enormous, and at times apoplectically toned, speculation about 
who he really is and what he's really up to. Powell is young to be the 
head of a federal agency—he is thirty-nine—and genially charming. 
Everybody likes him. Before becoming chairman, he was for three years 
one of the F.C.C.'s five commissioners; not only is he fluent in the 
F.C.C.'s incomprehensible patois, he has a Clintonesque love of the 
arcane details of communications policy. He's always saying that he's an 
"avid moderate." And yet he has a rage-inciting quality. One of his 
predecessors as chairman, Reed Hundt, quoted in Forbes, compared Powell 
to Herbert Hoover. Mark Cooper, of the Consumer Federation of America, 
calls him "radical and extreme." Just as often as he's accused of being 
a right-wing ideologue, Powell gets accused of being paralytically 
cautious. "It ain't about singing 'Kum-Ba-Yah' around the campfire," 
another former chairman, William Kennard, says. "You have to have an 
answer." One day last spring, Powell, testifying before a Senate 
subcommittee, delivered an anodyne opening statement, and the 
subcommittee's chairman, Ernest Hollings, of South Carolina, berated 
him. "You don't care about these regulations," Hollings said. "You don't 
care about the law or what Congress sets down. . . . That's the 
fundamental. That's the misgiving I have of your administration over 
there. It just is amazing to me. You just pell-mell down the road and 
seem to not care at all. I think you'd be a wonderful executive 
vice-president of a chamber of commerce, but not a chairman of a 
regulatory commission at the government level. Are you happy in your 
job?"

"Extremely," Powell said, with an amiable smile.


One cannot understand Powell's maddening effect, at least on Democrats 
and liberal activists, without understanding not just the stated purpose 
of the commission he chairs but also its real purpose. The F.C.C. was 
created by Congress in 1934, but it existed in prototype well before the 
New Deal, because it performs a function that is one of the classic easy 
cases for government intervention in the private economy: making sure 
that broadcasters stick to their assigned spots on the airwaves. Its 
other original function was preventing American Telephone & Telegraph, 
the national monopoly phone company, from treating its customers 
unfairly. Over the decades, as F.C.C. World grew up into a comfortable, 
well-established place, the F.C.C. segued into the role of industrial 
supervision—its real purpose. It was supposed to manage the competition 
among communications companies so that it didn't become too bloody, by 
artfully deciding who would be allowed to enter what line of business. 
In addition to looking out for the public's interest, the commission 
more specifically protected the interests of members of Congress, many 
of whom regard the media companies in their districts as the single most 
terrifying category of interest group—you can cross the local bank 
president and live to tell the tale, but not the local broadcaster. 
According to an oft-told F.C.C. World anecdote, President Clinton once 
blocked an attempt to allow television stations to buy daily newspapers 
in the same city because, he said, if the so-and-so who owned the 
anti-Clinton Little Rock Democrat-Gazette had owned the leading TV 
station in Little Rock, too, Clinton would never have become President.


F.C.C. World may have been con tentious, but it was settled, too, 
because all the reasonably powerful players had created secure economic 
niches for themselves. Then, in the nineteen-eighties, the successful 
breakup of A.T. & T.—by far the biggest and most important company the 
commission regulated—deposited a thick additional sediment of 
self-confidence onto the consciousness of F.C.C. World. A generation 
ago, for most Americans, there was one local phone company, one 
long-distance company, and one company that manufactured telephones, 
which customers were not permitted to own—and they were all the same 
company. It was illegal to plug any device into a phone line. By the 
mid-nineteen-nineties, there were a dozen economically viable local 
phone companies, a handful of national long-distance companies competing 
to offer customers the lowest price and best service, and stores 
everywhere selling telephone equipment from many manufacturers—and 
millions of Americans had a fax machine and a modem operating over the 
telephone lines. A.T. & T. had argued for years that it was a "natural 
monopoly," requiring protection from economic competition and total 
control over its lines. So much for that argument. Over the same period, 
the F.C.C. had assisted in the birth of cable television and cell phones 
and the Internet. It was the dream of federal-agency success come true: 
consumers vastly better served, and the industry much bigger and more 
prosperous, too.

The next big step was supposed to be the Telecommunications Act of 1996, 
one of those massive, endlessly lobbied-over pieces of legislation which 
most people outside F.C.C. World probably felt it was safe to ignore. 
Although the Telecom Act sailed under the rhetorical banner of 
modernization and deregulation, its essence was a grand interest-group 
bargain, in which the local phone companies, known to headline writers 
as "baby Bells" and to F.C.C. World as "arbocks" (the pronounced version 
of RBOCs, or regional Bell operating companies), would be permitted to 
offer long-distance service in exchange for letting the long-distance 
companies and smaller new phone companies use their lines to compete for 
customers. Consumers would win, because for the first time they would 
get the benefits of competition in local service while getting even more 
competition than they already had in long distance. But the politics and 
economics of the Telecom Act (which was shepherded through Congress by 
Vice-President Gore) were just as important. Democrats saw the act as 
helping to reposition them as the technology party—the party that 
brought the Internet into every home, created hundreds of thousands of 
jobs in new companies, and, not least, set off an investment boom whose 
beneficiaries might become the party's new contributor base. Clinton's 
slogans about the "information superhighway" and "building a bridge to 
the twenty-first century," which, like all Clinton slogans, artfully 
sent different messages to different constituencies, were the rhetorical 
correlates of the Telecom Act, and Gore's cruise to the Presidency was 
supposed to be powered substantially by the act's success.

The F.C.C. had a crucial role in all this. The arbocks are rich, 
aggressive, politically powerful, and generally Republican (though like 
all important interest groups they work with both parties); they 
immediately filed lawsuits, which wound up tying the hands of their new 
competitors in the local phone market for more than three years. Through 
rule-making, enforcement, and litigation, the F.C.C., then headed by 
Reed Hundt, who was Gore's classmate at St. Albans, was supposed to keep 
the arbocks in their cages, so that not only long-distance companies 
like A.T. & T. and MCI WorldCom but also a whole category of new 
companies, "see-lecks" (the pronounced version of CLECs, or competitive 
local exchange carriers), could emerge. This entailed the regulatory 
equivalent of hand-to-hand combat: the see-leck is supposed to have 
access to the arbock's switching equipment, the arbock won't give the 
seeleck a key to the room where it's kept, so the see-leck asks the 
F.C.C. to rule that the arbock has to give it the key.

Partly because Hundt assured the see-lecks and other new companies that 
he would protect them, and partly because of the generally booming 
condition of the economy then, investment capital flooded into the 
see-lecks—companies with names like Winstar, Covad, and Teligent—and 
into other telecommunications companies. Even not obviously related 
technology companies like Cisco Systems benefitted from the telecom 
boom: demand for their products was supposed to come from the see-lecks 
and other new players. There would be no conflict between the interests 
of the new telecom companies and those of consumers; as one of Hundt's 
former lieutenants told me, "Reed used to joke that my job was to make 
sure that all prices went down and all stocks went up."


The years following the passage of the Telecom Act were the peak of the 
boom. Wall Street had its blood up, and that meant not just more 
startups but also more mergers of existing communications companies: 
Time Warner and AOL decided to throw in together, and A.T. & T. and 
Comcast, and so on. (Surely, WorldCom and the other telecom bad guys 
believed that their self-dealing, stock-overselling, and creative 
accounting would go unnoticed because the market was so 
undiscriminating.)

By the time the outcome of the 2000 Presidential election had been 
determined, the telecom crash was well under way. Nonetheless, the 
chairmanship of the F.C.C. remained one of the best jobs, in terms of 
influence and visibility, available to a career government regulator. 
Three Republicans emerged as candidates: Powell, who was a commissioner; 
Harold Furchtgott-Roth, the farthest-to-the-right commissioner; and 
Patrick Wood, the head of the Texas Public Utility Commission and, as 
such, a George W. Bush guy. In Texas, however, Wood had crossed the most 
powerful person in the arbock camp, Edward Whitacre, the C.E.O. of 
S.B.C. Communications, which is headquartered in San Antonio. This meant 
that the arbocks didn't want Wood as head of the F.C.C., because he 
might be too pro-see-leck. (Wood is now the head of the Federal Energy 
Regulatory Commission.) Michael Powell had to signal the arbocks that he 
wasn't as threatening as Wood, while also signalling the conservative 
movement that he was only negligibly farther to the left than 
Furchtgott-Roth.

Powell did this deftly. For example, in December of 2000 he appeared 
before a conservative group called the Progress & Freedom Foundation and 
gave a very Michael Powell speech—whimsical, intellectual, and 
free-associative (Biblical history, Joseph Schumpeter, Moore's Law)—that 
began by making fun of the idea that the F.C.C. should try to keep new 
telecom companies alive. "In the wake of the 1996 Act, the F.C.C. is 
often cast as the Grinch who stole Christmas," Powell said. "Like the 
Whos, down in Who-ville, who feast on Who-pudding and rare Who-roast 
beast, the communications industry was preparing to feast on the 
deregulatory fruits it believed would inevitably sprout from the Act's 
fertile soil. But this feast the F.C.C. Grinch did not like in the 
least, so it is thought." Thus Powell was indicating that if he became 
chairman he didn't expect to administer first aid to the see-lecks as 
part of the job. He was appointed to the chairmanship on the first day 
of the Bush Administration.

Twenty months into the Administration, nearly all the see-lecks are dead 
or dying; nearly all long-distance companies, not just WorldCom, are in 
serious trouble; cable companies have lost half their value; satellite 
companies are staggering. The crash has had an automatically 
concentrating effect, because as new companies die the existing 
companies' market share increases, and, if the existing companies are in 
good shape financially, they have the opportunity to pick up damaged 
companies at bargain prices. During the Bush Administration, as the 
financial carnage in communications has worsened, the communications 
industry has moved in the direction of more concentration. If the Bells 
wind up protecting their regional monopolies in local phone service, and 
if they also merge, the country will be on its way to having a national 
duopoly in local service: Verizon, in the East, and S.B.C., in the West. 
And these companies could dominate long distance as well, because of the 
poor health of the long-distance companies.

The cable business also seems close to having two dominant national 
companies, AOL Time Warner and Comcast. Unlike the phone companies, they 
don't have to share their wiring with other companies and so can more 
fully control what material they allow to enter people's homes. As part 
of the complicated bargaining with interest groups that led to the 1996 
Telecom Act, the limits on concentration in the radio industry were 
significantly loosened, and in the past six years the number of 
radio-station owners in the United States has been cut by twenty-five 
per cent; today, a large portion of local and national radio news 
programming is supplied by a single company, Westwood One, a subsidiary 
of Viacom.

In this situation, many Democrats and liberals think, the F.C.C. should 
be hyperactive—the superhero of government regulation, springing to the 
rescue of both consumers and the communications industry. It should try 
to breathe life into the see-lecks and other new companies. It should 
disallow mergers, maintain ownership limits, and otherwise restrain the 
forces of concentration. It should use the government's money and muscle 
to get new technology—especially fast Internet connections—into the 
homes of people who can't afford it at current market prices. (An 
analogy that a lot of people in F.C.C. World make is between telecom and 
the Middle East: the Clinton people blame the bloodshed on the Bush 
people, because they disengaged when they came into office, and the Bush 
people blame it on the Clinton people, because they raised too many 
expectations and stirred too many passions.)

But Michael Powell's F.C.C. has not been hyperactive. Powell has been 
conducting internal policy reviews and reforming the management of the 
F.C.C. and waiting for the federal courts and the Congress to send him 
signals. (In mid-September, Powell finally initiated a formal review of 
the F.C.C.'s limits on media concentration.) This doesn't mean he has 
been inactive; rather, he has been active in a way that further 
infuriates his critics—in a manner that smoothly blends the genial and 
the provocative, he muses about whether the fundamental premises of 
F.C.C. World really make sense, while giving the impression that he's 
having the time of his life as chairman. At his first press conference, 
when he was asked what he was going to do about the "digital 
divide"—that is, economic inequality in access to the Internet—he said, 
"You know, I think there is a Mercedes divide. I'd like to have one and 
I can't afford one." At the National Cable & Telecommunications 
Association convention, in Chicago, Powell, following a troupe of 
tumblers to the stage, interrupted his walk to the podium to perform a 
somersault.


Not long ago, I went to see Powell in his office at the F.C.C. Until 
1998, when the commission moved to a new building in Southwest 
Washington, near the city's open-air fish market, F.C.C. World was at 
the western edge of downtown, where everybody would encounter everybody 
else at a few familiar restaurants and bars. Today, the F.C.C. building 
looks like the office of a mortgage company in a suburban office park. 
Even the chairman's suite, though large, is beige, carpeted, and 
fluorescent. Powell is a bulky man who wears gold-rimmed glasses and 
walks with a pronounced limp, the result of injuries he suffered in a 
jeep accident in Germany, in 1987, when he was an Army officer. Because 
of the accident, he left the Army and went to law school, where he 
became entranced with conservative ideas about regulation, particularly 
the idea that the government, rather than trying to correct the flaws of 
the market before the fact—"prophylactically," as he likes to say—should 
wait till the flaws manifest themselves and then use antitrust 
litigation to fix them. He worked briefly at a corporate law firm, and 
then became a protégé of Joel Klein, the head of the antitrust division 
of the Clinton Justice Department and the man who led the government's 
legal case against Microsoft. (He was recently appointed chancellor of 
the New York public-school system.) It testifies to Powell's political 
skill that he is probably the only high official in the Bush 
Administration who not only served in the Clinton Administration but 
also maintains close ties to Bush's nemesis Senator John McCain, of 
Arizona. One of the things about Powell that annoy people is his 
enduring love of law school—"It's sort of like a law-school study 
session over there," one Democratic former commissioner said. As if to 
confirm the charge, Powell, when I arrived, introduced me to four law 
students, summer interns at the commission, whom he'd invited to sit in.

I began by asking Powell whether he agreed with the founding assumptions 
of the F.C.C. For example, could private companies have apportioned the 
airwaves among themselves without the government being involved?

"I think we'll never know," Powell said. "I don't think it's an 
automatically bad idea, the way some people will argue. Land is probably 
the best analogue. We don't seize all the land in the United States and 
say, 'The government will issue licenses to use land.' If my neighbor 
puts a fence one foot onto my property line, there's a whole body of law 
about what I can do about that, including whether I can tear it down. If 
a wireless company was interfering with another wireless company, it's a 
similar proposition. There are scholars who argue—indeed, the famous 
Ronald Coase treatise that won the Nobel Prize was about this—that 
spectrum policy is lunacy. The market could work this out, in the kinds 
of ways that we're accustomed to."

Talking to Powell was fun. Unlike most high government officials, he 
doesn't seem to be invested in appearing dignified or commanding. He 
slumps in his chair and fiddles with his tie and riffs. He speaks in 
ironic air quotes. He's like your libertarian friend in college who 
enjoyed staying up all night asking impertinent rhetorical questions 
about aspects of life that everybody else takes for granted but that he 
sees as sentimental or illogical. After a while, I asked him whether he 
thought his predecessors' excitement about the 1996 Telecommunications 
Act had been excessive.

"I would start with a caveat," Powell said. "Look, I can't fault those 
judgments in and of themselves, given the time and what people thought. 
They were not the only ones who were hysterical about the opportunities. 
But, frankly, I've always been a little bit critical. First of all, 
anybody who works with the act knows that it doesn't come anywhere close 
to matching the hyperbole that was associated with it, by the President 
on down, about the kinds of things it's going to open up. I mean, I 
don't know what provisions are the information-superhighway provisions, 
or what provisions are so digitally oriented, or some of the things that 
were a big part of the theatre of its introduction. When one starts 
reading the details, one searches, often in vain, for these provisions. 
But, nonetheless, there was a rising dot-com excitement, and an Internet 
excitement, and people thought this was historic legislation, and it 
certainly was.

"But. We were sucking helium out of balloons, with the kinds of 
expectations that were being bandied around, and this is before the 
economy or the market even gets in trouble. It was a dramatically 
exaggerated expectation—by the leadership of the commission, by 
politicians, by the market itself, by companies themselves. It was a 
gold rush, and led to some very detrimental business decisions, ones 
that government encouraged by its policies, frankly. Everybody wanted to 
see numbers go up on the board."

Powell began imitating an imagined true believer in the Telecom Act. " 
'I want to see ten competitors. Twenty competitors! I want to see 
thirty-per-cent market share. Fifty-per-cent market share! I want the 
Bells to bleed! Then we'll know we've succeeded.' " Now Powell returned 
to being Powell. "I think that expectation was astonishingly 
unrealistic, in the short term. They wanted to see it while they're 
there. We were starting to get drunk on the juice we were drinking. And 
the market was getting drunk on the juice we were drinking. There's no 
question, we went too soon too fast. Too many companies took on too much 
debt too fast before the market really had a product, or a business 
model."

How could the Telecom Act have been handled better? "We could have 
chosen policies that were less hellbent on a single objective, and were 
slightly more balanced and put more economic discipline in the system," 
Powell said. "Money chased what seemed like government-promised 
opportunity. The problem with that is there's a morning after, and we're 
in it. And the problem is there is no short fix for this problem. This 
debt is going to take years to bring down to a realistic level. In some 
ways, for short-term gain, we paid a price in long-term stability."

Powell went on to say that it might have turned out differently if there 
had been a more "reasonable" level of investment. "No, we wouldn't have 
every home in America with competitive choice yet—but we don't anyway. I 
don't think it's the remonopolization of telephone service. I don't buy 
that. The Bells will prosper, but did anybody believe they wouldn't? The 
part of the story that didn't materialize was that people thought so 
would MCI WorldCom and Sprint."

Other local phone companies, he added, hadn't materialized as viable 
businesses, either, and they never might. "Everybody's always saying, 
'The regulators did this and this and this.' But, candidly, the story's 
quite the opposite. I think the regulators bent over backward for six 
years to give them a chance. Conditions don't get that good except once 
every thirty years, and it didn't happen. So, whatever the reason, we're 
looking at a WorldCom that's teetering. We're looking at a long-distance 
business that has had a rapid decline in its revenue base. A.T. & T. is 
breaking itself up. Sprint has struggled."

Could the F.C.C. have done anything to make the long-distance companies 
stronger? "At the F.C.C.? I think I'll just be blunt. My political 
answer? Yes, there's all kinds of things we can do at the margin to try 
to help. But I can't find thirty billion dollars for WorldCom somewhere. 
I can't mitigate the impacts of an accounting scandal and an S.E.C. 
investigation. Were I king, it would be wonderful, but I don't have 
those kinds of levers. I don't know whether anybody does. At some point, 
companies are expected to run themselves in a way that keeps them from 
dying." Powell couldn't have made it much clearer that he doesn't think 
it's his responsibility to do anything about the telecom crash. He has 
demonstrated his sure political touch by making accommodationist 
gestures—in August, for example, five months after disbanding the 
F.C.C.'s Accounting Safeguards Division, Powell announced that he was 
appointing a committee to study accounting standards in the 
communications industry. But that shows that Powell is better at riding 
out the storm than, say, Harvey Pitt, his counterpart at the Securities 
and Exchange Commission, and does not mean that he plans to try to shore 
up the telecom industry.

I asked Powell if it would bother him if, for most people, only one 
company provided cable television and only one provided local phone 
service. "Yes," he said. "It concerns us that there's one of each of 
those things, but let's not diminish the importance of there being one 
of each of those things. That still is a nice suite of communications 
capabilities, even if they aren't direct analogues of each other." 
Anyway, Powell said, before long the phone companies will be able to 
provide video service over their lines, and the cable companies will 
provide data service over their lines, so there will be more choice. 
"So, yeah, we have this anxiety: we have one of everything. The question 
is, Does it stay that way?"

The concentration of ownership and the concentrated control of 
information did not appear to trouble Powell, either. He said that 
people confuse bigness, which brings many benefits, with concentration, 
which distorts markets. "If this were just economics, it's easy. If you 
were to say to me, 'Mike, just worry about economic concentration,' we 
know how to do that—the econometrics of antitrust. I can tell you when a 
market's too concentrated and prices are going to rise. The problem is 
other dimensions, like political, ideological, sometimes emotional. Take 
the question of, if everybody's controlling what you see, the assumption 
there is that somehow there'll be this viewpoint, a monolithic 
viewpoint, pushed on you by your media and you won't get diversity. I 
think that's a possibility. I don't think it's nearly the possibility 
that's ascribed to it sometimes."

Powell explained, "Sometimes when we see very pointed political or 
parochial programming, it gets attacked as unfair. I see some of the 
same people who claim they want diversity go crazy when Rush Limbaugh 
exists. They love diversity, but somehow we should run Howard Stern off 
the planet. If it has a point of view, then it becomes accused of bias, 
and then we have policies like"—here his tone went from ironic to 
sarcastic—"the fairness doctrine, which seems to me like the antithesis 
of what I thought those people cared about. So when somebody is pointed 
and opinionated, we do all this stuff in the name of journalistic 
fairness and integrity or whatever, to make them balance it out."


F.C.C. World abounds in theories about Michael Powell. One is that he 
can't make up his mind about how to address the crisis in the industries 
he regulates—so he talks (and talks and talks) flamboyantly about the 
market, in order to buy himself time. Another is that he's carrying 
water for the arbocks and the big cable companies. Another is that he is 
planning to run for the Senate from Virginia (or to be appointed 
Attorney General in a second Bush term), and doesn't want to do anything 
at the F.C.C. that would diminish his chances. Another is that he's 
waiting to move until there is more consensus on some course of action, 
so that he doesn't wind up going first and getting caught in the 
crossfire between the arbocks and the cable companies and the television 
networks. (In F.C.C. World, this is known as the Powell Doctrine of 
Telecom, after Colin Powell's idea that the United States should never 
commit itself militarily without a clear objective, overwhelming force, 
and an exit strategy.) And another is that he actually believes what he 
says, and thinks the telecommunications crash is natural, healthy, and 
irreversible, and more concentration would be just fine.

"This is why elections matter," Reed Hundt, who isn't happy about what 
has become of his Telecom Act, told me. It's true that the F.C.C.—much 
more than, say, the war in Afghanistan—is a case in which a Gore 
Administration would be acting quite differently from the Bush 
Administration. Consumers might have noticed the difference by now, but 
there's no question whether communications companies have noticed. The 
arbocks are doing better against their internal rivals than they would 
have done if Gore had won. Next election, they'll help the party that 
helped them. If the Republicans win, policy will tilt further in the 
arbocks' favor. If they lose, perhaps the arbocks' rivals—the 
long-distance companies and the telecommunications upstarts—with their 
friends now in power, will stage a comeback. America's present is not 
unrecognizably different from America's past.


