Regulatory relief as economic tonic?

Federal Communications Commission Chairman Michael Powell made his first appearance before Congress in his new role Thursday on Capitol Hill. He was there to share with the House Commerce Telecommunications Subcommittee his plans for FCC reform.

Those plans, more of an outline at this point, were received warmly by Republicans and Democrats. But subcommittee chairman Fred Upton, R-Mich., had a more urgent message for Powell.

High-tech companies are continuing to announce layoffs and "this trend must change," Upton said.

"I think part of the formula will be reforming the FCC and lifting regulatory obstacles on the technology industry," he said.

The ranking Democrat on the subcommittee, Ed Markey of Massachusetts, echoed that sentiment.

"Millions of people and thousands of companies hang on your every word and what the (FCC) decides," he said to a packed hearing room that extended to a hallway filled with lobbyists.

Some members proposed specific steps that could be taken to boost the economy. The chairman and ranking Democrat of the full committee, Billy Tauzin of Louisiana and John Dingell of Michigan, pushed a bill from the last Congress they likely will reintroduce next week that would allow Bell companies to transport data long-distance, in theory to ease their ability to offer DSL services to remote areas.

Additionally, Markey plugged his pet issue of removing telecommunications subsidies.

Powell was courteous in accepting input from these and other members. But he made no promises, instead sticking to his message that the FCC will be reformed internally into an agency that will move fast and exercise regulatory restraint.

Working with Congress
Both of Powell's immediate predecessors, William Kennard and Reed Hundt, had frosty relations with Congress. Powell, by contrast, has had a series of meetings with key congressmen since assuming the top FCC post, and several members expressed their appreciation for his outreach.

"Michael Powell is well-qualified to serve as chairman," Tauzin said, in part because "he spent more than three years as a commissioner watching how not to run the FCC."

Tauzin, Upton, Dingell and others, including a past sponsor of FCC reform legislation in Chip Pickering, R-Miss., told Powell that they looked forward to working with him on agency reform.

But in his testimony Powell suggested he had his own vision for Congress' role. He said an internal review under way now would identify reforms that could be done immediately and others that would be long-term efforts. The goal would be to create consistency in regulation across markets, a flatter staff structure and a consolidation of support roles.

"Congress will have a critical role in this," he said. "Some of it will require legislation."

That is particularly true in creating level regulatory fields for competing industries, which are regulated under separate statutes. For example, DSL is regulated under different rules than cable modem service because the former travels on a copper phone line while the latter uses a coaxial cable owned by a video provider.

For example, Powell said, "We are at a loss to describe AT&T," a company that offers phone service, video service and cable modem service over one pipe.

Powell and the subcommittee seemed in agreement that if these converged industries had shared regulations, or when possible shared freedom from regulations, that competition would flourish and the economy would benefit as a result.

Powell made it clear, however, that opening up markets for more competition and new technologies did not mean he would try to save companies or industries that found themselves in jeopardy.

"I expect there will be market failures," he said.

Speeding to market
Powell also reiterated his goal to speed new technologies to market both by quicker reviews at the FCC and when appropriate by waiving the need for federal approval of new hardware. "Some companies have to wait nine months for permission" on hardware deployments, he said. "Yet 98 percent of the time we give it."

Much better, he said, "is that we give you the benefit of the doubt, but if you cheat I'm going to hurt you and hurt you hard" through more vigorous enforcement.

To do that, though, Powell will have to get Congress to raise the fine limits Congress can impose, which he said are absurdly low. "Our fines are trivial," he said. "They're the cost of doing business for many companies."

For now, at least, Powell is enjoying a honeymoon with Congress, although that may change if some members feel they're not having enough say in the reform process.

But Thursday the praise for him was rich, with one Democrat suggesting he not stop at the FCC but reform the whole federal government. The most succinct praise came from another Democrat, Dingell, who said Powell's plan for reform was "right on the money."