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Mixed legacy for FCC's Powell

Michael Powell's tenure left the Net and VoIP free of weighty regulation. But it was also marked by flaps over indecency and media ownership.

The unrepentant, hands-off views on broadband of outgoing FCC Chairman Michael Powell have set in motion a high-stakes battle over the future of the U.S. telecommunications industry that will continue long after his departure.

Powell, appointed chairman of the Federal Communications Commission by President Bush in January 2001, leaves behind a booming, substantially deregulated marketplace that has embraced high-speed Internet connections, wireless and voice over Internet Protocol (VoIP) in ways that were nearly unimaginable in the 1990s.

"We worked to get the law right in order to stimulate innovative technology that puts more power in the hands of the American people," Powell said in a statement, summarizing his sometimes controversial reign over the agency. "Evidence of our success can be seen increasingly in the offices, the automobiles and the living rooms of the American consumer." Powell said he plans to depart in March.

During his tenure, Powell consistently advocated a free-market approach to broadband and VoIP, which often put him at odds with the two Democratic commissioners and sometimes Kevin Martin, a fellow Republican. Powell argued for greater competition between cable and DSL rather than continuing predecessor William Kennard's approach of forcing telephone companies to accommodate rivals on their networks by signing money-losing deals.

Those generally laissez-faire views led to a series of crucial rulings from the FCC, including one in March 2002 that immunized cable modems from the stack of 20th-century rules and fees that apply to "telecommunications services," and another in February 2003 that let former Bell companies run fiber-optic lines to American homes without being required to make the links available to competitors.

It may be too early, though, to judge Powell's legacy. While Bush has not signaled his choice for a new chairman, the more regulatory-minded Martin is one likely candidate. In addition, lawsuits challenging some of the Powell-backed rules are bubbling through the court system--including one that's now before the U.S. Supreme Court--and Congress is itching to revisit the nation's telecommunications laws this year.

Congressional tinkering could imperil the current protected status of VoIP, which Powell has aggressively shielded from intrusive government regulation and taxation. The FCC Republicans ruled last February that Internet-only VoIP services were not subject to FCC oversight and expanded that view in November to protect VoIP from state regulators. In August, Powell and his colleagues took a major step toward imposing wiretapping rules on VoIP, but stopped short of giving the FBI and other federal police agencies everything they wanted.

Powell may be best known for his efforts to relax rules against media ownership and his crusade against broadcast indecency, which targeted prominent figures including Janet Jackson--after her breast-baring incident--and talk show host Howard Stern. On one memorable occasion, Stern phoned a radio show that had invited the FCC chairman as a guest and challenged Powell to a debate over censorship.

"Powell's plan for mass media consolidation, which I continue to believe is the single worst decision in the FCC's history, would permit a single person in one community to own three TV stations, eight radio stations, the only newspaper in town, the cable system, and all the Internet portals for such entities," longtime enemy Rep. Ed Markey, D-Mass. said on Friday. "This terrible decision galvanized a bipartisan backlash against such a sweeping plan."

But technology companies were generally more positive. Microsoft chief technology officer Craig Mundie said his company looks "forward to future commissions following through on (Powell's) agenda and we are hopeful it becomes a roadmap for the rest of the world."

"He let us go out and build this new thing without knowing all the issues beforehand," said Jeff Citron, chief executive of Vonage, the largest U.S. provider of Internet telephone services. "He helped the telephone industry transition from the old to the new world."

Many of Powell's deregulatory victories were won by the narrowest of margins, with the chairman marshaling the other two Republican commissioners against the two Democrats who found themselves in the minority. His most strident opposition typically came from Commissioner Michael Copps, a Democrat who has urged stiffer regulations on cable modems and VoIP services. Last November, for instance, Copps said he would "withhold" his approval of VoIP deregulation because the decision could "erode our partnership with the states."

"I think the free market really has lost a friend in Michael Powell," said Adam Thierer, a telecommunications analyst at the Cato Institute. "This was a man who really did believe in the superiority of markets over Band-Aids. It didn't always translate well. But make no doubt about it, this was a man with a clear vision that generally stressed the benefits of capitalism over central planning."

The number of cell phones in the United States increased from 130 million to 175 million with Powell at the helm. "Consumers were always Michael's top priority, and he knew instinctively that they were best served when free and competitive markets were permitted to function," Steve Largent, president of cell phone lobbying group CTIA-The Wireless Association, said in a statement.

Powell's tenure was not without controversy: His free-market approach to media ownership estranged him from the White House, which seemed to support the chairman in principle but not in practice. Democratic Party activists and politicians opposed easing the rules, arguing that individual corporations would be able to own too many TV and radio stations.

Open-source activists and members of the free-software community bitterly objected to the FCC's decision in 2003, supported by Powell, to impose a "broadcast flag" that takes effect in mid-2005. At that time, it will become illegal to sell or distribute any product that can receive certain digital TV streams--unless it includes government-approved copy protection.

In a lawsuit before a federal appeals court in Washington, D.C., advocacy group Public Knowledge is challenging the FCC's authority to levy the broadcast flag rule. It will impose serious "constraints on the design of consumer-electronics and computer products--limitations that will diminish interoperability between new products and old ones," the group says.

Kyle Dixon, a senior fellow at the Progress and Freedom Foundation and former Powell aide, said his former boss "led the charge in promoting investment and innovation in Wi-Fi and wireless, Internet voice, broadband and other technologies that became critical to consumers and the economy."

Powell, a Republican, is the son of outgoing Secretary of State Colin Powell.