Powell Announces He'll Leave Commission in March

Powell didn’t disclose his departure date, saying only he would leave “some time in March.” Sources said that means after the March 10 agenda meeting. Powell met with his office and bureau chiefs Fri. morning and stressed that he planned to play an active role at the Feb. and March agenda meetings. He sent an e-mail to FCC staff before his public statement. An FCC source said Powell doesn’t plan to seek another job until he leaves and won’t have to recuse himself from items before the FCC.

While Powell was unpopular among CLECs and vilified by others for his indecency and media ownership agenda, his legacy ultimately may be tied to promotion of broadband and wireless data, as well as new technologies. Several sources commented that the proliferation of communications devices at the CES show are part of a more concrete legacy. “A lot of other issues like media ownership and circuit switch unbundling are important, but they're the old issues,” said a Powell supporter in high tech. “Circuit switched stuff was important, but do many people think it’s the future? No. The future is multiple fat pipes carrying everything over IP.”

“In a nutshell, Powell got the govt. out of the way of technological innovation,” said Scott Cleland, pres. of the Precursor Group. “I think history will be very kind to Michael Powell. He got technology, market forces and the law dead right.”

“Within the Bush administration, he has been the leading spokesman for the digital migration -- he got the vision thing right,” said Peter Pitsch, communications policy dir. at Intel: “And he definitely put spectrum reform front and center of the policy agenda.”

On the telecom side, Universal Service Fund (USF) and intercarrier compensation (ICC) reform will demand the attention of a new chmn. immediately. The FCC is expected to vote out an ICC rulemaking in Feb. starting to tackle a huge, complicated set of issues. On wireless, the Commission will have to continue work on consolidation, 800 MHz rebanding and the rollout of spectrum as the industry moves into a 3G world. “The wireless carriers are much more interested in intercarrier compensation and USF than anything on the wireless side,” said a regulatory attorney.

Matthew Flanigan, pres. of TIA, told us Fri. he’s not concerned the next chmn. will follow Powell’s example. The next chmn. will have little choice given President’s Bush’s stated goals of universal broadband by 2007, he said. “He has been a clear leader and he has really set the stage for what is to follow,” Flanigan said. “They're going to have to stay the course that Michael Powell has set.” Media Ownership Appeal Said Less Likely, Indecency Clarity Possible

The Commission is less likely with Powell’s departure to file for certiorari on the 3rd U.S. Appeals Court, Philadelphia, media ownership ruling against the Commission’s liberalized rules, said Media Access Project Pres. Andrew Schwartzman. The FCC was granted an extension to file to Jan. 31. In June, the appeals court remanded the FCC’s major rules for cross-ownership of newspapers and broadcasters and the concentration of broadcast ownership in local markets.

Schwartzman said Powell made his media ownership decisions with “blinders on” that resulted in the court’s remand. He said Powell was a “fine speech-maker, but poor politician. He was good at philosophy, but bad at execution.” The next chmn. needs to understand that media ownership has “profound” implications for our democracy that can’t be addressed only by debating economic efficiencies and economists’ formulas, Schwartzman said.

Powell’s departure may bring clarity to FCC’s indecency rules, NBC Universal TV Group Pres. Jeff Zucker told TV critics Fri. “The key thing we're looking for regarding indecency is uniformity. Things have been dealt with indiscriminately. If everyone understood what the rules were, it would be a step in the right direction. I hope all these things will be looked at with a fresh eye, some new thinking, some new conversations and some fresh approaches.” Zucker also said important issues, such as protection of digital content and the digital transition have been “languishing” at the Commission, and that Powell’s resignation “gives us hope there will be a new agenda.”

Fress Press and Common Cause called on President Bush to appoint a chairman who would represent the public interest, not “media moguls.” Powell was a “disaster for the public,” Common Cause Pres. Chellie Pingree said. “The American public deserves a regulator who puts the needs of viewers and listeners above the profit considerations of conglomerates.” Powell’s departure presents an opportunity for the Administration to stop media consolidation and ensure media diversity, Pingree said.

Legg Mason said major changes in media policy were unlikely, including on media ownership rules, where the FCC has moved in a more deregulatory position. Meanwhile, broadcast associations including NAB, NCTA and ACA praised Powell for his contributions to the industry, even if some broadcasters had occasional policy differences with the chmn.

Telco Critics, As Well As Supporters, Speak Out

Powell critics also spoke out, sometimes through silence. AT&T, for example, which fought with Powell over UNE-P and other issues, declined to issue a statement. CompTel offered only: “The Chairman has been a strong advocate for the principles in which he believed.”

“We won’t be lobbying for his face to be carved into Mt. Rushmore,” a CLEC source said Fri. “Chairman Powell has undermined the ability of entrepreneurs to bring their innovative new services and products to the marketplace by strengthening the monopoly choke hold on telecom bottlenecks.”

Many other groups and companies issued statements praising Powell. “His legacy will be marked by his understanding that the one-wire, analog world is now a multi-wired and wirelessly connected IP world,” SBC said. USTA said: “As Congress begins a critical effort to update the nation’s telecom laws, it is vital that President Bush have the leadership of an FCC Chairman who shares his commitment to clearing out the ‘regulatory underbrush’ that today holds back more vigorous private sector investment and competition.”

The Assn. of Public-Safety Communications Officials said it was sorry Powell was leaving and noted it was giving him an award for his leadership. Western Wireless CEO John Stanton said: “Michael should be saluted for his leadership on rural telecommunication measures and he should be particularly lauded for his drive to bring first-class wireless and wireline service to rural and tribal areas.”

Powell Called VoIP Promoter

Powell will be remembered as a promoter of VoIP growth, industry officials said. The Commission last year freed Internet voice from old regulations and preempted states from regulating VoIP in its decisions on Pulver.com and Vonage petitions.

“Powell has been an unabashed advocate of VoIP services,” said PointOne Vp-Regulatory & Govt. Affairs Staci Pies. Pulver.com CEO Jeff Pulver gave Powell credit for trying “to create a regulatory environment that will simultaneously promote innovations and competition for new communications applications and services and allow for broadband deployment and network upgrades to support new technology and services.” Sprint said it was “the strong and steady leadership” of Powell that positioned the FCC to address VoIP regulation and changes to the Universal Service Fund during the coming months.

Industry officials said they hoped that Powell’s successor would embrace his philosophy of approaching VoIP and fulfill the vision of IP services that Powell had laid out during his tenure. “We trust [Powell’s] successor will build further on the concepts of consumer empowerment and net neutrality to ensure that every consumer has access to a broadband pipe and the freedom to maximize the functionality and value of the Internet and advanced communications,” Pulver said. Pies said she hoped that like Powell, his replacement would recognize “the positive social and economic benefits of IP services.” She noted that such benefits could be reaped only “if the nominee is willing to take on the political battle of reforming the universal service subsidy system so that the compensation structure can be reformed. Such actions will take a fairly brave and aggressive person to implement fully.”

Powell’s departure could have a “very significant impact” on VoIP, Pies said. “He has been one of the strongest proponents of VoIP and he has been willing to take the political heat,” she said: “It’s not clear whether other replacements would be willing to take that heat.” Pies said the biggest issue with VoIP was compensation and “any change on that issue will have a very significant impact on VoIP providers and what they pay to incumbents. Hopefully, a new chairman will take a strong position on those issues.” She said the departure would probably have minimal impact on VoIP social policy issues: “Most nominees are on the same page with Powell on 911 and other social policy issues, so we don’t expect any significant changes on that.”

Legg Mason said in a report “whoever his [Powell’s] replacement, we do not expect fundamental changes in FCC policy that has generally been moving in a deregulatory direction, including on broadband/VoIP… even if the White House tapped Martin, who sometimes clashed with Powell.” It said with the dispute over “largest area of disagreement” between the 2 on UNE rules having receded, “the fundamental debate is moving toward issues on broadband/VoIP policy, where Martin has been every bit as deregulatory as Powell, if not more so.”

Pulver.com Gen. Counsel Jonathan Askin said he was “a little bit concerned” that Powell was leaving before putting a final seal on the net neutrality principles that he had outlined. “What is important is that he wants to deregulate, but he needs something in place of the regulatory structure, and we think that would be a set of that principles that nobody can thwart someone’s access to the Internet,” Askin said: “I am a little bit concerned that Powell is leaving right before implementing a final deregulatory piece in the puzzle to establish a template for competition and innovation.” He said he “would love to see an official FCC policy that would guarantee consumer empowerment and net neutrality” established before Powell leaves: “That would be a beautiful legacy for Powell.” Askin also said he didn’t expect that Powell’s departure to slow the Commission’s pace of addressing VoIP issues.

Wireless Groups Offer Praise

The wireless industry praised the Powell’s record. The Powell Commission made several decisions on wireless issues described by industry officials as “positive.” “He did a lot and quickly,” a wireless attorney said. For example, the attorney said, “the Cingular-AT&T Wireless merger was done in 8 months, which is very short for a big effort.”

“In general, we are pleased with the Powell’s legacy,” a CTIA spokesman said: “He set the tone that allowed the wireless industry to grow and provide consumers with the choice that they have today.” The spokesman said “the chairman saw the importance of not interfering with the free market” and believed that consumers and the choices they make were “the ultimate regulators.” He said the market-driven approach that Powell applied to the wireless industry “has been proven to be successful.” He said he hoped the successor would embrace that philosophy and apply a “light regulatory touch” to the wireless industry.

Powell’s departure will probably not change the FCC’s wireless agenda, but the timing for addressing major issues could be slower, industry officials predicted. “In terms of policy direction, I wouldn’t expect a big change in this Administration especially on wireless issues, [which] tend to be more bipartisan,” the attorney said: “Nothing strikes me that would change dramatically, but not knowing who the next” chairman is makes it hard to predict. One industry source noted that the slow-down could be minimized if the replacement came from within the Commission. A Nextel spokesman said he didn’t expect the departure would have any impact on 800 MHz or any other wireless proceedings at the FCC.

The 2 active merger proceedings, between Sprint and Nextel, and Alltel and Western Wireless, probably won’t be affected, industry officials agreed. “Whoever takes the chairman’s role will have the major influence on how the Commission acts [on the mergers], but we think that the mergers will stand on their own,” the CTIA spokesman said: “We think no matter how you look at them, they make a great sense in business terms and will provide consumers with even stronger competitive market that will make them beneficiaries.” Sprint and Nextel spokespersons said they didn’t expect the departure would affect their respective mergers. The Sprint spokesman noted that most of the work of the merger review in the early months is conducted at the FCC staff level and “we expect that that will take place at the expected pace, no disruption.”

Universal service and intercarrier compensation issues will probably still move forward this year, maybe a little slower, industry officials said. “They are in the forefront of the wireless industry and we fully anticipate them to be addressed this year,” the CTIA spokesman said. A wireless industry source said the industry would be looking more closely at what happens on those issues on the Hill rather than at the FCC.

New America Foundation (NAF) Dir.-Spectrum Policy Michael Calabrese strongly criticized Powell, saying his tenure has been “decidedly mixed but mostly negative.” He said the only “significant positive legacy” that Powell left was “to encourage experimentation with the sort of unlicenced wireless broadband technologies that have generated the Wi-Fi productivity boom.” But he said on most other issues, Powell’s tenure “has radically changed the nation’s media and telecom policy direction in ways that damage both our economy and our democracy.”

Hill Praise

Praise for Powell rolled in from Capitol Hill. Sen. McCain (R-Ariz.), former Senate Commerce Committee chmn. and Powell’s foremost political supporter in the Senate, said he brought “intelligence and enthusiasm” to the post. “Chairman Michael Powell has spent the last 8 years revolutionizing the telecommunications industry by championing new technologies and advocating competition,” McCain said. House Telecom Subcommittee Chmn. Upton (R- Mich.) said Powell led a “bold approach to strip away regulatory burdens to spur competition and allow the marketplace to grow.”

Senate Commerce Committee Chmn. Stevens (R-Alaska) said he was “saddened” by Powell’s departure, especially since the Committee is about to reopen the 1996 Telecom Act. Stevens said he hasn’t always agreed with Powell on issues, but he said he was inspired by his soliciting information and opinions on regulatory matters. “He always had an open mind to views expressed by oversight committees. And, he often invited me to attend sessions held at the FCC for the expression of views by persons involved in various aspects of communications sessions which I not only enjoyed but from which I learned more about the industries involved in regulated communications.”

House Commerce Consumer Protection Subcommittee Chmn. Stearns (R-Fla.), also a Telecom Subcommittee member, said President Bush should appoint an FCC chairman who shares Powell’s vision on telecom deregulation and competition. “It was a difficult job that often made him a target for criticism, but I believe that Chairman Powell’s leadership on many of these issues will serve the industry and American consumers very well in the years to come,” Stearns said.

Even Democratic opponents on the Hill praised Powell. Sen. Dorgan (D-N.D.), a leading congressional Democratic opponent on media ownership issues, said he wished Powell the best -- though he will also wish for a new FCC chmn. with different philosophies on ownership. Dorgan said he looks “forward to working with his successor, who I hope will see things a little differently on the need for localism and diversified ownership of broadcasting stations.” And while Sen. Schumer (D-N.Y.) said “Powell instinctively sided with industry,” he praised Powell for fighting against “the big telecommunications behemoths” in pushing for wireless local number portability. Schumer, who isn’t a Commerce Committee member, often publicly pushes wireless telephone consumer issues, like LNP, directory assistance and service quality.

Satellite Industry Seeks Continued Progress

Powell “has always been for adopting policy fostering increased availability of new technologies and new services and he’s been a longtime proponent of satellites’ role in that,” a spokeswoman for the Satellite Bcstg. & Communications Assn. said, noting Powell’s support for the DTV transition. SBCA said it hopes the new chmn. will continue to place an emphasis on the digital transition and on new HD technology.

The broadband over powerline (BPL) industry, which Powell had supported, said his departure was sudden and an “unfortunate development.” Powell was a “visionary” leader who recognized that encouraging new technologies like BPL was the best way to promote competition, said Brett Kilbourne, regulatory-dir. of the United Power Line Council. He said Powell’s departure might affect the industry if the agency takes up reconsideration of the FCC’s BPL order. Despite Powell’s departure, he said he didn’t see support waning for BPL at the agency. The American Radio Relay League (ARRL), which has accused Powell of being a cheerleader for BPL at the expense of ham radio operators, said Powell’s “performance was a deep disappointment to us. We look forward to working with a new chairman.”

The consumer electronics industry overwhelmingly hailed Powell and the legacy he would leave behind, though not all in the industry always saw eye-to-eye with him. Powell will be remembered not for “the legal landmines thrown in his lap on decency and media ownership” but “as one of the great FCC chairmen for understanding the digital revolution,” said CEA Pres. Gary Shapiro. “He got it. He knows that competition among media with fewer government rules benefits consumers and encourages progress.” Even when the CE industry disagreed with Powell, as it did on the DTV tuner mandate, “he was intellectually honest enough to label his action as industrial policy for a greater good,” Shapiro said. He said he hopes Powell seeks high elective office because “we will be a better country if we can get him back into public service.”