Looser Reins

FCC may ease telecom rules

Changes at the Federal Communications Commission may be a harbinger of other Bush administration policies, with looser regulatory reins that may mean fewer telecom choices for many customers.

Already, two huge regional Bells are backing away from service expansion pledges they made as a condition of mergers approved by the FCC during the Clinton administration. That will likely result in fewer options in phone and data services for businesses and consumers, and thus less competitive pressure to drop rates.

The first of an expected flurry of petitions to reconsider Clinton-era decisions has already hit the FCC, with both AT&T and Viacom asking to be relieved of requirements to shed cable assets.

Conservatives are also pressing the FCC to shut down an inquiry into so-called "open access" rules for broadband cable and interactive television services. Without open access requirements, consumer groups fear a body blow to independent Internet service providers and content providers looking to get inside the pipes of giants such as AOL Time Warner and AT&T.

"Clearly, the essential question here is: Are companies going to try to exploit a more lenient and friendly administration? And the answer is yes, absolutely," said Mark Cooper, director of research at the Consumer Federation of America.

The Bush administrations new FCC chairman, Michael Powell, has also said that it will take a coordinated effort by the administration to deal with contentious issues around the allocation of spectrum for third-generation wireless data services. Thats because much of the most desirable spectrum is controlled by the military.

"Theres going to be a lot of debate over how much of the spectrum [that] the government uses can be devoted to 3G, how the Bush administration is going to carve the spectrum up to keep the military happy," said Greg Garcia, director of global government relations at 3Com.

By years end, Powell will almost certainly have an entirely new set of colleagues. Currently, the five-member panel has two Republicans, two Democrats and a vacancy. The Republicans reportedly under strongest consideration for the jobs would give Powell a conservative majority. Powell is also backed by powerful forces on Capitol Hill who are friendly to the regional Bells and broadcasters.

There is already clear evidence of how quickly the incumbent giants are pushing back against the Clinton administrations efforts to regulate more competition in entrenched local markets.

SBC Communications is backing off from its commitment to expand aggressively into competitive markets in 30 major cities, citing market conditions. SBC agreed to compete outside its region to win FCC approval of its merger with Ameritech in 1999.

Similar commitments were made to win merger approval when giants Bell Atlantic and GTE joined to form Verizon Communications last year. Verizon also said last week that it would slow the pace of expanding service outside its territory.

The Bells hope that the FCC under Powell will move far more quickly to approve their requests to enter the long-distance market.

"Were very encouraged by his comments to date," said Gary Lytle, acting president of the United States Telecom Association, which represents the Bells.

But competitive local carriers, frustrated by what they consider continued stalling by the regional Bells on opening their local markets, are deeply concerned about the FCCs possible backtracking.

"It would have a devastating impact on competition" said Russell Frisby, president of the Competitive Telecommunications Association, the competitors lobby in Washington, D.C. "The [Bells] want to remonopolize the national telecommunications network. If they succeed, it will mean higher prices and less choice."

Representatives at the Bells have said that they intend to comply with their merger conditions.

But petitions for reconsideration of Clinton-era decisions are clearly on the rise, said Howard Feld, associate director at the Media Access Project.

In the wake of a federal appeals court ruling striking down limits on cable ownership, the FCC has suspended deadlines for AT&T to divest itself of cable assets in connection with its acquisition of MediaOne Group.

"The AT&T action, we felt, was very inappropriate, because AT&T didnt file a formal request. They went in and had a meeting with Powells staff, and orally raised the issue," Feld said.

One FCC agency official said its "too early to tell" how big a push is coming to rewrite rules and seek relief. "Not only with the regional Bells, but with other folks, everything we do is taken up on reconsideration."

Meanwhile, smaller and rural businesses worry that they might never get affordable access to broadband.

Tom Kohley, co-founder of MyTopo.com in Red Lodge, Mont., said his business partner had to move 250 miles away to Helena, Mont., to find a broadband connection that wouldnt bankrupt the business, which delivers topographical maps to farmers and recreational enthusiasts.

"Right now, it is not technically feasible to develop a business like mine from Red Lodge," Kohley said. "Right now, there is no broadband."