Change Or Die: A Hobson's Choice At The Fcc

Firstit was the Food & Drug Administration, then the Internal Revenue Service. Now, the Federal Communications Commission has a bull's-eye on its back. And it's not just oft-fined shock jock Howard Stern taking potshots at the agency. It's Congress.

Deregulation-minded Republican lawmakers are out to drastically reduce the FCC's role in the free market. While the FCC will probably survive the onslaught, even Chairman William E. Kennard sees dramatic changes ahead as the agency becomes more of a referee and consumer watchdog and less of a rulemaker and gatekeeper.

The GOP declared open season on Mar. 17 as House Telecommunications subcommittee Chairman W.J. "Billy" Tauzin (R-La.) began hearings on the FCC's annual reauthorization. "We're talking about a 1930s-Model agency attempting to do a job at the turn of the millennium," says Tauzin. "The agency was designed to regulate and doesn't know how to deregulate."

GETTING GORE. The FCC, which oversees the booming communications industries, is a prime target for GOP lawmakers. For starters, FCC-bashing deflects criticism from Congress for the 1996 Telecommunications Act, which has been slow to bring competition to the phone and cable markets. What's more, Republicans see an opportunity to tarnish the ambitions of Mr. Information SuperhighwAy himself, Vice-President Al Gore. "If you want to land some blows on Gore, you attack the agency he's most identified with," says an industry source.

Under the barrage, Kennard has little choice but to head off the attacks with his own blueprint for reform. "In five years, this agency will look very different," he vows. So as the phone, cable, and broadcast industries become fully competitive, Kennard wants the FCC to get out of rulemaking and rate making and into enforcement and consumer protection.

In a deregulated world, Kennard suggests, a slimmed-down FCC eventually would take on three core functions--to protect consumers against unscrupulous operators, to ensure affordable telecom rates for all consumers, and to allocate the nation's airwaves for commercial use. He also proposes restructuring the 1,900-employee agency to reflect the convergence of technologies. Today's industry-specific offices for broadcast TV, cable, and phones, for example, would give way to divisions for licensing, rulemaking, and enforcement.

By suggesting his own plan, Kennard hopes to stave off more radical ones when Tauzin and Senate Commerce Committee Chairman John McCain (R-Ariz.) introduce legislation later this year to overhaul the agency. Tauzin is playing his cards close to his vest, but last year he proposed cutting the FCC's staff by 20% annually, down to zero, and then appointing a single telecom czar with a small staff to oversee the industry and to handle consumer complaints.

Tauzin and McCain--backers of the Baby Bells--have long been unhappy with the agency's reluctance to let the Bells into long distance. "We should get on with it," says Robert T. Blau, a vice-president for federal regulatory affairs at BellSouth Corp. But this time, other industries are lining up to press their agenda, too. Broadcasters, for one, want to use the fight over the FCC to press for looser restrictions on the number of stations a company can own in one market.

Then there are the two GOP Commissioners on the FCC, Michael K. Powell and Harold W. Furchtgott-Roth, who question the agency's merger review authority because they say it duplicates the Justice Dept.'s antitrust oversight. With so much pressure building, the FCC may find that if it wants to avoid the hunters, it must change its spots fast.

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