Commentary: How the FCC Chairman Can Retake the Helm

By Catherine Yang

Can Michael K. Powell recover from his missteps? That's a burning question in Washington these days as the chairman of the Federal Communications Commission tries to bounce back from the biggest setback of his two-year tenure.

The facts are by now well-known. After an appeals court ordered the FCC to redraft some key telecom rules, Powell saw an opportunity to drastically reshape the regulatory landscape. He wanted to end rules requiring the Baby Bells to lease their network at discount rates to rivals. He also wanted to cut the states largely out of the regulatory picture. But Powell underestimated fellow Republican Commissioner Kevin J. Martin who, with the help of two Democratic commissioners, outmaneuvered the FCC chief and gave the states a continued role in deciding when the leasing rules would end.

The damage to Powell goes beyond the slip-up over the Baby Bells. While Powell sees his stand as "an act of courage," some FCC lobbyists see the agency as operating under a weakened chairman with Martin as the up-and-comer. Moreover, Powell's woes couldn't come at a worse time for the telecom industry, which has shed $2 trillion in market value over the past two years: The last thing the industry needs now is infighting that leads to further uncertainty about the ground rules Washington sets for competition. Beyond telecoms, Powell could face another problem this spring, when the FCC considers sweeping changes in media-ownership rules.

Still, it's not too late for Powell to recover. Here's how:

-- Stop acting like a general. A former Army officer, Powell's command-and-control style has been ill-suited to a panel that can outvote him. He gave his fellow commissioners just over three weeks to peruse his telecom proposal. While the FCC says many complex items have been completed in three weeks, critics argue that it wasn't enough time to review a sweeping 400-page document. Powell also insisted that a vote take place by Feb. 20. That was the date he believed the court would gut existing rules if the FCC didn't redraft them in time--a conclusion not shared by all of his colleagues.

-- Use detente, not derision. The telecom lobby is now swirling with questions over whether Powell will try to take revenge on Martin, who declined to comment. Says a Republican Hill aide, describing the current dynamic: "It's like breaking up with someone and having to see them every day." To regain his effectiveness, Powell will have to seek detente. One possible area of agreement: a proposal to relieve the Bells' consumer-broadband services of having to seek approval for price changes.

-- Reach out to Dems. Commissioners Jonathan S. Adelstein and Michael J. Copps, who backed Martin on Bell deregulation, now have more clout than is usual for commissioners in the minority party. Without a sure Republican majority, Powell can't afford to ignore this duo, where he can look for a third swing vote to join him and GOP ally Kathleen Q. Abernathy. One issue to watch: upcoming votes on subsidies for rural phone service, an Adelstein concern.

-- Score a victory. Powell's next big test is deciding how much to relax rules that restrict TV networks from owning stations that reach more than 35% of the nation, for example, or prevent newspapers from owning broadcasters. While Powell says he doesn't want to scrap the media rules, he hopes to loosen them to reflect growing competition from cable TV and the Net.

Here, too, he must tread carefully. Even conservative lawmakers fret that relaxing ownership rules might shrink the diversity of viewpoints. Powell also will have to convince lawmakers that greater media concentration won't jack up political ad rates. But if he can bring Martin on board, Powell's telecom mishap will be but a memory. "To get that vote behind him, he has to change the subject," says Blair Levin, a former FCC chief of staff and an analyst at Legg Mason Wood Walker Inc.

In the hurly-burly of Washington, Powell hasn't suffered an irreversible defeat--yet. But he needs to sharpen his diplomatic skills if he hopes to salvage his reputation and remain in the pantheon of GOP rising stars.

Yang covers the FCC in Washington.

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