At the FCC, Powell Hangs Up

The departing Federal Communications Commission chairman championed new technologies but stumbled over easing media-ownership rules

By Roger O. Crockett

The end had been anticipated for months. So perhaps few were caught off guard on Jan. 21, a day after President Bush's second-term inauguration, when Federal Communications Commission Chairman Michael Powell announced that he plans to resign in March. The 41-year-old Republican steps away perhaps more frustrated than satisfied with four years at the helm of the agency that oversees the regulation of the rapidly changing communications world.

In some key arenas, Powell's interest in paving the way for new technologies was evident. He persuaded the FCC to avoid regulating new services like broadband Internet connections. He pushed through requirements aimed at accelerating the transition to digital television. And he backed allowing consumers to take their phone numbers with them when they switch carriers. Powell was an advocate of such forward-looking technologies as broadband over power lines and wireless high-speed Internet. And he argued the need to find more airwaves for commercial wireless services.


  As FCC chairman, Powell received praise from most businesses for his approach. He often took strong positions on issues favorable to Bell telephone companies, such as overturning rules surrounding wholesale competition on the outfits' networks. He also ruled recently that newfangled voice-over-IP offerings were not a conventional phone service -- to the benefit of the cable industry.

It's the pro-business Powell that drove consumer groups batty. They repeatedly criticized him for attempting to allow media conglomerates to grow bigger. But the soon-to-be-ex commissioner failed to relax ownership restrictions, infuriating many in industry. Powell expressed some regret that he was unable to finish new media-ownership rules -- an appeals court has held up his liberalization attempt.

Ultimately, what appeared to wear down Powell might have been the very sort of issue for which he'll be most remembered. Sanford C. Bernstein analyst Tom Wolzien observes that Powell talked of how he hated having to deal with "wardrobe malfunctions," a reference to the exposed breast of Janet Jackson during last year's Super Bowl game.

But many took note when Powell spoke harshly of media's failed decorum during the incident. Under his leadership, the FCC swiftly cracked down on indecent antics on TV and radio by levying a record $550,000 fine on CBS stations that carried the game.


  Powell didn't say what's next for him, nor has a successor to the son of former State Secretary Colin Powell been named. But current FCC Commissioners Kevin Martin and Kathleen Abernathy, former Texas Public Utility Commission Chair Rebecca Armendariz Klein, and Assistant Commerce Secretary Michael Gallagher are among the leading candidates to replace him.

Whoever takes the helm, analysts say, the FCC's policy is not likely to change much -- even if the White House taps Martin, who had legendary disputes with Powell. The two clashed over the wholesale network-sharing rules of the 1996 Telecom Act. But the Administration sided with Powell on litigation of the issue last year, and the debate has now moved on, Legg Mason analyst Blair Levin says in a report. He doesn't expect major changes in media policy, either.

So as long as no one flashes body parts at the upcoming Super Bowl, telecom and media regulation shouldn't veer far off course.

Crockett is a correspondent in BusinessWeek's Chicago bureau

Edited by Beth Belton

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