How To Rewire The FCC

Is the U.S. telecom industry sprinting or inching into the future? Sometimes it's hard to tell. Telecom companies and equipment providers seem to announce bold new initiatives and cutting-edge technologies every day. Yet key problems -- including getting fast broadband connections to the majority of American homes and ensuring enough competition in local phone and cable markets -- still elude solution.

Michael K. Powell's decision to step down as chairman of the Federal Communications Commission offers an opportunity to think about how we can do better. Powell, appointed to the FCC by Bill Clinton in 1997 and named chairman by George W. Bush in 2001, was a true technological determinist. His vision was that technology would provide high-capacity connections to the home -- either wired or wireless -- and generate enough competition without the heavy hand of regulation. In that sense, he was on the right side of history.

But change didn't happen as fast as Powell expected. He was too quick to abandon regulation before the technologies had developed enough to create new competition. Take Powell's move to allow one company to own broadcast stations and newspapers in the same market. In theory, such consolidation is O.K., since there are plenty of Internet and cable-news providers. However, in practice, people still mainly get their news from the local paper and local TV station.

Similarly, Powell's reliance on market and technological forces to bring broadband to the home has turned out to be overly optimistic. Progress has been too slow, with broadband penetration in the U.S. lagging many other countries. That's why competition may need a push. Powell's successor will have to consider, for example, pressuring TV broadcasters to surrender some of the extra frequencies they have been hoarding. That would free up more spectrum for wireless broadband, a potentially inexpensive way to get fast Internet service into more homes. The next chairman will also have to revisit the question of whether a subsidy, funded by a user fee, could help the broadband rollout, especially in rural areas.

Deregulation is good, and so is technology. But running U.S. telecom policy requires appreciating when a bit of regulation can be a positive thing. That's something Powell never seemed to understand.

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