POWELL STRESSES NEED FOR FACILITIES-BASED COMPETITION

Terrorist attacks on Sept. 11 emphasized need for redundancy that competitors can offer, Powell said. However, using platforms such as resale offers no redundancy, he said: “I'm not disparaging competition using other models but we have a public interest to [gain] real facilities-based entry.” Facilities-based competition doesn’t just come from wireline telephone providers, he said. Wireless industry and, soon, cable also are viable competitors, Powell said. “The explosion in wireless subscribership has been an explosion in local competition.” And, soon, “cable telephony is going to break through” as well, Powell said.

Powell said that within year he planned to structure FCC proceedings along lines of 5 policy goals:

(1) Widespread deployment of broadband services and how that goal was affected by issues such as how much advanced services should be regulated, how to encourage multiple broadband platforms and whether broadband services could be made universally available without falling into economic problems inherent in current universal service program. He said proceedings such as cable open access and 3rd generation spectrum fell into that category of policy goals. Asked to explain his comments about universal service, Powell said current subsidy-based program could discourage competition and was remnant of monopoly environment of past. He said FCC had worked to eliminate some of those problems but agency should be careful in how it was applied to advanced services.

(2) Development of competition policy that stressed facilities-based telecom entry with “decreased reliance on incumbent networks” and “simplified interconnection rules.” Powell indicated concern about effect of universal service program and emphasized that it should be preserved but shouldn’t stymie competitive entry. FCC’s unbundled network element policies fit into that category as did agency’s effort to develop performance measurements to assure that incumbents continue providing access to competitors, he said, suggesting that “a dozen or so measures” should be enough to assure access.

(3) Spectrum allocation policy that’s not “politicized reactive process.” Powell said spectrum allocation traditionally had been one where businesses sought spectrum for their new products and FCC scrambled to find it for them. “It’s command and control oriented, constantly changing the allocation table to accommodate new uses,” he said. Powell said he favored shift to more market-oriented policy with more flexible allocations. Interference standards should be strengthened and agency should explore new regulatory approaches to spectrum efficiency, such as spectrum leasing. In addition, agency ought to catalog what spectrum was being used for what services, he said: “Nowhere is there a map. We will create such a map.”

(4) Review “foundations of media regulation.” Powell said he didn’t support “deregulation for its own sake” but current broadcast policy was out of date, for example focusing on over-air TV when most viewers paid for programming. He called for “comprehensive study” of everything from diversity rules to cross-ownership limits to localism focus. In answer to question, he said newspaper- broadcast combinations actually could promote FCC’s objective of localism because newspaper content was so locally oriented.

(5) Homeland security initiatives. Powell said FCC had 2 roles here. First was to make sure communications infrastructure was secure. In that area, agency is looking into idea of creating advisory council similar to telecom’s National Reliability and Interoperability Council (NRIC) for media side of communications business. When World Trade Center toppled Sept. 11, many of N.Y.’s broadcast antennas went out of operation at same time because they all were located on one of towers, he said. That raises question whether there’s need for more NRIC-style planning, he said. Powell said other “homeland” goal was to assure that emergency services were well-supported, goal that involved issues such as E-911 and spectrum planning.

Powell’s comments were praised from variety of quarters: (1) Precursor Group Analyst Scott Cleland said Powell’s emphasis on broadband deployment and facilities-based competition indicated he was taking “more deregulatory and pro-investment” attitude that was “different from the inertia policy of the past.” (2) USTA said it was pleased by Powell’s “understanding of the fact that onerous regulation discourages investment in broadband services.” Assn. said it also looked forward to working with FCC “to fashion policies that foster facilities-based competition and increased consumer choice.” (3) Intel said it liked Powell’s comments on importance of broadband deployment to economy and consumers. (4) Alliance for Public Technology said it was “encouraged” by Powell’s remarks on importance of broadband in communications policy. APT, nonprofit group that promotes broadband services, said Powell’s leadership could accelerate development of national policy on deployment. (5) BellSouth said it agrees with Powell that encouraging facilities-based competition “is the correct next step.” Such action would strengthen nation’s telecom infrastructure and offer redundancy in emergencies, be they cable cuts, hurricanes or terrorist attacks, BellSouth said.

Powell reiterated “commitment” to resolve Northpoint-DBS spectrum battle by end of year. He rejected industry assertions of “foot-dragging” on part of Commission. “What you call foot-dragging is careful analysis of the issues, but we are committed to making the decision by the end of the year.” Powell said issue involved “complex legal and technical questions.” He called proceeding “the most challenging set of issues Commission has ever faced” and result was that FCC needed to “tread carefully” before issuing final decision. He said licensing and spectrum allocation issues involved had “created a different set of rules” for statutory regime: “Whatever we decide, 50% will hate [decision] and 50% will love the decision.”