POWELL SAYS HE'S NO FAN OF COMPANY-SPECIFIC MERGER CONDITIONS

Don’t expect FCC to be as eager to place issue-oriented conditions on merging companies as past Commissions, FCC Chmn. Powell told reporters in news conference Thurs. on telecom issues. He said FCC votes depended on all 5 commissioners but he wouldn’t be pushing for kind of conditions that were imposed on SBC- Ameritech, Bell Atlantic-GTE and other mergers. Powell held 2 news conferences for trade reporters Thurs., answering questions on video issues in morning session (see separate story) and telecom questions in afternoon.

If issues are important enough to include in merger approvals, they ought to be dealt with in rulemakings, Powell said: “I don’t think mergers should be substitutes for rulemaking.” Adding conditions when “you have someone over the barrel” because they want their merger approved, “creates distortions,” he said. Sometimes conditions don’t even solve perceived harm, but rather are added “to offset” harm, he said. Asked whether conditions placed on mergers by earlier Commissions were subject to reconsideration, Powell said “that’s not my style.” He said he might have disagreed with them, but they were law now. His job is to “work from here forward,” he said.

Powell also indicated opposition to structural separation for Bell companies because Congress specifically opted not to take that route. He said he was adherent of separation as means of promoting local competition when Congress was writing Telecom Act. However, Congress chose interconnection regime instead and that’s what should be followed now, he said. He said states had authority to add structural requirements but he didn’t think separation would catch on. Pa. PUC considered idea and settled on somewhat less stringent requirements, he said. Structural separation can take long time because Bells “aren’t going to go quietly.” Basically, Powell said, “I don’t have a lot of sympathy for the idea” because it represents “a lot of lost time” and “more regulatory uncertainty, more marketplace anxiety.” Example for structural separation is AT&T divestiture and that took years to complete, he said.

There’s no easy solution for spectrum shortage, which has been heightened by demands for 3G spectrum, he said, because no matter how much spectrum is made available, “demand is always going to outreach resources.” Real solution is to find creative ways to use spectrum that don’t use up as much of it, he said. With limited resources, it comes down to “fighting over value judgments,” with each industry saying its use is more important, he said. In 3G area, he again pointed out power of Defense Dept. to get its way in such battles. Most “noise” on Capitol Hill has come from Commerce Committees, which represent commercial interests, but “you will hear from the Defense Committees,” there’s no question about that, Powell said.

Plan proposed by ICO-Teledesic Chmn. Craig McCaw to develop terrestrial cellular service using radio spectrum reserved for satellite systems is tough to handle because it involves 2 separate technologies (CD April 4 p1), Powell said. Proposal highlights difficulty in dealing with those that cross technology lines under FCC’s industry-specific rules, he said. “It’s creative as Craig McCaw often is,” but it also “gets to the issue of regulatory convergence,” Powell said. “You can auction terrestrial spectrum but not satellite spectrum. When someone wants to do both in one system, it gets messy.” Among other things, it raises “thou shall not come into our turf mentality” from industry, Powell said. “We understand the problem with technological convergence. We just don’t have a solution yet.

Powell said FCC was investigating faked letters that were sent on VoiceStream-Deutsche Telekom deal (CD April 5 p1) to determine whether law enforcement officials should be called in. “If this is what it seems to be, a forgery, it is a serious offense, representing market manipulation of the worst kind,” Powell said. If that proves to be case, it could be criminal offense, he said. Asked whether agency would announce publicly any decision to call in law enforcement officers, Powell said it probably wouldn’t make announcement.”