COMR. NESS SAYS SHE WILL LEAVE FCC BY JUNE 1

Comr. Ness, senior member of FCC, announced Thurs. she would be leaving agency by June 1 after 7 years. Ness, Democrat who was sworn in May 23, 1994, sought 2nd term after her 5-year term expired, but was stymied by Senate Commerce Committee Chmn. McCain’s refusal to confirm her. McCain said he didn’t approve of commissioners serving more than one term. Ness said she was making announcement now because “an orderly transition is best accomplished by announcing when my time with the Commission will end.” President Bush has announced names of 3 individuals he plans to nominate for Commission seats (CD April 9 p1) although there was some uncertainty about when new members would be confirmed. Their names haven’t been formally sent to Hill. Ness didn’t announce her plans.

FCC Chmn. Powell lauded Ness for “her stellar tenure” and said she would be “sorely missed.” Comr. Furchtgott-Roth praised her expertise in issues ranging from digital TV to international satellites to telecom services for schools and libraries. Ness is known as behind-scenes negotiator who tried to develop agreements among commissioners on difficult issues.

NCTA Pres. Robert Sachs praised Ness as “an active and effective advocate for broadband deployment, workplace diversity and the transition to digital TV.” He said “her prior experience in cable and broadcast finance” brought to Commission “a practical knowledge of business that enhanced the policymaking process.”

Legg Mason analysts speculated that Ness’s departure would give Powell “opportunity to accelerate his deregulatory agenda somewhat,” including relaxing spectrum caps on wireless carriers. Analysts Blair Levin and Michael Balhoff said in research note they also thought her leaving increased chances that Sec. 271 long distance applications by SBC and Verizon, for Mo. and Conn., respectively, would be approved when they came due in July. New commissioners are expected to be seated this summer but “there are some rumblings of partisan tensions” that could cause delay, Legg Mason report said. If there’s delay, Ness’s departure could leave only 3 commissioners and cause possibility of 2-1 Republican majority votes on certain proceedings, analysts said. In any case, it could eliminate any possibility of 2-2 deadlocks on key issues, they said.

Among regulatory issues Legg Mason looked at: (1) Ness nearly joined Comr. Tristani recently in opposing Verizon entry into Mass. Her departure eliminates any possibility that she will swing to opposition side on future Sec. 271 votes, which, with 4- person Commission now, could result in 2-2 deadlock. (2) Final comments on easing spectrum caps are due in mid-May so decision could become ripe while there was 3-member Commission. (3) Ness’s leaving won’t speed Powell’s efforts to ease ownership media restrictions. Powell “has signaled that the FCC will likely not begin a review of most of its media ownership rules, such as a 35% national broadcast TV ownership cap, before late this year.” Only exceptions would be rulemaking FCC might open in May on newspaper- broadcast restrictions and decision on whether to hold AT&T to merger-related divestiture required by cable ownership cap. (4) Comr. Tristani, “who has grown increasingly critical of FCC decisions that lead to increased industry concentration,” could gain leverage “and possibly even de facto veto power” if Powell were to try to accelerate his agenda.