FCC Veterans Differ on Agency Reform

Two former FCC officials differed strongly Fri. over how the FCC should be restructured in an age of competition among digital services. At a Capitol Hill forum sponsored by the Progress & Freedom Foundation, PFF Senior Fellow Randolph May -- a former assoc. gen. counsel at the FCC -- reiterated his call for a reduced body that would no longer be an independent agency but instead part of the executive branch (CD Aug 25 p5). But former Comr. Susan Ness said such a move would be “dangerous.” All panelists said the sunshine rules hinder the FCC’s performance, a point that’s also been made by FCC Chmn. Powell (CD Aug 25 p3).

The FCC is “basically unchanged since its creation,” May said, but the communications market has changed dramatically. He said it’s been more than 5 years since then-Chmn. William Kennard’s call for a 5-year plan to create a new FCC for the 21st Century. “Bill Kennard was right, of course, in predicting vigorous competition” that would require less regulation, May said, but he said the FCC’s budget and staff had increased since Kennard’s 1999 call, and since the passage of the 1996 Telecom Act. CapAnalysis Chmn. James Miller -- a PFF board member and former FTC chmn. and OMB director -- said the Telecom Act was hardly deregulatory. Miller for the most part supported May’s deregulatory arguments, but did say, “I'm not so sanguine about moving the FCC to the executive branch.”

Ness supported Kennard’s call for FCC reform then and now, she said. “I support having the commission focused on functions” rather than “stovepipes,” and outlined an agency that would forbear on much regulation. But May argued that the current model is too cumbersome and slow. He cited the 6 months it took to issue the UNE rules in 2003 after they had been voted on. An agency with 3 commissioners “would be more timely” and issue “more consistent decisions” that might better withstand court scrutiny, May said. A step further, he said, would be to have the reduced agency under one administrator within the executive branch.

It would be “dangerous to have responsibility over the authority of our communications in an administration,” Ness said, defending the current model. She noted the FCC is “wholly accountable to Congress.” Reducing the number of commissioners would make it “very easy to shut out one of the 3 commissioners,” she said. May acknowledged that the licensing process could be seen as subject to politics if included in an administration, but said there was ample precedent to have it insulated from such influence. Ness said if you believe that, “there’s a bridge in New York I'd be very happy to sell you.”

Regardless of the structure of the agency, there was a consistent call for less regulation in the face of increasing competition. Miller argued that the FCC appeared to be too involved in the nitty-gritty of the telecom market, referring to its Thurs. rulemaking sparing Bells from having to unbundle fiber-to-the-curb (FTTC) loops within 500 ft. of customer premises (CD Oct 15 p1).

Miller said the agency should abandon entirely economic regulation, leaving only social regulation remaining, and should have less of an economic impact on the market. “They have a lot of power to redistribute income,” he said. “They're basically a taxing authority.” May said the FCC is by its nature a regulatory agency, and it’s natural that its employees, in a desire “to preserve their jobs,” would look for things to regulate. Former PFF Pres. Jeff Eisenach, from the audience, broached elimination of the FCC, with “the ground salted” to eliminate the temptation to reregulate deregulated areas. He argued that if the FCC hadn’t existed after cable deregulation, Congress would have had more difficulty reregulating the industry because it would have had to reinvent the FCC. Govt. “would be better able to resist” the temptation to regulate if the agency were gone, May agreed. Ness countered that “if you abolish the FCC, guess what you've got? Fifty state commissions” looking to regulate communications without federal preemption.

The sunshine rules at the FCC “can be counterproductive,” Ness said, saying the inability to talk with multiple commissioners has delayed decisions. She said she and fellow commissioners signed a letter supporting Sunshine Act reform, but Congress abolished the commission examining the issue. May, who served on just such a commission, said “politically it’s very difficult” to reform the rule, because Congress and the media are sensitized to a need for transparency. Miller, recounting the difficulties of working under sunshine rules at the FTC, said “we want transparency,” but “for crying out loud, it’s almost like cameras in the bathroom.” May said if the FCC was under a single administrator as he has proposed, the sunshine rule would be irrelevant.