New FCC chair may be force in telecom reform

WASHINGTON - The new chairman of the U.S. Federal Communications Commission (FCC), whoever that may turn out to be, could have significant power to shape the future of telecommunications regulation as the U.S. Congress looks to tackle telecom reform this year.

Current Chairman Michael Powell announced on Jan. 21 that he plans to step down from his post in March. Powell, a member of the commission for seven years, lead the FCC for four years as it attempted to referee disputes between large incumbent telecom carriers and competing carriers that arose after Congress passed the Telecommunications Act of 1996.

The '96 Act established a set of rules in which the incumbent owners of much of the nation's telephone network infrastructure -- four companies often called the regional Bells -- were required to share parts of their networks with competing carriers.

Now, as Powell leaves the FCC, several members of Congress have begun pushing for changes in telecom regulations. The push for telecom reform may gain steam with the announcement Monday that SBC Communications  intends to acquire AT&T, with the United States Telecom Association (USTA), a trade group representing incumbent carriers, suggesting the deal between former rivals shows that the '96 Act no longer addresses the competitive realities in the telecom industry.

One leading candidate for the chairmanship has parted ways with Powell in the past. Current commissioner Kevin J. Martin broke with the commission's Republican majority during the so-call triennial review order in February 2003. Martin and the commission's two Democrats voted to continue many of the rules requiring the incumbent carriers to share parts of their networks with competitors, against Powell's wishes to limit the network-sharing rules and favor what Powell called "facilities-based competition."

The incumbent Bells currently own large chunks of the telecom networks, and a facilities-based approach would force their competitors to build their own networks.

Some lawmakers advocate fairly minor changes to the '96 Act that would protect voice over Internet Protocol (VOIP) and other Internet-based applications from most federal and state regulations, including requirements that incumbent carriers share their networks with competitors.

Other lawmakers have talked about a major overhaul of the '96 law that would tackle a range of issues, including simplification of the complex formula for access fees exchanged between carriers and reform of the Universal Service Fund, supported by carriers to promote telecom services in rural and poor areas.

FCC observers disagree on just how much a new FCC chairman can influence the telecom debate in Congress.

The new chairman is in the position to be "incredibly influential" this year, because the FCC is the expert agency on telecom issues, and many in Congress are likely to turn to the new FCC chairman for advice, said Ron Sege, president and chief executive officer of Tropos Networks Inc., a supplier of systems used to create large Wi-Fi networks.

"I think the FCC chair is in a position to play a leadership role in helping Congress formulate the rules," Sege said. "This is a critical time."

For CompTel/Ascent, a trade group representing competitors to the incumbents such as preacquisition AT&T, a new chairman represents a potential for a change in policy, away from Powell's decision to favor incumbent carriers.