Major Problems Await Incoming FCC Officials

As Reed Hundt departs the Federal Communications Commission, he leaves behind a lot of unfinished business.

Under his chairmanship, the FCC was given the job of opening up the telecommunications market to competition so that consumers could enjoy more choices and lower prices for services such as local and long-distance phone calls and cable TV. Today, there are few signs of the competition that was ballyhooed as a result of the sweeping Telecommunications Act of 1996. What’s happened instead is industry consolidation, litigation and uncertainty.

As for lower prices, consumers generally are paying more for long-distance phone service, cable TV rates are rising even higher and competition in local telephone service hasn’t happened. We were supposed to see better Internet service and new services like video via telephone wires. That hasn’t happened either.

What’s going on? Is it the law or its implementation that is flawed? That is the big question for the four incoming FCC commissioners, whose confirmation by the full Senate is expected very soon.

The agency is encountering rising criticism in Washington and court challenges to its implementation of the telecommunications law. Last week a federal appeals court threw out FCC rules that were designed to foster local phone competition by forcing regional Bell companies to lease parts of their networks to long-distance carriers.

Among other issues confronting the FCC are TV broadcasters reneging on their promises to develop high-definition digital television programming in exchange for the use of an estimated $70 billion worth of public airwaves. Some of these companies now say they will instead broadcast lesser-quality digital programs or, worse, use the spectrum space for commercial purposes such as stock quotes and pager services. If broadcasters create profitable new businesses by using the public airwaves for purposes other than what they promised, they should at least pay for the privilege.

The four nominees to the FCC are well versed in telecommunications, unlike past commissioners who had to spend considerable time coming up to speed on issues. The chairman-designate, William E. Kennard, has been general counsel at the agency. Gloria Tristani is a member of the New Mexico Corporation Commission, which regulates phone service in that state. Harold Furchtgott-Roth is an economist for the House Energy and Commerce Committee and one of the drafters of the Telecommunications Act. Michael Powell is chief of staff of the Justice Depart- ment’s antitrust division.

Deregulation was supposed to benefit consumers but so far seems most beneficial to industry. Consumers may not be outraged yet, but as they realize they are still captive to one cable operator and one local phone company, with continually rising rates, that will change. The commissioners should move quickly to balance the public good with the communication industry’s health.