House Panel Criticizes FCC Over New Telephone Rules

Members of a House panel lashed out Wednesday at the Federal Communications Commission for approving telephone regulations that some lawmakers blasted as confusing and anti-competitive.

In their second grilling on Capitol Hill in six weeks, the five commissioners faced nearly five hours of questions from the House Energy and Commerce Committee’s telecommunications subcommittee.

Some lawmakers were upset with the FCC’s 3-2 vote Feb. 20 to deregulate the market for high-speed Internet access while maintaining a requirement that the regional Bell companies lease parts of their local networks to competitors such as AT&T; Corp. and WorldCom Inc. at deep discounts.

Singled out for criticism was Republican Commissioner Kevin J. Martin, who voted with the commission’s two Democrats to defeat a competing proposal by FCC Chairman Michael K. Powell.

Commerce Committee Chairman Rep. W.J. “Billy” Tauzin (R-La.) questioned Martin’s party loyalty and his adherence to conservative, free-market principles. Tauzin asked why the FCC handed control over local phone policy to the states.

“You’ve said you want limited government, and yet you’ve taken a deregulatory commission and you’ve given that authority to 51 regulatory-minded commissions,” he said.

Martin responded that he believed that only state regulators were in a position to assess competition in local phone markets.

The ruling stemmed from a three-year FCC reexamination of rules designed to encourage long-distance firms to compete in the $100-billion-a-year local phone market and spur the Bells to offer long-distance service.

Lawmakers called the FCC decisions conflicting and said the rule changes would trigger price increases for consumers and cause financial turmoil.

“Where they had a chance to provide clarity and stability, they opted for chaos and continued regulatory haggling,” said subcommittee Chairman Rep. Fred Upton (R-Mich.).

Despite the testy questioning, FCC members said privately that they were surprised that lawmakers didn’t express greater anger over the FCC’s reform of local phone rules. Although the hearing was held to “examine the health of the telecommunications economy,” lawmakers devoted considerable time to media-ownership rules.

“Last night we were really strapping on the armor in anticipation we would be blasted on our telecom decision,” said one FCC aide. “But nearly half of the questions were about media concentration, which shows you the level of concern.”