The FCC after Michael Powell

Published March 1, 2005

After four tumultuous years as chairman of the FCC, Michael Powell announced on January 21 his resignation, effective at the end of the month.

To the general public, Powell was known for his fights against Howard Stern, wardrobe malfunctions, and profanity on the Web. But Powell’s and the FCC’s far more important work was in the far more boring, but economically critical, area of telecommunications regulation.

Powell was, as Adam Thierer of the Cato Institute put it, “the regulator who loved markets.” A fan of Friedrich Hayek, Powell fought to reduce obsolete regulation of telephone markets and to keep new regulations from being imposed on emerging technologies. As a result, these markets are freer and Americans better off than they would have been otherwise.

Nevertheless, Powell leaves with many of his efforts incomplete. Reform of forced sharing rules leaves many of these senseless regulations in effect and mired in litigation. And despite good first steps toward protecting Internet telephony from regulation, the final status of that new service remains in doubt.

Many blame Powell’s unusual (some say eccentric) personal style for impeding reform. Recalcitrant fellow commissioners certainly didn’t help. Nor did a White House that was often unhelpful on key telecom reform issues.

Who’s Up Next?

The key question now is who will replace Powell.

One leading contender is current Commissioner Kevin Martin. Until recently, Martin was seen as a strong supporter of deregulation. But, in a critical 2003 battle, he broke ranks with Powell and teamed with the FCC’s two Democrats to pass a significantly more regulatory set of rules. For Martin to be rewarded now with the chairmanship would raise more than a few questions.

Fortunately, there are a number of other candidates. Among these: Peter Pitsch, Intel’s man for telecom policy in Washington and a former chief of staff at the Reagan-era FCC. Combining a firm grasp of free-market principles with an intimate knowledge of how Washington works, Pitsch could prove effective at leading reform. Similarly, Janice Obuchowski, who headed up telecom policy at the Commerce Department in the first Bush administration, would make an excellent choice. Another promising contender is Mike Gallagher, the current telecom head at Commerce.

Historically, FCC selections have been a bit of an afterthought for presidents. For better or worse, that is no longer true: The FCC now sits front and center, regulating (or not regulating) key parts of the information economy. The selection will also say much about Bush’s attitude toward regulation as a whole during his second term. This is an opportunity that should not be squandered.

James Gattuso ([email protected]) is research fellow in regulatory policy for the Roe Institute for Economic Policy Studies at The Heritage Foundation.