Supreme Court says Telecommunications Act grants promiscuous rights to the FCC

By Stephen N. Brown

Local phone companies and congressional supporters assail the FCC for creating a "legal morass," but the Supreme Court blames Congress. Meanwhile, presidential politics surface.

Local phone companies have litigated against the Telecommunications Act of 1996 since its creation. They challenged certain portions of it as unconstitutional while also claiming the Federal Communications Commission (FCC) exceeded its authority in administering the legislation. Those arguments were swept aside by Supreme Court actions in December and January, when the Court ruled that the FCC`s authority to set prices overrides a state`s authority when local companies lease portions of their networks to competitors. The Court`s actions cement the FCC`s authority and discretion to implement the act.

The local companies, their trade associations, and their congressional supporters bitterly complain about the agency`s discretion. Roy Neel, a former adviser to Vice President Al Gore and currently president of the United States Telephone Association, said the act "is sound, it`s the FCC interpretation that is not." The president and chief executive of US West, Solomon Trujillo, said, "The FCC`s rules are stopping millions of people dead in their tracks from accessing the information highway....What should have been rules of transition to full-speed market competition have become their own barriers and created a regulatory and legal morass that has blunted the intent of the act." U.S. Representative William Tauzin, (R-LA), chairman of the House Subcommittee on Telecommunications, Trade, and Consumer Protection, said of the FCC, "We`ve got a horse-and-buggy agency trying to bridle a supersonic technology." Senator John McCain, (R-AZ) chairman of the Senate Commerce Committee, said in a letter to FCC chairman William Kennard, "[T]he Commission may be preparing to adopt a set of rules that will make it unworkable for incumbent local telephone companies to fully deploy advanced broadband services....I caution you. Commission action that would quash substantial new investment...by incumbent telephone companies...would be unfathomable."

Members of Congress have themselves to blame when they complain about the FCC, according to the Supreme Court. On Jan. 25, the Court concluded its decision in the case of AT&T Corp., et al., versus Iowa Utilities Board, et al., with damning words for Congress: "It would be a gross understatement to say that the Telecommunications Act of 1996 is not a model of clarity. It is in many respects a model of ambiguity or indeed self-contradiction. That is most unfortunate for a piece of legislation that profoundly affects a crucial segment of the economy....The 1996 Act can be read to grant (borrowing a phrase...) `most promiscuous rights` to the FCC vis-a-vis state commissions and to competing carriers vis-a-vis the incumbents--and the [FCC] has chosen in some instances to read it that way....Congress is well aware that the ambiguities it chooses to produce in a statute will be resolved by the implementing agency."

Because a majority of the FCC commissioners who resolve such ambiguities are members of the party controlling the White House, the Court`s statement is the best proof that the Telecommunications Act is a revolving four-year bet about who wins the presidential election. In 1996, the local companies backed the Republican candidate, Bob Dole. He lost and so did they. This explains why the most persistent and intense complaints about the FCC come from local telephone companies and Republican office holders. Presidential politics will always influence how the FCC resolves ambiguities.

Presidential considerations

From its earliest days, the Clinton-Gore administration emphasized its commitment to the private sector as the vehicle bringing the information superhighway to the public. Government ownership, especially at the local level, is shunned. That view played out in the FCC`s decision regarding section 253 of the Act, which says, "No State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide interstate or intrastate telecommunications service."

Nearly three years ago, the Texas legislature passed a law barring municipalities from offering telecommunications services. The FCC refused to preempt the law, reasoning that the agency could not interfere with a state`s right to control its political subdivisions. Since then, much of the private-sector telecommunications industry has taken the Texas model and applied it in other states to ban public-sector provision of telecommunications services. In a last-ditch effort to establish a national principle that cities should be allowed to offer such services, Abilene, TX, challenged the FCC`s order, saying the act`s language was clear and that "any entity" is such a broad term that it must include municipalities.

Not so, said the federal district court in Washington, DC. It upheld the FCC and wrote, "Abilene thinks it important that [Section 253]...places the modifier `any` before the word `entity.` If we were dealing with the spoken word, the point might have some significance, or it might not, depending on the speaker`s tone of voice. A speaker, by heavily emphasizing the `any` in `any entity,` might be able to convey to his audience an intention to include every conceivable thing within the category of `entity.` But we are dealing with the written word and we have no way of knowing what intonation Congress wanted readers to use. All we know is that `entity` is a term Congress left undefined in the Telecommunications Act." This ambiguity could have been resolved in Abilene`s favor, but there was nothing for the FCC and its controlling authority to gain by upending state laws supported by private-sector interests.

Presidential politics probably affected another FCC decision, where the agency concluded that advanced telecommunications capability is being deployed to all Americans in a reasonable and timely matter, in accordance with the act (see Lightwave, March 1999,䂂). The agency endorsed the notion that 200-kbit/sec upstream delivery is "advanced" for the time being. Although the commission`s record in that case is composed of 298 filed documents, not one document comes from the U.S. government`s very knowledgeable civilian agency, the Commerce Department`s National Telecommunications and Information Administration (NTIA). This absence is conspicuous because the FCC considers the NTIA a source of expertise. When implementing the act`s section 251 interconnection rules two years ago, the Commission said, "We also received helpful advice and assistance from other government agencies, including the NTIA."

There is further evidence that the FCC holds the NTIA in high regard. Within the past year, the FCC filled two high-level positions, chief of the Wireless Telecommunications Bureau and chief of the Commission`s Common Carrier Bureau, with recruits from the NTIA. Its assistant secretary is Larry Irving, who has a long history of involvement with telecommunications. For years, he was an advisor to U.S. Representative Edward Markey (D-MA), the ranking Democrat on Tauzin`s subcommittee.

With so much expertise and policy insight, the NTIA would have been a logical choice to voice a noncommercial public-interest opinion on the deployment of advanced telecommunications capability. The NTIA`s silence on this issue is a clear sign of something amiss. It is not unthinkable that presidential aspirations played a role in keeping the NTIA silent while the FCC defined advanced telecommunications capability as a minuscule 200 kbits/sec. Vice President Gore is very closely associated with telecommunications policy and the act. If it were seen as a failure because advanced telecommunications is not being deployed to the public, such a perception could be a weapon against Gore`s quest for the presidency. In this context, the FCC would not hand a tool to Gore`s opponents, especially to Senator McCain, who has made his own presidential aspirations well known.

But this situation raises another issue: How often will the FCC tailor its decisions to protect Al Gore, especially when he does not need the protection? According to a CNN/USA Today/Gallup poll, Gore`s job-approval rating is 64%, and 59% of the public has a positive view of him. With support like this for its mentor and sponsor, the FCC does the Vice President no service by using its so-called promiscuous rights to define 200 kbits/sec as advanced telecommunications capability.

Stephen N. Brown specializes in market research and public policy toward new technology in the telecommunications industry. He can be contacted at tel: (615) 399-1239.