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MORE ON MICHAEL POWELL & CONFLICTS OF INTEREST
Share / Recommend - Comment - Print - Thursday, Dec 16 2004, 5:01PM
I have had a surprisingly strong reaction to what I wrote yesterday about a very anti-competition decision from the FCC that allows Baby Bells to choke off fair access to local facilities under their control.
I thought these kinds of competition and telecom issues would not generate much interest -- but I have already had more than 100 emails in reaction.
These facilities were once part of the AT&T telecommunications monopoly -- arguably bought and paid for by U.S. consumers paying monopolistically determined rates for those facilities now under the control of these Baby Bells. To ensure competition, the Congress passed the 1996 Telecommunications Act to compel those controlling these facilities to provide wholesale access to competitors -- so as to promote competition and in order to benefit the consumer.
Well, because of the FCC's decision yesterday and other recent FCC rulings, America is back in the pre-1996 era, and consumers are screwed.
I argued yesterday that the pattern of decisions that Michael Powell and his cabal have pursued make no sense because they so blatantly fly in the face of the public interest. Whose interests are being served?
All I can figure at this point, until someone makes a better case to me, is that Michael Powell is serving his own interest as well as, perhaps, the economic interests of his staff.
This note came in today from an informed TWN reader:
Steve -- Apropos of your speculation on Michael Powell's future career plans, I wanted to draw your attention (anonymously, if you don't mind) to the fact that News Corp hired two Powell aides -- Susan Eid and Paul Jackson -- as lobbyists not long after Powell released a set of media ownership rules that would have benefited Fox and other big station groups. (Check out Broadcasting & Cable, "Capital Watch," 3/1/2004 -- it's in Lexis/Nexis.)
It's particularly curious that News Corp would have hired Jackson, formerly the FCC's congressional lobbyist, considering the FCC had horribly bungled its relationship with Congress and received one of its strongest rebukes ever in the form of various votes against Powell's ownership rules. Only the administration stepping in at the last minute allowed the ownership cap to be lifted as a matter of law.
What corporate boards is Michael Powell going to be invited on?
I think that the action plan here is to get the administration to reverse its rule relaxation on employment and lobbying by senior officials leaving government. As reported December 5th in the Washington Post:
. . .the Office of Government Ethics declared that it was relaxing prohibitions on lobbying by former Cabinet secretaries and other top officials.
Until now, senior officials at Cabinet departments and agencies had not been allowed to lobby former colleagues for a full year after leaving office -- a rule designed to prevent an obvious conflict of interest. But, in a notice in the Federal Register, the ethics office issued a new rule invoking its power to declare that "a former senior employee who served in a 'parent' department or agency is not barred . . . from making communications to or appearances before any employee of any designated component of that parent."
Before 9/11, the Enron fiasco looked as if it was going to take the Bush administration down. John McCain was licking his chops and planning to challenge Bush who had done little to curtail the collusiveness and corruption that had penetrated many of America's blue chip firms.
This relaxation of ethics rules is a big deal, and I will be writing more about this soon. I would enjoy hearing from any in appropriate positions how best to compel the administration to reverse this decision.
In the mean time, The Washington Note is going to pay close attention to the job and consulting relationships of Michael Powell, his fellow anti-competition FCC commissioners, and other FCC staff.
-- Steve Clemons
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Good Stuff Steve,
Michael Powell is a real piece of work...a real dirtbag, I'd say he's a disgrace to his father, but his father is so busy disgracing himself, you'd wonder if there wasn't some intergenerational competition on who could take the Powell name down to the level of Eden's serpent.
It is not the Bush administration's goal to "curtail the collusiveness and corruption" in America's blue chip firms. It is, rather, to emulate it. Just as rules are bent, broken or ignored by the likes of Enron, the Bush administration has used the same tactics in every area of its endeavors, from waging war by ignoring the Geneva Conventions, to protecting the environment by raping it and calling it lovemaking. Their singular ability to conveniently rewrite the rules must be the envy of robber barons everywhere.
The Powell family has rather well developed insctincts when it comes to gathering lucre.
Colin Powell's net worth was a few hundred thousand dollars when he retired from the Army and was $27Million when he was up for confirmation as Secretary of State a few short years later.
Board memberships, speaker's fees ($80k/pop was his rack-rate) and $6 mil for his memoirs.
A very senior government position in Washington pays less than $200K/yr including benefits, but the opportunities for serious money AFTER holding public office are better by several orders of magnitude.
This fact of Washington life has clearly not escaped the Powells (Père et Fils.
JohnStuart
Take him down, Steve.
Ever since I saw Billy Tauzin call LATA lines "latta lines" (they come with more steamed milk than the other kind), I knew the fix was -- eventually -- in. This is only the latest of a series of historically bad decisions from FCC, but it's probably the most blatant attack on the principles of the 1996 Act.
Don't get me wrong -- TELRIC had, and still has, implementation flaws that need to be addressed. But shutting down UNE-P access (except for some local loops) is baby-and-bathwater territory. UNE-L competition is expensive, subject to frequent ILEC interference, and forces new players to compete with companies that emplaced their equipment under the aegis of sanctioned monopoly. For example, I don't know any CLECs who are offering voice access over UNE-L.
Economically, the cumulative effect of FCC's decisions will be massive. In Texas, TELRIC+UNE-[P,L] means around $2 billion/year in consumer savings on voice lines. A lot of that money is now going to sink back into the monopolistic quagmire of the RBOCs.
That *was* a lot of acronyms, wasn't it? For those who aren't versed in telecom-speak:
LATA: Local Access Transport Areas. Calls within LATAs are local; inter-LATA calls are long-distance. Inter-LATA can be either intra-state or inter-state.
TELRIC: Total Element Long Run Incremental Cost. An FCC pricing scheme for CLEC access to ILEC UNEs. ILECs have repeatedly argued that TELRIC provides insufficient compensation for UNE access. TELRIC pricing was adopted by FCC because the "avoidable cost" discount set forth by Congress was thought to be too shallow.
ILEC: Incumbent Local Exchange Carrier. Also known as RBOC, Regional Bell Operating Companies. The "Baby Bells" created after the breakup of Ma Bell. ILECs are primarily known for owning the "local loop" and "central offices" used in wireline voice and data.
CLEC: Competitive Local Exchange Carrier. CLECs can lease loops (UNE-L) and network elements (UNE-P) from ILECs under TELRIC pricing.
UNE: Unbundled Network Elements. The individual elements that allow a subscriber to connect voice or data to the world at large. UNE-P includes port and switch access; UNE-L includes only loop access (and precious little loop access at that, since FCC has exempted new fiber rollout -- which means that even facilities-based players who can offer DSL won't be able to share in the FTTC of the future).
I haven't followed Telecom Act issues closely for a few years, so my information is probably out of date and somewhat fuzzy. Basically, FCC has slowly been dismantling the UNE-P provision requirements of the 1996 Act, which makes it harder for CLECs to compete. As long as a CLEC can buy UNE-P from the ILECs, they can compete without buying facilities. If they only have access to UNE-L, then they need to collocate equipment, which is expensive. If you're offering DSL, then you need to collocate at the DSLAM as well as the CO, which is even more expensive. Then you need to get bandwidth out of each CO for your subscribers, which ain't peanuts either. And, unlike UNE-P purchasing, you have to buy all your capacity upfront, which means that you're going to sink millions of dollars into the game before you put your first line into operation.
In this case, they'll still (for a while) have access to UNE-P, but at a significantly increased rate. What's going to happen is the larger non-facilities CLECs will have to transition to UNE-L mode, while smaller CLECs will deal with facility middlemen like XO, who will sell them elements at a higher-than-TELRIC/lower-than-wholesale cost.
All of this could, IMO, been addressed by reforming TELRIC. But no one was asking me.
Maybe I missed something - what is the relevance of that to Steve's post?
Powell is also behind efforts to regulate pre-paid calling cards --- the impact of this would especially be felt by our troops overseas who use these cards to call home. It's interesting to note that his call for regulation matches the statements from Bell companies losing fees to pre-paid card companies who are lobbying the FCC heavily on this issue.
So, as if it wasn't enough that the Pentagon sends our troops into battle without body armor, now Michael Powell and the FCC are trying to take pre-paid cards away from them.
Love this blog, Steve...Keep it up!
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