With the GOP-led Congress headed full-steam ahead toward passage of landmark telecommunications reform legislation this year, perhaps it is worthwhile to question the conventional wisdom underlying the policies being shaped into law.
1. The overhaul of the Communications Act of 1934 will lead to greater competition in the telecommunications industry.
Legislation will lead to more competitive policies but the leap to competition in monopoly markets is another story. Some lawmakers, consumer advocates and the Clinton administration say Republican-crafted telecommunications bills in the House and Senate are bad for competition and the buying public.
In fact, lifting regulatory restraints from huge, muscle-bound telecommunications firms could easily allow them to get bigger as fast as small- and medium-size companies get smaller – or disappear. If anyone grabs 5 percent or so of the local telephone market by 2005, I’ll ‘fess up to being wrong.
Maybe policy wonks one day will figure a way to make the rest of the telecommunications industry as competitive as the wireless sector will become
2. The Justice Department should not have a role in telecommunications reform.
The Republicans don’t want Anne Bingaman, chief of DOJ’s antitrust division, or any of her successors near telecommunications policymaking. She thinks otherwise, as doe the Clinton administration and House Judiciary Committee Chairman Henry Hyde, R-Ill.
But GOP lawmakers, in spite of themselves, are guaranteeing Justice more of a say in telecommunications reform than perhaps they have today or even would have were Congress to write the department into the legislation.
You see, House Speaker Newt Gingrich, R-Ga., has inspired GOP troops to phase out the FCC over the next several years. The first sacrifice House telecommunications subcommittee Chairman Jack Field, R-Texas, may offer up this year may be the FCC’s Competition Division.
The Office resides in the Office of General Counsel, has bout 20 employees and is responsible for applying strict antitrust analysis to would-be rulings.
Industry apparently likes the work of the Competition Division and its chief, James Olson. So Congress will get rid of it. Fine. What happens then? Easy. After the telecommunications industry has operated under the law of the jungle for a few years, without antitrust analysis at the front end of the process, the Justice Department will step in with a flurry of antitrust investigations. By then, of course, the damage will have been done in the marketplace.
The FCC to the chagrin of Newt and friends, is not likely to go away soon either. House and Senate Republicans, not wanting Justice involved, want to give the FCC most of responsibility for implementing sweeping telecommunications reforms. The assumption is that after being in place a few years, regulations and the agency administering them can walk into the sunset.
But it probably won’t happen that way. Regulation may give way to deregulation, but perhaps not to the competition desired.
So long live the FCC and bravo for a magnificently ironic ending to the great telecommunications debate of 1995!
