Hey Michael, Thanks for Nothing

By Joshua E. Barbach

FCC Commissioner Michael Powell announced his resignation in January. His was a busy tenure. Powell was part of three attempts to write unbundling rules, twice as Chairman. Despite speeches filled with a strong emphasis on his pro-competition stance, there were nine significant communications mergers during his tenure. A review of Powell's career reveals a long line of well intentioned statements and protests for the letter of the law that did little to prevent the reconsolidation of telecommunications by the RBOCs. The RBOCs got what they wanted, with regulation turning in their favor. It happened under Powell's watch, despite what he had to say about it.

Powell was Pro-Competition?
What happened to the pro-competitive stance Powell assumed in his early days with the FCC? An excerpt from his first speech, given December 1997, reveals that things have not changed that much in telecommunications:

"Let me conclude with a diagnosis. Washington tends to suffer from the disease "Big-Guy Myopia." AT&T, Sprint, and MCI are not the only long distance companies in America, nor are the BOCs and GTE the only local carriers. Yet all too often we act as if they are. We write one-size-fits-all policies based on the experiences, data, and promises of the big guys, we short-sightedly cut deals with one or two large companies, and, fatally, we measure the success of competition, new market entry, innovation of services, and prices by what these giants are doing."

Now there are fewer of these “Big-Guy” companies, controlling a greater percentage of the market than there were in late 1997. There was once a time when the increasing number of wireless competitors was celebrated by the FCC. Commissioner Tristani, in 1999 said, “consumers, if they were lucky, had a cellular duopoly for choice. Today, most Americans have at least five -- and some as many as six -- providers to choose from." But that number is being reduced back to previous levels.

There have been nine significant mergers during Powell's tenure. He concurred with the SBC-SNET, Worldcom-MCI, SBC-Ameritech, Qwest-US West, Bell Atlantic -GTE, AOL-Time Warner, ATT-Comcast, News Corp-DirecTV and ATT Wireless-Cingular mergers. The Sprint-Nextel proposed merger has received no public statement from the FCC. Meanwhile, SBC has talked merger with ATT, and Verizon is targeting MCI. There can be little wonder why Alltel acquired Western Wireless. With over 10 million combined customers, Alltel would remain on the main stage, if just slightly in the background.

The competitive market is shrinking. Consider the situation if all the mergers go through. The telecom landscape looks like the following: Cingular, Verizon Wireless and Sprint-Nextel would control more than 80% of the US wireless market. With ATT and MCI soon to be absorbed by the RBOCs, that would leave Sprint-Nextel as the only major telephony player without a BOC history. The RBOCs still control more than 80 percent of the local access market. This leaves just a few entities in control of the U.S. telecommunications market.

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