From...

March 19, 1999
Web posted at: 8:39 a.m. EST (1339 GMT)

by Elizabeth Wasserman

WASHINGTON, D.C. (IDG) -- The chairman of the Federal Communications Commission unveiled a plan for restructuring the agency during a congressional hearing Wednesday. His proposal focused on enforcement, consumer protection and licensing, but he turned to lawmakers for assistance in dealing with tough issues posed by the Internet and technological convergence.

"We must do what we can without legislation," Chairman William Kennard said during questioning by the House Commerce subcommittee on Telecommunications, Trade and Consumer Protection. "But we would certainly welcome you to address the issue of convergence legislatively."

Kennard's testimony included "A New Federal Communications Commission for the 21st Century," a report that spells out a procedure for restructuring, streamlining, deregulating and planning strategically to transition the commission into a new role. Kennard said that in an era of market competition, he wants the agency to focus more on law enforcement than on its current central mission of regulation. He suggested that implementation of this plan could begin by next year.

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Kennard pointed out that in the three years since Congress directed the FCC to implement the Telecom Act, competition in the communications industry has thrived. The communications sector has grown by more than $100 billion. In the wireless industry, investment has tripled since 1993; mobile phones are now used by more than 60 million people every day. While acknowledging the need to open local phone markets to greater competition, he noted that consumers are beginning to see price reductions because of competition in wireless, long distance and international calls.

Meanwhile, Kennard said in written remarks, the surge in Internet use and the convergence of technologies across communications industries pose regulatory issues that are "complex. Telephony is regulated one way, cable a second, terrestrial broadcast a third, satellite broadcast a fourth. As the historical, technological and market boundaries distinguishing these industries blur, the statutory differences make less and less sense. Maintaining them will likely result in inefficient rules that stifle promising innovation and increase opportunities for regulatory arbitrage."

Kennard then called on Congress and other stakeholders for help in resolving these issues. The different regulations all stem from laws established by Congress: the 1887 Interstate Commerce Act (governing telephony), the 1927 Federal Radio Act (governing broadcasting) and the 1984 Cable Communications Policy Act (governing cable television). "We need to make sure that the rules for different forms of media delivery, while respecting differences in technology, reflect a coherent and sensible overall approach," Kennard said. "To the extent we cannot do that within the confines of the existing statute, we need to work with Congress and others to reform the statute."

Subcommittee chairman Rep. W.J. "Billy" Tauzin (R-La.) called the hearing on reauthorization of the FCC last week to "re-mission" the 65-year-old agency.

Concerns about the FCC and its mission are bipartisan. One of the subcommittee's Democratic stalwarts, Rep. John Dingell (D-Mich.) pointed out that Tauzin's term "re-mission" is often used in reference to cancer. "I fear that in certain parts of the commission something like that is going on," Dingell said. His concerns deal more with the universal service fund and access charge reform in telephony than with the issue of convergence.

Tauzin presented Kennard with a list of complaints that consumers and industry had presented to the subcommittee. That list included complaints of redundancy – for example, that the FCC reviews mergers at the same time the Justice Department reviews mergers. Companies also complained that in order to avoid long waits for licenses or commission rulings, they have to play "Let's Make a Deal" with the commission. In addition, the commission heard the sentiment that the playing field isn't level between different segments of the communications industry, such as telephone and cable, who are competing to provide broadband services to consumers.

Wednesday's hearing is expected to be one of many this spring dealing with the FCC. The Senate Commerce Committee Chairman has scheduled a hearing on the rollout of broadband services for March 24.