Congress Corrals the FCC

By SmallBusinessComputing Staff | Posted April 01, 2001
by Robert J. Wagman

A little noticed provision added to an appropriations bill in the final hours of the 106th Congress last November indicates a shift in Congress' attitude towards how the telecommunications industry should be regulated.

Congress passed the Telecommunications Act of 1996 to drive down prices of phone and data services to consumers. Initially, Congress was happy to allow the Federal Communications Commission, under activist chairman William Kennard, to administer the new law and to find ways to foster competition. Large media corporations chafed under Kennard's efforts, making their unhappiness known to influential members of Congress -- and dropping large campaign contributions along the way.

The last-minute provision inserted in the budget bill forbade the FCC from spending any money to administer its low powered radio station licensing program which is intended to help establish small radio stations operated by non-profits and community groups all across the country. Established broadcasters opposed the effort, and the budget restriction effectively killed the program.

The significance of the measure was far broader than the radio broadcast industry. It sent a clear signal that Congress was taking back much of the independent regulatory power it had ceded to the commission to implement the 1996 Act.

Louisiana Republican Billy Tauzin, a free market deregulator, assumed leadership of the House Energy and Commerce Committee, which oversees the FCC. Kennard, meanwhile, has left the commission, which leaves its leadership with the new chairman, anti-regulation advocate Michael Powell. Most observers believe we are likely to see a retrenchment of the FCC's regulatory authority.

The last time the FCC retrenched was in 1982, at the start of the Reagan administration. This will probably mean that broadcasters, telephone companies, and established industries will profit, and efforts at greater competition will suffer. Though good news for the big guys in these industries, this will probably stifle some of the innovative programs aimed at bringing new smaller companies into the telecommunications industry.

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