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FCC Chairman Martin Unleashed

Mark Lloyd examines Martin’s troubling efforts to come to the aid of the very companies he’s supposed to be regulating.

Less than two months ago the U.S. Senate confirmed Kevin Martin to head up the Federal Communications Commission and already the chairman is laying the ground work for a major battle when a new Congress returns in January.

Only two weeks after his Senate confirmation, Martin directed the FCC’s General Counsel to consider whether Commissioner Robert McDowell could violate his ethics agreement to participate in the determination of BellSouth Corp.’s merger with AT&T Inc. McDowell worked as counsel for a trade association of telecommunications companies with an interest in the AT&T/Bell South deal. McDowell agreed not to participate in any proceeding regarding that deal for at least a year because to do so would violate longstanding canons of legal ethics regarding conflicts of interest.

We should have no doubt Martin understands that McDowell would vote alongside his Republican colleagues to approve a deal which the Bush Justice Department is already under attack for allowing. That Martin put the Bell South/AT&T merger in play so soon after his confirmation and a week before the 109th Congress would close its doors was no coincidence.

U.S. Senate Commerce Committee member Sen. Daniel Inouye of Hawaii, who will chair the committee when the 110th Congress convenes in January, called for a delay in the FCC’s approval of the merger so his committee could review it. Inouye said that waiving the ethics agreement and allowing McDowell to vote would derail negotiations over concessions necessary to preserve competition. What’s more, both James Sensenbrenner (R-WI), the outgoing chairman of the House Judiciary Committee, and the incoming chairman Rep. John Conyers (D-NY) expressed strong reservations about the deal.

But while traveling in an entourage with President Bush in Vietnam last month, AT&T senior vice president Chris Rooney expressed confidence that the deal would be approved without having to give up additional concessions. “We have great optimism in what we are doing with the FCC,” he told Information Week.

On December 18, however, Commissioner McDowell declined to ruin his legal reputation. He said he’d abide by his ethics agreement. That leaves the FCC deadlocked over whether to approve the AT&T-Bell South deal since two of the remaining four members of the commission are Democrats who oppose the merger.

Martin did not get his way on the merger, but he wasn’t done. Two days later, Martin demonstrated anew that Mr. Rooney’s optimism is not misplaced.

In a highly suspect maneuver, Martin and the other Republican on the commission, Deborah Taylor Tate—this time with McDowell in tow—decided to rewrite video franchising rules to give AT&T what it had not able to get through two years of lobbying Congress. Based on the unsupported allegations of telecommunications operators AT&T and Verizon, the Republican commissioners found that local governments were being too tough in their negotiations with these Baby Bells.

The FCC then ordered the following remedies: Local authorities must make a decision on whether to let the Baby Bells provide video service in a community within 90 days; “Unreasonable” build-out requirements will not be allowed; and the telecommunications companies can withhold payment or services it decides are beyond five percent.

Martin, of course, claims that the new FCC regulations remove local “regulatory barriers.” But as FCC commissioner Jonathan Adelstein argued after voting against the new rules, the FCC order seems more like legislation than the careful balanced fact finding required of expert administrative agencies. The FCC’s assertions of “drawn-out local negotiations with no time limits” and “unreasonable build-out requirements” are simply not supported by the record, said the Democratic commissioner.

The outrage of local authorities was swift. “We are confounded by today’s decision by the Federal Communications Commission that would systematically block the ability of local governments to protect their citizens, local assets and revenues,” said Don Borut, Executive Director, National League of Cities. “It is not in the best interest of America’s taxpaying public; it is not in the best interest of our citizens who own the public rights of way; it is not in the best interest of the widest number of consumers, who, depending on where they live or how much they are willing to spend, may be shut out from the most up-to-date technology by companies seeking to service only the most well-to-do neighborhoods. The cities and towns represented by NLC have urged fairness in the effort to reform telecommunications policy. That did not happen today.

Local officials are anticipating court challenges if the FCC acts on its new rules. But that doesn’t seem to trouble Martin and his Republican FCC colleagues since they seem as intent on running roughshod over local elected officials as they are on ignoring intense Congressional interest in these issues.

Rep. John Dingell (D-MI), who will exercise considerable oversight of the FCC in the new Congress, has already issued Martin a veiled warning. “It would be extremely inappropriate for the Federal Communications Commission to take action that would exceed the agency’s authority and usurp congressional prerogative to reform the cable television and local franchising process,” said the incoming chairman of the House Energy and Commerce Committee. Dingell has asked Martin to provide “statutory and legal citations” for the new Order and expects a response by January 3.

Whether Martin and the Baby Bells will succeed in slipping through any of these last-minute-of-the-year changes is extremely doubtful. What is not in dispute is that 2007 will bring new fireworks and much needed oversight to an FCC chairman determined to deliver on behalf of the giant telephone companies.

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