Powell to Step Down at F.C.C. After Pushing for Deregulation

The New York Times
January 22, 2005
Powell to Step Down at F.C.C. After Pushing for Deregulation
By STEPHEN LABATON

WASHINGTON, Jan. 21 - Michael K. Powell, who has overseen the Federal Communications Commission during a time of helter-skelter convergence among telephone, television and high-speed Internet services, announced Friday that he would be stepping down from the agency in two months.

Mr. Powell sought to roll back regulation of each of those industries. But on his watch the F.C.C. also enforced stringent decency standards, imposing hefty fines on television and radio broadcasters.

Administration officials and industry executives said that two leading contenders had emerged to succeed Mr. Powell as chairman. One is Kevin J. Martin, a Republican commissioner and former White House official who several times foiled Mr. Powell's attempts to deregulate broadcasters and telephone companies. The other is Becky A. Klein, a senior policy adviser to George W. Bush when he was governor of Texas and a former chairwoman of the Public Utility Commission of Texas. She lost a Congressional bid two months ago. Her campaign received a large amount of financial support from executives at telecommunications companies who expected she would be a top contender for the F.C.C. job.

Both Mr. Martin and Ms. Klein have close ties to Mr. Bush and they have track records that are less ideological than Mr. Powell's. Both have taken steps as regulators that at times have angered the large Bell companies and at other times pleased them. Working in Mr. Martin's favor is the fact that he is a sitting commissioner and, as such, could fill the position quickly because he would not need Senate confirmation. Some broadcasters are concerned, however, that Mr. Martin could be even more aggressive than Mr. Powell in enforcing the indecency rules.

The officials and executives said that other candidates being considered to succeed Mr. Powell include Michael D. Gallagher, the top Commerce Department official on telecommunications issues; Pat Wood III, another former Texas regulator who is head of the Federal Energy Regulatory Commission; and Janice Obuchowski, a consultant who worked in the Commerce Department during the administration of the first President Bush.

The White House is also expected to soon have a second Republican vacancy on the five-member commission. Kathleen Q. Abernathy, an ally of Mr. Powell, has recently told administration officials that she intends to step down.

Mr. Powell, 41, who became chairman four years ago this week after serving the prior three years as a commissioner, has told friends that he will take time off after he leaves the F.C.C. to consider his next career move. His announcement has long been expected although the way his resignation was initially disclosed - in an editorial on Friday in The Wall Street Journal - was unusual.

"Having completed a bold and aggressive agenda, it is time for me to pursue other opportunities and let someone else take the reins of the agency," he said in his statement. "The seeds of our policies are taking firm root in the marketplace and are starting to blossom."

Mr. Powell, the son of Secretary of State Colin L. Powell, who is also leaving his post, declined to discuss his decision.

His successor faces a number of difficult challenges. The commission has to decide how it will regulate the newly emerging telephone services being offered over the Internet.

It also faces significant issues on the transition to digital television and on overhauling the multibillion-dollar universal service fund that provides telephone and Internet services to rural areas, schools and libraries. And it has not announced how it will respond to the decision in June by a federal appeals court casting doubt on the commission's attempt to allow media conglomerates to own more television, radio and newspaper properties.

"There is a large agenda of unfinished business," said Blair Levin, a former top official at the commission during the Clinton administration who is now a senior regulatory analyst at Legg Mason, the financial services company. "Powell leaves a very mixed record."

When he was appointed, Mr. Powell vowed to erase scores of regulations - from those restricting the size of media companies to those setting wholesale phone rates. He also promised to consider relaxing the tough indecency rules restricting television and radio broadcasters. Those positions earned him significant support among the largest telephone and broadcasting companies.

Although he was fortunate enough politically to be able to work with both a Republican White House and a Republican Congress, industry executives and analysts said he nonetheless fell short of his agenda. His efforts at deregulating the media ownership rules were blocked by the appeals court. His attempt to revamp the phone-rate rules failed initially after Mr. Martin broke ranks with him. After an appeals court struck down the rules, the commission rewrote them and they are once again being challenged in court.

He also sharply shifted emphasis on broadcasting regulations and indecency. As a commissioner, and early in his tenure as chairman, he was praised by companies and First Amendment organizations for saying it was time to eliminate the double standard that allowed the government to subject broadcasters, unlike cable and satellite television, to indecency and other speech regulations.

But under pressure from lawmakers and some conservative organizations, he wound up leading the agency through one of its most aggressive enforcement periods and expanded the indecency rules. His shift became apparent about a year ago, after the House and Senate adopted resolutions critical of an F.C.C. staff conclusion that Bono, the lead singer of U2, did not violate indecency rules by uttering an expletive after winning a Golden Globe Award on NBC; the commission later overruled its staff.

Mr. Powell has said the broadcasters have lowered their standards in a quest for higher ratings. But industry lawyers say the broader interpretation of the rules has had the effect of chilling legitimate speech.

Consumer groups praised Mr. Powell for two regulatory changes. The first, done with the Federal Trade Commission, set up a "do not call" registry that restricts telephone solicitations. The second fostered competition among mobile phone companies by permitting customers to retain their phone numbers when changing providers.

But the groups also sharply criticized Mr. Powell for a variety of other policies that they said led to higher prices and reduced competition. They said his policies had the effect of introducing some competition for services being sought by wealthier consumers, like high-speed Internet service, while neglecting the needs of the less affluent.

"During his tenure, cable rates have risen almost three times faster than inflation, satellite prices are beginning to similarly rise, broadband prices have increased and there has been enormous consolidation in the wire line and wireless services," said Gene Kimmelman, a senior director of public policy at Consumers Union. "Powell was more concerned about preserving competition for wealthy people, people who already have broadband, people who have video service. The people who used to rely on the long-distance companies, who want more choices for their cellphone carrier, they were left out in the cold."

It was a sign of the contentious, and, to some, disappointing nature of his tenure that Mr. Powell received as much praise as criticism on Friday from various industry leaders.

Senator Byron L. Dorgan, the North Dakota Democrat who fought to reverse the commission's decision to relax the media ownership rules, said, "I wish him the best in the future and look forward to working with his successor, who I hope will see things a little differently on the need for localism and diversified ownership of broadcasting stations."

Richard E. Wiley, a commission chairman in the 1970's and a telecommunications lawyer with Wiley Rein & Fielding, said Mr. Powell "was a strong, visionary leader."

"I've watched them all come and go and I think he has been one of the better ones we've seen, particularly in understanding the technological issues," Mr. Wiley said.

Others were not as laudatory. "It actually gives us hope that there can actually be a new agenda at the helm of the F.C.C.," Jeff Zucker, president of the NBC Universal Television Group, said in answering a question at a gathering of television critics in Los Angeles. "I think it's a real opportunity, quite frankly."

The Parents Television Council, an advocacy organization that has lobbied hard for more stringent indecency rulings, was equally critical, saying the F.C.C. could have gone further during Mr. Powell's tenure. "While we acknowledge and respect his many years of service to the nation in a number of capacities, Michael Powell has brought us four years of failed leadership at the F.C.C.," said L. Brent Bozell, president of the council.

Officials have said that the commission has traced virtually all of the complaints received over the last two years - with the exception of those involving last year's Super Bowl halftime show featuring Janet Jackson - to the parents' council.