Down and out in D.C.

Jul 12, 2002 12:00 PM, Peter Bernstein

Recently, I was fortunate to be part of an event held in the stately Mansfield Room of the U.S. Senate, named after the longest-serving Majority Leader in our history, Senator Mike Mansfield. One of the guest speakers was Rep. William (Billy) Tauzin of Louisiana. Yes, that Billy Tauzin of "Tauzin-Dingell Bill" fame. Sitting in this smoke-free room off the Senate Chamber the day after MCI's meltdown and two days before the Capitol was rumored to be on fire caused me to reflect on my 27 years of experience in the telecom industry and how much has changed, and how much has remained the same. Smoke and fire in Washington, D.C., seems to be a commodity not seen in such abundance since the British burned the place during the War of 1812. 

How much has changed is that 24 years ago I was a young lobbyist sitting in a room near the Mansfield Room with a group of people that included a chain-smoking Bill McGowen. Yes, that Bill McGowan, founder and CEO of MCI. We were having a meeting with staff members of Sen. Ernest (Fritz) Hollings of South Carolina (yes, that Sen. Hollings who called the Tauzin-Dingell Bill "dead on arrival"). The meeting centered around the attic-to-basement rewrite of the Communications Act of 1934 going on in the House of Representatives and what the Senate was planning.  The issues were:

• How to encourage competitive market entry

• How to insure universal services and at affordable rates

• How to enable the franchised and heavily regulated incumbents to exercise their full potential in the marketplace while limiting the amount of government interference/micro-management.

My, how little has changed except for the passage of time and a few individuals. 

The last point about the passage of certain individuals, however, demonstrates the dialectical nature of our industry.  Much and little has changed.

On the "how much" side of the ledger as it relates to individuals, Rep. Tauzin is an interesting case. He has done his homework on the industry for which his committee has oversight.  He has anecdote upon anecdote demonstrating his grasp of what is going on in the technology. He poses a skilled politician's sense for a turn of a phrase, the moment for a story that includes helping little kids who have nothing, and the ability to say much without saying anything. However, he lost me when he started talking about his bill. It is supposed to do everything in the three bullets. The modern jargon is: create a level playing field, insure a public policy environment that encourages investment by eliminating inconsistency, and end the digital divide. It starts with a premise that government has no business telling property owners, the ILECs, what to do with their property in terms of sharing it (especially at supposedly confiscatory rates) with others. "That's a violation of the Fifth Amendment," he thunders. 

The problem is he forgets that the reason those ILECs have the property is because the government gave it to them, as a public trust. Trust is what is broken. As they say, "The Lord Giveith and the Lord Takeith away." (Although now that the Supreme Court has declared we are not a nation "Under God," who knows? Our currency says, "In God We Trust"). It certainly is not in government that we should trust according to Rep. Tauzin, except it appears when we are giving entities a license to print money in perpetuity and tilting the competitive playing field in their favor when they run into trouble.

Representative Tauzin says competition is the best substitute for government screwing up markets, yet his prescription is government screwing up the markets by foreclosing real competition. As Charles Gibson used to intone on Laugh In when he played a simulation of Sergeant Schultz from Hogan's Heroes, "very interesting, but very peculiar!" The "Consumer Communications Reform Act of 1976," a.k.a., "The Bell Bill," never had such an advocate, it might have passed if only... 

On the "how little" side, the CEOs of today don't look much different from Mr. McGowan. He of the cult of personality CEO, extravagant lifestyle, the high-risk/high-reward business tactics. He who miraculously got to the top of the heart transplant line. He who built a company on borrowed money and a great legal team. What Mr. McGowan apparently overlooked was the need for "creative accountants."

However, what we are missing, that Bill McGowan had in great supply, is vision--of how competition really should unfold--and people who can execute. Indeed, corporate malfeasance aside, what our sector desperately needs at the board of director level are true independent directors who understand: our industry, not just how to run (into the ground?) a large corporation; the power of networking and the relationship of technology to enabling next-generation value creation;  and sales and marketing. The days of "rounding up the usual suspects"--allowing them to sit on five or more boards, and no balking when they pay little attention to the details of management's strategy, never mind the details of the auditor's reports--hopefully are over.

There is a wealth of talent who actually know how to run networks and please customers who have been jettisoned in the telebomb. The industry needs to reach out to those of integrity and wisdom to help right the ship. The recruiters are being as quoted as saying nobody wants to serve on boards anymore. The recruiters are part of the problem, they are asking the wrong people. I for one would be delighted to be a director on the right kind of board. As the bumper sticker of my least favorite politician used to read, "He's smart, he's tan, he's ready, Nixon in 1980." 

I am available. There are lots of people like me who are also available. Maybe a change where it can really make a difference would break the cycle. Otherwise, the more things change the more they will remain the same. Billy Tauzin just might win after all, but then again, if he won, he and the rest of the politicians would not be able to take money from all sides of the debate. Alas, some things never change.

Peter Bernstein is President of Infonautics Consulting, Inc. He can be reached at pabernstein@worldnet.att.net.