BIG TROUBLE

FCC Chairman Michael Powell's announcement that he is open to the idea of a Baby Bell acquiring WorldCom made headlines last week, but was it really big news? It was about as shocking as Michael Jackson announcing that he is open to the idea of plastic surgery.

Did anyone think that Powell, whose critics have long accused him of a bias toward (if not a full-blown crush on) big business, would object to the idea of another telecom colossus? The man who greenlighted dozens of media mergers, including Fox's controversial acquisition of 10 Chris-Craft TV stations? The man who changed FCC policy to allow as few as two media companies to divide 70% of a given market without the benefit of public input? The man whose commission has approved 10 applications for Bell entry into long-distance markets in 18 months? The man who blessed the creation of a $350 billion AOL Time Warner? Michael Powell is open to an RBOC/IXC merger?

Wow.

Powell has admitted that his tenure as FCC Chairman would be, for him, a personal education on the FCC's responsibility to the public. (He once said “I have no idea” when asked how the FCC should go about protecting public interests.)

The sinking of mammoth corporate dreadnoughts like WorldCom bares a lesson for Powell. As he rushed to survey the damage at WorldCom, which is said to carry about 70% of the country's domestic e-mail traffic, he may have begun to realize the harm that oversized companies can inflict. (He could have learned it earlier, when the collapse of Excite@Home, another morbidly obese monster, disrupted Internet service for tens of thousands of customers.)

More important, he may have begun to realize the conflict between oligopolies and the public interest. At least we'd like to think so.

What is dangerous about Powell's vision of free markets goes far beyond the threat of too many eggs in too few baskets. (Let's be honest: 70% of the country's domestic e-mail traffic is spam.) It's more an issue of the power that gets bestowed upon the companies that hold those baskets and how they choose to use it. Markets served by only two competitors can hardly be described as competitive markets. As the former chief of staff for the Justice Department's antitrust division, Powell should already know that.

Powell would argue that every Goliath is vulnerable to the next new David that comes along. That theory would make sense if Goliath didn't have friends in Congress and an army of lobbyists demanding a ban on slingshots.

It's no wonder the Federal Trade Commission stepped forward last week, offering to protect consumers from being trampled by telecom titans. If Powell can't see the damage these giants can do, it may be because he's standing on their shoulders.