Commissioner T

The FCC cannot be limited in its ability to punish those that break the rules because of ineffectual fines.

As an American of Italian descent, I'm supposed to be upset about the HBO hit show The Sopranos. After all, if I'm to believe the lawyers who supposedly represent my interests, the show perpetuates the stereotype that Italians are nothing more than murdering, thieving thugs who control the meat processing, waste management and, occasionally, prepaid phone card businesses.

But there's something about Tony Soprano. Sure he's a coldblooded killer, an adulterer and a money launderer. But it's the way he gets respect and makes sure everyone stays in line with the code of conduct that makes him likeable.

He's the type of character that telecom regulators could learn from. Imagine this: FCC Chairman Michael Powell (as Tony) sends Commissioner Gloria Tristani (as Paulie Walnuts) to San Antonio to break a few bones if SBC stalls the provisioning of unbundled loops. It's not a likely scenario. The FCC's enforcement procedures tend to be a little more civilized, and that's part of the problem. If Powell has anything to do with it, that enforcement is going to become more heavy-handed.

In May, Powell asked Congress to increase the amount the FCC could fine common carriers for violating local competition provisions from the current $1.2 million per violation to $10 million. No action has been taken on the request just yet, but if Congress wants to see competition flourish, this is one route to make it happen. The enticement of getting into long distance is working — but not to the extent that anyone envisioned.

Some may see a $10 million fine as excessive, but it must be taken in context. Early last year, the FCC fined the former Bell Atlantic $13 million for a series of actions that impeded customers from switching to competitive carriers. That same quarter, Bell Atlantic reported a net income of $731 million.

More recently, the FCC proposed a previously unheard-of fine of $1.02 million on America's Tele-Network for slamming violations. By itself that sounds excessive, but consider these items: The commission had received 260 consumer complaints against the company, ATN was fined the previous year for failing to make universal service contributions, and it has been cited by numerous states for various other violations. Suddenly, a $1.02 million fine doesn't appear out of line.

The problem with current enforcement levels is they can be figured into the cost of doing business for the largest incumbents — particularly if the fine results from an action that pushes a competitor out of business.

Outside the industry, most consumers view telcos with about the same amount of respect afforded loan sharks. If that image is to improve, the industry leadership needs to take a more forceful approach to enforcement.

The new FCC already is being harnessed with a label that it will be friendly to big telcos. But the commission has a unique opportunity to prove everyone wrong by wielding a very large stick in front of every carrier that knowingly violates provisions of the Telecom Act. Just as important, greater power to enforce the regulations can only improve the respectability of the industry as a whole.

Consider the prepaid phone card scam on The Sopranos. Cards were bought on credit by a sham company and sold to unsuspecting recent immigrants while the carrier is never paid. The mere fact that a TV drama could create a subplot around such a scam should be a source of embarrassment for anyone connected to telecom.

The FCC cannot be limited in its ability to punish those that break the rules because of ineffectual fines. If Chairman Powell is ever to get the respect he seeks, Congress must give him the muscle to earn it.

Contact Vince Vittore at vvittore@intertec.com