Congress Calls for FCC Restructuring

Can an agency created during the New Deal era regulate an environment of multi-billion-dollar mergers, the Internet and Bill Gates? That is a question the industry has asked, and one that Congress is trying to answer.

Led by Rep. W.J. "Billy" Tauzin, (R-LA), head of the House Commerce subcommittee on Telecommunications, Trade & Consumer Protection, Congress last month began a series of hearings to review the FCC's current structure and consider whether a major overhaul is required.

Tauzin wants to downsize the agency and reduce its role, making it more referee than rulemaker. His committee will consider whether changes are needed in the number of commissioners and how they are appointed, as well as how oversight is exercised. Another issue is whether the FCC should have the power to review telecom mergers.

According to Michelle Farquhar, co-chair of the Communications Practice Group, Congress hasn't presented any concrete plans to reinvent the FCC, but it is getting input from industry.

Created in 1934 and headed by three Democrats and two Republicans, the FCC has a staff of 1,975, a budget of 192 million dollars and six bureaus with regulatory authority over an estimated 500 billion-dollar chunk of the U.S. economy. But each of the industries it regulates is subject to different rules.

Last month, the subcommittee summoned William Kennard, FCC chairman, and the four commissioners to Capitol Hill to discuss restructuring. Tauzin presented Kennard with a list of complaints, including reports of redundancy because the FCC reviews mergers at the same time the Justice Department does and complaints about long waits for licenses and commission rulings. In addition, legislative critics charged that the FCC has been lax in implementing the 1996 Telecommunications Act, and its regulatory mindset has hampered new telecommunications markets.

In his testimony, Kennard acknowledged the need to open local phone markets to greater competition, and introduced his plan, "A New Federal Communications Commission for the 21st Century," detailing FCC restructuring and streamlining.

According to Kennard, the FCC of the future will focus on universal service, enforcement of regulations to keep competition open and spectrum allocation. A guiding principle will allow that new entrants won't be subjected to legacy regulation.

He will release a working draft by June and solicit public comment before submitting the final 5-year plan to Congress in September.

But some legislative critics want to go farther and faster. Tauzin plans to introduce a FCC reform bill by summer, but Congress and the White House, which has defended the FCC's regulatory privileges, are expected to butt heads.

Farquhar said it's good to re-examine the FCC's structure and its workload management, but that process shouldn't be so time-consuming and political that it diverts agency resources from important tasks at hand.

"Both the FCC and the Hill are looking at concrete end dates by which decisions will be completed," shesaid.