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This is not your father’s FCC. At least that’s the message sent by Federal Communications Commission officials at a recent forum showcasing their efforts to transform the oft-maligned agency into “a model for the digital age.” In the nine months since Chairman William Kennard unveiled a plan to reinvent the FCC, initiatives such as a 180-day deadline for merger reviews, a rocket docket for enforcement cases, the creation of “virtual” broadband bureau, and a reduction in the backlog of license applications are all under way. Still, some wonder if such incremental reforms, welcome as they are, will be enough to keep an agency created to oversee monopolies relevant in a competitive marketplace. More than any other agency, it seems, the FCC has been caught in the cross-hairs of the information revolution. With competition and convergence sweeping the field of telecommunications, the FCC’s old method of regulating according to industry segment has become increasingly problematic. But so far, much of the “reform” seems to involve setting up steering committees and working groups and coming up with key objectives, rather than tearing down walls. “The workload is a hurdle,” said Kathryn Brown, Kennard’s chief of staff, at the April 28 public forum. “We have such an enormous amount of work to do that to plan for the future is difficult. And there are cultural issues. The agency has operated the same way for a long time.” Under the five-year plan entitled “A New FCC for the 21st Century,” the core functions staked out for the FCC are fostering competition, protecting consumers, managing the nation’s airwaves, and “promoting opportunities for all Americans to benefit from the communications revolution.” The first three functions are relatively noncontroversial among members of the telecom bar, although Wilmer, Cutler & Pickering communications practice co-head William Lake wonders, “If the FCC transforms itself into an antitrust and consumer protection agency like the Federal Trade Commission, why do we need both? “ Other lawyers are skeptical about the priority accorded to the FCC’s social goals of access and diversity under Kennard. “Every chairman has his pet things,” says one telecom lawyer, “but there is a real question as to whether or not all this is needed.” FROM ENFORCEMENT TO OUTREACH So far, the most tangible change has been the creation of an enforcement bureau headed by David Solomon, former deputy general counsel of the agency. The bureau, which opened in November, has been regularly slapping companies with fines, most often for slamming carriers without their permission. Since March, for example, Excel Telecommunications Inc. has agreed to pay $400,000 for slamming, while the Sprint Corp. got hit for $250,000 and Brittan Communications International Inc. was fined $1 million. “We’ve moved from rule making to ensuring the rules actually work,” says Brown. “We think it’s a success already.” But some in the private bar are less impressed. “They’re shooting fish in a barrel by going after slammers,” says Glenn Manishin, a partner in the McLean office of D.C.’s Patton Boggs, who has represented MCI WorldCom Inc. and the Netscape Communications Corp. “That’s not to indicate slamming isn’t important. But these are not the competitively significant enforcement issues that are still pending before the commission and have remained unresolved for years.” Jonathan Askin, general counsel for the D.C.-based Association for Local Telecommunications Services, says that when setting enforcement priorities, the new bureau needs to be “fully cognizant of what the 1996 [Telecommunications] Act mandated markets.” He adds, “The rules are nothing more than empty rhetoric unless they’ve got the teeth to enforce them.” But Harris, Wiltshire & Grannis partner Scott Blake Harris, who headed the FCC’s International Bureau from 1994 to 1996, says that the mere existence of an enforcement bureau has been helpful. “When I have clients negotiating with incumbent carriers who are, shall we say, dragging their feet, we just mention the FCC’s Enforcement Bureau,” he says. In particular, Harris says, when the bureau fined Bell Atlantic-New York $3 million in March for failing to fully open up its network elements to competitors, “It sent a signal all across the industry. It made everyone take notice.” In addition to enforcing laws and protecting consumers, the FCC is emphasizing its role in ensuring equal access, employment, and ownership opportunities in the broadcast industry. “We have to ensure this communications revolution is a revolution of inclusion,” says FCC Opportunity Steering Committee member Cornell William Brooks. Brooks reports that the agency requires all broadcast licensees to widely disseminate information about job opportunities and is studying how well women and minorities are able to compete in spectrum auctions. The commission has also launched initiatives to reduce basic phone charges for Native Americans. Other programs include an initiative by Kennard to link graduates of historically black colleges in Virginia with jobs in the high-tech sector of Northern Virginia, says Brooks. Concerns about diversity and access for the disabled have been a hallmark of Kennard’s chairmanship, and chief of staff Brown does not apologize for it. “We’re dealing with the most important issues in the country with respect to access to the tools of the information age,” she says in an interview. “As we work through these issues, Chairman Kennard is most certainly keeping his eye on opportunity and diversity issues.” She adds, “In making sure these issues are attended to in no way takes away from the energy, time and focus we’ve had on competitive issues. We see it as co-existing, and important that we do both.” Still, some telecom lawyers doubt these issues will be such a priority for the next leader of the FCC, whether Republican or Democrat. “It’s an area the FCC does very poorly in, not because the objectives are inappropriate, but because the agency has no skill in bringing these objectives about,” says one local telecom lawyer. “The FCC has a lot of engineers, a lot of economists, and a handful of MBAs, and a lot of lawyers who understand the Telecom Act. … But the FCC is not very good at social engineering.” But Wiley, Rein & Fielding name partner Richard Wiley, chair of the FCC from 1974 to 1977, points out that many of these policies are based on congressional directives. “Access and equal opportunity have been a part of the commission for a long time,” he says. “I don’t expect it to go away.” REWIRING FOR THE FUTURE Another hot spot for the FCC has been its role in reviewing telecommunications mergers. The agency has set a goal of 180 days for completing merger reviews, and Robert Pepper, head of the Office of Plans and Policy, says they will meet that deadline on the America Online Inc.Time-Warner Inc. application, which was filed in February. Pepper also reports that, in an effort to make the process more open, comments and other public documents involving major transactions are now being posted on the FCC’s Web site. One of the agency’s other recent steps has been the creation of a “virtual” broadband bureau. Broadband, or advanced telecommunications capability such as high-speed Internet access, is of interest to just about every FCC constituent. Because it cuts across industry lines and does not fit neatly into any one bureau, broadband is one example of the shortcomings of the FCC’s historic organizational structure. Pepper, who co-chairs the steering committee for competition issues, says the goal of the virtual bureau is to “provide the right incentive for competitive deployment of broadband to everyone.” The bureau is composed of people from the Cable Bureau, the Common Carrier Bureau, the Office of Plans and Policy, and the Office of Engineering and Technology. James Blitz, of counsel at the D.C. office of Seattle’s Davis Wright Tremaine, has worked with staff from the bureau and is cautiously optimistic about its role in the future. “I don’t see it as being an additional layer of bureaucracy, but that will also depend on how it is implemented,” he says. The industry is still in its infancy, and thus far, the FCC has taken a hands-off approach toward regulation. But in March the agency began requiring providers of local telecommunications and broadband services to report data about competition and availability in their markets. Another key issue for the FCC is management of the broadcast spectrum. Dale Hatfield, chief of the Office of Engineering and Technology, chairs the spectrum steering committee, and says the agency is rapidly running out of airwaves to allocate. “People are coming into my office almost daily with proposals for new uses of spectrum,” he says. To try to accommodate them, the agency is exploring options such as sharing spectrum, band clearing, and new technology such as ultra-wideband and software-defined radio. James Olson, a partner at Howrey Simon Arnold & White, says the FCC has “been doing a much better job” at spectrum management, and praises the agency for “relaxing the structure of how [purchased spectrum] can be used.” Telecom lawyers also applaud the FCC for reducing the backlog of license applications in the Wireless Bureau. Since December 1998, the number of items pending more than a year in that bureau fell from 64,000 to just 630. To Wiley and others, the big question that remains is whether the FCC will continue to forge ahead with reorganization. “If there is a commissionwide policy bureau and licensing bureau, I have my doubts they will be more efficient,” says Wiley. Wilmer, Cutler’s Lake says further reorganization makes sense to him, but he cautions that major upheaval doesn’t have the support of many industry players, who “tend to be suspicious of change.” Other lawyers say the current bureau chiefs are reluctant to surrender their responsibilities. “It’s to the chairman’s credit he is trying to reorganize the agency,” says Lake. “The effort needed to be taken, in part because of congressional concern that reform is needed. If the agency didn’t reform itself, Congress would do it for them.”

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