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Powell Requests $278M for FCC

Federal Communications Commission (FCC) Chairman Michael K. Powell requested $278 million for the FCC's 2003 budget at a U.S. Senate subcommittee hearing Thursday. Last year, the commission requested $248 million for 2002.

Powell told the Senate Subcommittee on Commerce, Justice, State and the Judiciary of the Committee on Appropriations that the funds are needed to continue the commission's reform and restructuring efforts, which include the continuing overhaul of its infrastructure.

"Currently 69 percent of the Fiscal Year 2002 appropriation is earmarked for salaries and benefits," Powell told the subcommittee. "Additionally, 29 percent will cover non-discretionary cost increases related to rent and supplies. That amount leaves the commission with two percent of its total appropriation to implement reform -- streamline operations, enhance technical and economic expertise, oversee spectrum management, and provide funds for resolution of ongoing enforcement issues such as cramming/slamming. For this reason, focusing on improving the funding picture in the future -- i.e., Fiscal Year 2003 -- is especially important."

Powell said the FCC's specific objectives for the funding include:

  • Continued expansion of electronic filing and other initiatives to enhance public access and expedite commission policy decision-making
  • Improved technical and economic expertise of staff
  • Life-cycle replacement of technical monitoring and testing equipment
  • Ongoing infrastructure improvements to the Columbia laboratory facility
  • Expeditious and effective response to public requests for assistance and information
  • Enhancement of information technology infrastructure to make it responsive to changes in the industry
  • Enabling the FCC to improve its homeland security posture.

Most of the commission's requested budget is composed of operational costs. Powell said $268 million in operational costs was the bare minimum needed to "allow us to continue the progress made during the past year." As part of those funds, Powell requested $15 million for "critical programmatic initiatives;" and additional $8 million for uncontrollable cost increases related to salaries, benefits and inflationary cost increases for rent and supplies. On top of that, he requested $9.7 million for retirement costs, bringing the overall total to $278 million.

Powell further broke down the $15 million requested for programmatic initiatives:

  • $4.9 million dedicated to commission employee training
  • $1 million to improve internal security and support other security efforts as a result of national security needs identified since Sept. 11, 2001
  • $9 million to improve information technology for supporting program performance initiatives, including improving existing systems to ensure compliance with government-wide standards pertaining to system security, accessibility and financial management.

Powell also spoke about his policy vision for the FCC. First on his list was the central importance of widespread deployment of broadband infrastructure.

"Recognizing the importance of broadband deployment -- a topic of conversation that is extensively discussed here on Capitol Hill, as well as at the Commission, Wall Street, and Main Street -- the commission is taking a concerted, comprehensive approach to bring regulatory clarity to what is, at best, a murky and confusing policy area," Powell told the subcommittee. "To that end, the commission has committed significant resources to consider and initiate several proceedings that pointedly address broadband issues. Of course, our actions in this area will first and foremost be grounded in the Act, taking into account the statutory objectives of competition, universal service and consumer protection."

Not all would agree Powell and his commission take those areas seriously.

"What he's doing is defeating competition, eliminating consumer protection and adding little or nothing to ensure universal service," said Dave Burstein, editor of DSL Prime, a newsmagazine for the DSL industry. "In particular, eliminating line sharing, as he's discussing, makes consumer broadband competition unfeasible. When he says deregulate, the regulations he's eliminating include almost all the consumer protection or any ability to mandate universal service."

He added that Powell is following through on his promise to allow market forces to take over. "Unfortunately, there's not enough competition in the market for that to be a smart idea," he said. As a result, he said, the price for Internet access services -- even for dial-up -- continue to rise "when we know the technology should be driving prices down."

But Powell maintained, in his testimony to the subcommittee, "Competition is a fundamental and guiding statutory principle under the Telecommunications Act of 1996. It is the root from which most of our other policy areas grow. Under my leadership, the commission has been outspoken in its support for competition, both inter- and intra-modal. More significantly, our actions have backed up our words."

He added, "Positive rules to promote competitive entry are meaningless without a credible enforcement effort to back them up. Therefore, we have made enforcement the cornerstone of our competition policy."

But Burstein noted, "The telcos held up broadband to blackmail Washington to give them the freedom to charge consumers whatever they feel like without any requirements for quality. He should have been smart enough to see what was going on. In practice, what's happened is they're hoping the cable guys will be some real competition and hence they're willing to let any competition over the phone wire die through their inaction."

Burstein is not the only one who feels that way. Conservative New York Times columnist William Safire said Thursday that Powell was steering the FCC toward "terminal fecklessness," referring to the way his commission has handled media ownership. And Powell's February proposal to change the way telephone-based broadband Internet access services are defined brought questions and dissent from the FCC's members, industry watchdog charges of creating a new Internet monopoly, and even prompted one commissioner to raise the specter of an Internet access tax.

Jeffrey Chester, the executive director of the Center for Digital Democracy went so far as to suggest that the proposed rule changes should be called the "Cable and Bell Internet Monopoly Act of 2002. By declaring that broadband is an information service, the FCC is giving gatekeeper control to a handful of cable and Bell super-monopolies."

Powell defended his proposal, saying that his goal was to bring confidence back to the telecom sector and encourage more investment.

"What we're trying to do is propose some rules that clarify those obligations and make clear what the regulatory environment is, quell the uncertainty and risk and provide some stimulation by lowering regulatory costs for the construction and building of those networks so consumers can begin to see the promise of the service, rather than continue to hear the rhetoric about it," he said.

Meanwhile, Scott McCollough, a telecommunications lawyer with Austin, TX-based Stumpf, Craddock, Massey & Pulman, told InternetNews.com that the wording used by Powell seemed to suggest the FCC will try to strike out, among other things, the Telecommunications Act of 1996 provision that allows competitive access to the telephone company's unbundled network elements (UNE) for competitive local exchange carriers (CLECs).

"If that's what they're trying to do, then in one fell swoop, the FCC will have done two things: They have wiped out the independent ISPs and wiped out the CLECs [competitive local exchange carriers]," he said. "Way to go. Are we now going to reserve Internet services to the cable and telephone companies? And if so, what does that mean for customer choice and the usefulness and utility and benefit of the Internet? Trust me, they don't really care about John Q. Customer, only John Q's dollars."