THE BLOG

Prince Hamlet of the FCC

07/03/2010 05:12 am ET | Updated May 25, 2011

The turmoil and angst of Federal Communications Commission Chairman Julius Genachowski, so long speculated about have now been laid bare, thanks to three FCC sources who talked with Washington Post reporter Cecilia Kang.

According to the story, Genachowski is leaning toward trying to find a way to salvage his Open Internet policies through the existing legal structure that was largely, but not completely, shot down by the U.S. Appeals Court, D.C. Circuit, on April 6. He wants to use the generic authority of Title I of the Communications Act, coupled with language in the law which calls for the FCC to "encourage" more broadband deployment.

Kang reports that companies like AT&T and Verizon "would be cheered by a decision from the FCC to retain its current regulatory structure that is a murkier statute and would make it more difficult for the agency to impose rules on them." On the other side of the struggle for the soul of the FCC Chairman are Internet companies like Google and Skype as well as the public interest community. AT&T, Verizon and Comcast will oppose anything they see as too regulatory - a category which includes just about everything. Verizon opposed the catchall language to "encourage" deployment as giving the FCC any authority.

As Genachowski agonizes over this choice, he would do well to pick up the remarkable new book, "Winning the Silicon Sweepstakes: Can the United States Compete in Global Telecommunications," by Penn State Prof. Rob Frieden.

This is a book unlike any other, particularly one written by an academic. It is the telecom equivalent of the Emperor having no clothes. It lays out the realpolitik of the FCC, and the picture isn't pretty. "The U.S. regulatory model seems to operate from self-satisfaction and complacency," Frieden found. That observation is only the tip of the iceberg. No one looks good in this book, and the subjects include the FCC, the telecom industry and even his fellow academics. Time after time, Frieden slams the Commission for being lazy, for not doing its homework, for allowing market concentration and calling it competition, for allowing the system to be gamed by incumbents, illustrating his case with examples ranging from the consolidation of the wireless industry to the AT&T-BellSouth merger, to the inconsistent treatment of Internet telephony (VoIP). At the same time that the Commission touted all the wonderful progress in broadband, it wondered if it did enough to stimulate investment. Frieden points out the inconsistency there: "Contradictory appeals to the government to both create incentives for investment and eliminate its involvement in the marketplace point to the ability of some telecommunications companies to game the political system by creating divergent governmental perceptions of reality."

For example: "Over the last few years the FCC has rarely confronted a merger or an acquisition that it could not find a way to approved. The FCC has approved multibillion-dollar mergers that have reduced the number of major wireline and wireless telephone companies, satellite carriers, and independent content providers. It typically rationalizes the merger as a way to promote competition and serve the public interest, even though the merged company, created when one company acquired another, has a larger market share than either single company, and the market has one fewer competitors." Even though Congress has said it wants competition, the FCC approves consolidation.

When the FCC looks at data, Frieden wrote too often that information is suspect because it "suffers from the taint of financial support from organizations with obscure or undisclosed affiliations with specific stakeholders. Much of it would not pass a rigorous peer review, financial strings aside, because the research seeks to endorse a preordained outcome." It would have been nice if he had named names and pointed to some research, but simply making the point is sufficient.

Into the morass now comes Julius Genachowski, trying to balance the fates before him. It should be an easy call. The telecom industry will oppose him regardless of which path he chooses. Assuming he can finesse the current regulatory regime is a fool's assumption. Yet he sits, Hamlet like, on the eighth floor of the FCC headquarters.

The Prince asked: "To be, or not to be: that is the question: Whether 'tis nobler in the mind to suffer he slings and arrows of outrageous fortune, or to take arms against a sea of troubles, and by opposing end them?"

That was the question then, and it's the question now. A new version: Do you betray the bold concepts of the Obama campaign platform that you wrote for the chimera of political expediency? Do you contribute to the dismal history of the agency that Frieden has stunningly illustrated? Or do you take on the forces that have shackled the Commission for decades and fulfill the promises and bring a new day to the FCC and the public interest? We await the answers.