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Latest Prime Suspect In FCC Coup: Powell

Judging by the headlines of the past few weeks, you might believe that the biggest headache afflicting FCC Chairman Michael Powell is fellow commissioner and fellow Republican Kevin Martin. But some in Washington say Powell's biggest problem is—Michael Powell.

Complained one Washington lobbyist: "He can explain quantum physics but can't count to three." As in the three votes needed to win a majority of the five-member commission.

Observers say Powell's disdain for the politicking and dealmaking necessary to piece together a coalition and his imperious, even overbearing, management style have alienated not only Martin but other commissioners. And they warn that, if Powell can't regroup, he risks losing control of a series of upcoming major decisions. Among them: sweeping changes to media-ownership rules, broadband deregulation, cable carriage of digital TV, and relations between broadcast networks and their affiliates.

Powell, who frequently boasts of establishing a new FCC approach to drafting telecom rules by sticking to a narrowly tailored legal and economic analysis, was angered and embarrassed two weeks ago when the commission's two Democrats joined a Martin-led coup to quash the chairman's bid to eliminate rules forcing telephone companies to lease residential voice lines to competitors. He argues that the outcome will lead to the FCC's being ordered, for the third time in seven years, by federal judges to rewrite its telephone rules. The continued restrictions also contributed to a $15 billion drop in Wall Street valuations for telecom companies following the FCC decision.

The FCC vote "violates every principle I have ever stood for in addressing telecom reform," Powell told the House Energy and Commerce Committee last week.

Future friction?

What the dispute means for future proceedings is impossible to predict. Martin is believed to oppose Powell on such major issues as cable digital carriage rules (Martin is thought to favor carriage rights for electronic program guides and multicasting) and broadcast/network-affiliation rules. He also has disagreed with Powell's not moving quickly to eliminate newspaper/broadcast crossownership restrictions.

The animosity goes deeper than disputes over those specific proceedings. After a string of FCC decisions were overturned by the courts, Powell is determined that no rule issued under his watch be vacated. His critics complain that he won't compromise because he fears that deals will generate legal weak points.

Powell supporters counter that Martin has opportunistically seized Democrats' desperation for influence in a GOP majority.

Martin's revolt shocked Powell's supporters on Capitol Hill, but other Washington hands aren't at all surprised and predict similar debacles if Powell doesn't deal with fellow commissioners more flexibly.

The potential for future Powell/Martin breakdowns has so riled House Energy and Commerce Committee Chairman Billy Tauzin that he has warned Vice President Dick Cheney and White House Senior Advisor Karl Rove that his key House panel has power to thwart President Bush's initiatives on health care, energy and any number of matters if Martin isn't muzzled.

Tauzin and other House leaders blame the White House because Martin, whose wife is a Cheney press aide, has extensive ties to presidential staff from his campaign days and was the administration's hand-picked nominee for the FCC.

The favored explanation in Washington for Martin's independence: AT&T lobbyist James Cicconi persuaded his buddy Rove to leave Martin alone. A more plausible explanation may be that the White House isn't exactly up to speed on the intricacies of telecommunications policy since its original industry point man—you guessed it, Kevin Martin—joined the FCC.

Tauzin thinks Martin is committing political suicide. "He is going to be pulling a $15 billion ball-and-chain for a long time," said Tauzin spokesman Ken Johnson. "He must live up to his conservative deregulatory beliefs or come clean on his résumé."

So far, the White House has not ordered Martin to make nice with Powell. In fact, Martin says he has received no direction from the Bush Administration in any way. Washington sources, however, find it hard to believe that the president's advisers would knowingly risk damaging relations with key congressional leaders.

Within the law

Martin argues that his approach is legally defensible. The law "requires local markets to be opened to competition first and then provides for deregulation," he told Tauzin's committee. Martin also says his telecom stance supports states' rights, as Republicans do.

Some sources following the FCC say Martin had little alternative to bargaining with Democratic Commissioners Michael Copps and Jonathan Adelstein.

Indeed, hard feelings have been simmering over Powell's general policies on agency operations. Some commissioners complain that Powell is obsessed with details that create an appearance of good management but actually hinder effective operation.

Besides tightly controlling the drafting of new rules, which are the critical starting point for debate over all regulatory changes, Powell has instituted what the other commissioners consider a draconian regimen for preventing leaks to industry lobbyists and the media. Although previous chairmen have complained about leaks, he at least three times has launched Inspector General reviews to investigate unauthorized release of internal deliberations.

The commissioners and their staffs have little to fear legally, but such investigations are viewed as a form of intimidation that keeps them from vetting the impact of agency proposals with industry executives and other interested parties.

Dealing with Democrats

Also, an agency charged with promoting deployment of information technologies that make it easier to telecommute has, ironically, made it harder for its own employees to work from home because of tight new restrictions.

Although Martin has opposed Powell initiatives on mandating DTV tuners, satellite TV dish rules and a few other issues, the former Bush campaign lawyer has always been on the losing side and settled for sometimes strident dissents. But seeing an opening to broker a deal with Democratic commissioners desperate to have a voice in major FCC proceedings, Martin seized his chance.

From Martin's point of view, the cross-party deal could have been avoided. He had made clear his desire to make sure state regulators have a say in deregulating telephone unbundling rules beginning with a speech in June and reiterated his concerns publicly several times. Martin shared his views with Powell directly in a November meeting. Though puzzled that the chairman didn't reveal his views on the proceeding, Martin nevertheless left feeling assured that Powell would order the agency's Wireline Competition Bureau to address Martin's concerns.

Powell, for his part, feels blind-sided by Martin's freelance deal. The chairman ordered a briefing for the other commissioners on his plans for the telephone rules, and, in his view, every commissioner had adequate opportunity to raise concerns to work out a compromise. After Martin's revolt came into the open, forcing Powell to cancel what a scheduled Feb 13 vote on his plan, he negotiated strenuously to strike a deal that would get his colleague on board. Martin, in Powell's view, wouldn't budge. And, in the view of some, that's not the last time that will happen.