Tales of the Sausage Factory: Will the Last Powell Out Please Turn Off the Lights?

Michael Powell has announced his resignation as Chair of the FCC. Hardcore libertarian fiscal conservatives — such as the Wall St. J. and the CATO Institute — mourn his departure. By contrast, most public interest folks celebrate and condemn his legacies. Industry people, always wary of burning any bridges, give carefully guarded statements. And, of course, everyone speculates on who will be next chair.

As for my views? See below of course!

I’ll update this later, since it is getting close to Shabbos and I gotta run. So this will be short, prone to error, and highly impressionistic.

I’ve met Michael Powell a few times, always on business and always in the company of my boss, so I cannot say I know the man personally. Nevertheless, to give my personal take (and what use is being in the Sausage Factory if you can’t opine on the shakers and movers we hardly know?) Powell always struck me as a true intellectual and Libertarian ideolog rather than an industry lap dog (as some accused him of being). OTOH, he fell into a number of traps that smart people in this administration seem especially vulnerable to. Once Powell decided on a course of action, he wasn’t going to change it fundamentally. Oh, he might soften around the edges or change a detail or too, but he remained utterly unshakable on his core decisions despite any evidence to the contrary.

Powell had an unshakeable belief that technology had progressed to the point where dominance of information markets or technology markets was simply impossible. Even where a company had clear monopoly dominance, Powell believed in the theories of economists like Schumpeter that monopolists are constrained by the threat of competition emerging and therefore have the same drive to innovate and reduce prices as if there were competition. With regard to democracy and media concentration, Powell beleived that the emergence of the blogosphere proved that information bottlenecks no longer exist, and that _access_ to information in some form is enough to avert the danger of corporate manipulation of the news. If information is discoverable, it is up to the citizen to discover it. What matter if every TV and newspaper provides only one perspective? The citizen who distrusts big media can go elsewhere.

Well, as you might imagine, I and other fervently disagreed. And this was where Powell’s other problem kicked in. He simply did not think that politics was an important element of his job. As Chair of the expert agency, it was not his role to count the number of comments and realize that a large number of Americans were very upset with the thought of big media getting bigger. Worse, he felt that this anxiety was based on a failure to understand the new reality rather than on any principled objection. It totally escaped Powell (and others at the FCC), that when 2 million people send detailed comments about the state of their local media, that _is_ data, and you damn well better digest it. But in a choice between a messy reality and neat theories, Powell always went with theory and let the chips fall where they may.

Powell’s most positive legacy, IMO, was his commitment to unlicensed spectrum. Here, his libertarianism, his love of new technology, and his disregard for industry opposition served the American people quite well. The Commission has done more to expand the availability of direct citizen access to spectrum under his watch than under any other chair. As a result, unlicensed spectrum has become a multibillion dollar market with new uses every day.

In other areas, however, he failed to achieve significant change. His deregulatiuon of cable and telephone broadband has done little to spur deployment of new networks or new services, despite many promises and press releases from cable and telephone incumbents. If you compare growth of the internet, and changes in the industry, from the period of 1994(when it first burst on the public scene) to 1998, and the growth of broadband penetration from 2001 (when Powell assumed the Chairmanship) to 2005, the growth of broadband is staid and modest as compared to the revolutionary growth of the dial up internet. Powell failed to deregulate the media, in no small part because of his political missteps. The DTV transition continues to drag on, despite giving the broadcasters such bribes as mandatory DTV tuners in every new television set and broadcast flag.

So what happens next? well, that depends in no small part on who is the next chair. But it also depends on what happens to the chiefs of the bureaus. While most focus is on the commissioners, the heads of the bureaus also wield enormous power and set the tone on issues. Ken Ferree, the current head of the Media Bureau, is a long-time friend of Powell. I suspect he is likely to leave relatively soon after Powell does. (It is interesting that John Rogovin, FCC General Counsel and another Powell friend, announced last week he was leaving). OTOH, it is unclear whether Ed Thomas, the current chief of the Office of Engineering and Technology and one of the biggest proponents of unlicensed at the FCC, will leave. Ditto for John Muelleta, head of the wireless bureau, who is one of the most bitter opponnents of unlicensed. No doubt staff changes will depend on who succeeds to the Chairmanship.

Stay tuned . . .