Acting FCC Head Wants Deregulatory Change While at Helm

WASHINGTON (Dow Jones)--The interim head of the Federal Communications Commission wants to end his tenure as chairman with new restrictions on how telecom companies can seek regulatory relief in wholesale pricing and other business-to-business contract terms.

Qwest Communications International Inc. (Q), AT&T Inc. (T), and Verizon Communications Inc. (VZ) all have submitted such petitions to the FCC in the past.

FCC Acting Chairman Michael Copps said Wednesday that he hopes the three commissioners on the normally five member body will sign off on his proposal to change FCC's "forbearance" deregulatory procedures before the agency has new leadership.

Copps will relinquish the chairman's gavel once Julius Genachowski, President Barack Obama's nominee to lead the FCC, receives Senate confirmation.

"There's more than adequate latitude for the commission to significantly...minimize some of the disadvantages of the forbearance process," Copps told reporters after an FCC meeting. "There are things you can do with time frames and what people can do and when they can do it."

Much of the deregulatory process is set by statute, meaning Congress would have to step in to change some of its most controversial elements.

For example, the FCC is required, by law, to act within a certain time on companies' petitions, often to increase wholesale prices for competitors in certain markets. If the commission doesn't issue a decision by the deadline, the companies' requests are granted automatically.

Copps is among many Democrats (several are in prominent Capitol Hill positions) who have complained that telecom companies game the FCC's deregulatory system.

Large companies say firms that would be affected by wholesale price increases withhold data from the FCC and then ask that a deregulation petition be rejected based on lack of information.

Alternatively, smaller companies say large firms dump hundreds of pages of new data on the FCC just days before the deadline, making it difficult for them to respond.

FCC staffers spend countless hours evaluating deregulation petitions that the companies can then withdraw at the last minute, Copps said.

The most recent incident involved Verizon, which last month withdrew its petition to raise wholesale prices in Virginia Beach and Rhode Island just days before the deadline.

Verizon said it yanked the petition because a federal appeals court hadn't ruled on the company's separate bid to raise prices in six markets. "Given the lack of a decision from the court, there was little point in pressing the Commission to issue a decision," Verizon told the FCC in a May 14 letter.

In that letter, Verizon also said the FCC's deregulation process "has been subjected to malleable and changing standards that leave all concerned with no certainty as to the rules that apply."

Still, the mechanism exists because it is required by law.

It is far from certain whether Copps will succeed in getting his fellow two commissioners to sign off on his proposal before a new chairman is installed.

Commissioner Robert McDowell, the FCC's only sitting Republican, has been renominated for a second term and may be reluctant to vote on regulatory changes that would be disagreeable to Senate Republicans who will vote on his confirmation.

Commissioner Jonathan Adelstein, the other Democrat on the FCC, also faces Senate confirmation. He has been nominated to run the U.S. Department of Agriculture's Internet grant program. Adelstein will leave the FCC once Genachowski is sworn in.

Copps also might be running out of time. It is possible that both Genachowski and McDowell could be confirmed before the end of the month. The Senate Commerce Committee is planning a confirmation hearing for both men within the next few weeks, but any number of factors could derail that schedule.

Obama has also named Mignon Clyburn, a South Carolina public service commissioner, for an open Democratic seat on the FCC. The White House is expected to name Meredith Attwell Baker, a former Bush administration official, for the second open Republican slot on the FCC.