"You Say You Want a Revolution"
by Reed Hundt's

Reviewed By Henry Geller

The sub-title of Hundt's book is "a study of information age politics", and the book is a breezy, easy-to-read account of politics within the Federal Communications Commission (FCC), the Congress, the White House, and the industries involved. Hundt violates Bismarck's admonition that one should not illumine how either sausage or laws are made, but he describes the politics leading to the "big bang" - the 1996 Telecom Act - in an entertaining fashion. The book thus keeps faith with the wide lay audience for which it is intended, but it necessarily oversimplifies the complex telecom issues which the Act and later the FCC dealt. It is not fair to criticize Hundt on that score, as a book that delved deeply into those issues would have been read only by a small audience of academics or communications experts.

I do, however, criticize Hundt for his failure to set out his vision of the agency or the optimum policies in this emerging digital era. Hundt is very bright and to his great credit, attracted very bright staffers to the Commission; he conferred with the leaders of the information industry. He must have views as to what policies or process should optimally govern in this decade. There is no question but that the technology and the market are extraordinarily dynamic, and will eventually undermine many of the existing policies. But until developments like the Internet with its video streaming and IP telephony come on stream in a powerful fashion, there is a need in the near term to develop new policies. As I will show below, I find the book deficient in this regard.

The FCC. Hundt describes at length the difficulties he faced within the FCC and after 1994, with a Republican Congress. Unlike the present FCC Chairman, Hundt was dealt a poor hand, but so also was his predecessor, who ironically had trouble getting the votes of his two Republican colleagues. Hundt's problems have arisen often at the FCC, and the issue is how successful have Chairmen been in getting their agenda adopted. Some chairmen have tried cajoling their brethren and others overpowering them. Hundt was largely in latter category, and was successful on several important matters, especially in the critically important telecom area, where Congressional deadlines and complexity of the issues were a big help to him. As the book makes clear, Hundt's close association with Vice President Gore antagonized Congress, which naturally regarded the agency as independent and a creature of the Congress, not the Executive Branch. This resentment was not confined to the Republicans but also included powerful Democrats like Rep. John Dingell, who at one point retaliated against Hundt by trying to limit him to the Washington, D.C., area for speeches.

 

Hundt clearly would have been much more comfortable as the Administrator of an Executive Branch agency, and that is my main point here: I believe that the FCC should be replaced by a Federal Telecom Agency, administered by a single individual serving at the discretion of the President (as in the case of EPA or FDA, with some special provisions to deal with political sensitive areas like equal time rulings). Telecom is the important area, and in my opinion, it is much better dealt with by an OFTEL (the UK system) than a collegial body like the FCC. In view of his experience and stature, Hundt should have expressed his views on this critically important matter. Change of this far reaching nature is admittedly difficult but it can only come about by wearing down the opposition over time.

Broadcasting policy. Hundt fought very hard to implement the 1990 Children's Television Act, and deserves great credit for his success in adopting a three-hour weekly guideline of core educational programs as a general renewal standard. (Disclosure: I strongly supported this action in FCC filings). But this is, at most, a modest accomplishment - only three hours, and many of these programs focus on social purposes (e.g., NBC's "NBA Inside Stuff", about which Hundt complained unsuccessfully). As a constitutional matter, the FCC soundly cannot deal with the quality of programs, and the commercial TV industry is never going to produce a program like "Sesame Street," referred to by Hundt.

But again there is the "vision thing": In this decade, should we continue the public service content regulation of commercial broadcasting, or should we treat commercial broadcasting like cable (the public makes no distinction between the two) and, in place of public service content regulation, take a modest spectrum usage fee, which would be used to fund adequately public broadcasting, which is committed to high quality public service like Sesame Street? I strongly advocate such a structural approach to obtaining high quality public service programming. Newton Minow, of "vast wasteland" fame, continues to urge a different regulatory approach (so-called "play or pay" public broadcasting). What is Hundt's vision of the public interest in this still important field?

Hundt would argue that he has advocated a program - that commercial broadcasting devote a half-billion or more of free time to political broadcasts, in order to make a much needed contribution to campaign reform. While I fully agree that our broadcast system should be required to do so as an integral part of Congressional campaign reform, I find Hundt's activity in this respect grandstanding, unhelpful, and bizarre. In October, 1993, Common Cause and other non-profit entities filed a petition with the FCC, urging the Commission to require broadcasters to devote 20 minutes of time (five in prime time) during the 30 days before the election to candidates in races chosen by the broadcasters; the petition stressed that this was sought not for campaign reform (which was beyond the agency's authority) but as part of the core public interest responsibility of broadcasters. (Disclosure: I was attorney for Common Cause). No action was taken on the petition. When Hundt in 1996 began urging free time for campaign reform, I again brought the Common Cause petition to his attention, but the petition continued to be ignored. Paul Taylor is now promoting this approach - the "five minute fix"
- as within the FCC's public interest authority.

Hundt's position (continued by his successor William Kennard) effectively undermines consideration of the five minute approach. If the FCC has the authority to effect overall campaign reform, of course the modest five minute approach falls away. But it is bizarre for the FCC Chairman to assert such authority. Just look at the problems that must be considered under campaign reform: How much money to allocate, to whom (candidates or parties; if the latter, federal or state); how to treat minority candidates or parties; what length or need for appearance of the candidate; what limits on any additional purchase of time, etc. All these issues are sensitive political issues in the highest sense of that abused term; they must be resolved by the political process - by Congress and the Executive Branch. The FCC would be wholly out of its depth. It is certainly right for Hundt and the FCC to assert that the public interest would be served by campaign reform embracing free time. It is wrong to assert that the FCC has the authority to effect this. It is wrong for the FCC Chairman to agree with President Clinton and Vice President Gore that the FCC can act in this fashion; that gesture simply politicizes the FCC's consideration of the political broadcast issue. Hundt should have supported the Common Cause or Taylor approach and left campaign reform to Congress.

Telecom policy, This is the most important policy area. It is therefore regrettable that Hundt has not covered it in greater detail, but as stated, it is also understandable since to do so would lose the lay audience in light of the complexity of many of the issues. However important to the nation and information revolution, telecom policy is what journalists call a MEGO - my eyes glaze over.

The lay audience, however, would be greatly interested in one aspect of telecom policy - the corrupt process that led to the Telecom Act of 1996. Hundt should have described the obscene amounts of money that poured into Congress, which had to decide an bitter fight between very powerful elements of the industry - the incumbent local exchange carriers (the divested Bell companies; GTE) and the long distance carriers (AT&T, MCI, Sprint). The Act which resulted was a mess - detailed micromanagement provisions that were very poorly drafted, with the consequence that the courts have had to resolve policy issues that were really the province of the legislature.

To give but one example, Congress botched the job of dividing authority between the FCC and the State Commissions. The FCC construed the Act as allowing it to prescribe rules that the States had to follow in implementing the Act. I believe that this is sound policy (the FCC steers and the States
do the heavy rowing), but the Act was so botched that the Supreme Court had to decide the issue after years of litigation. Most significantly, when it was clear just months after passage that this issue would fester for years, Congress did nothing to clear up a matter - division of authority between the Feds and the States - that was its responsibility. Congress could not act because the industry pressures were simply too strong. Senator McCain is right: The nation does not deserve such a corrupt Congress.

While Congress is largely at fault, the Hundt Commission aggravated the micromanagement problem in some significant ways. To give one example, the FCC made available to all newcomers not just the local loop of the incumbents (a sensible and much needed step) but the entire network at a very steep discount based on the cost of a hypothetical local network - a discount estimated to be about 40% off the retail price of the local network. The incumbents protested and appealed. Significantly, the cable industry also argued that this was an unsound policy; they were investing billions to
compete in local telephony, and argued that it was unfair to find competitors like MCI or AT&T competing with them at a steep discount with no such investment in facilities. Indeed, Time Warner stated that it would not move ahead in cable telephony in light of this pending unfair policy. The head of OFTEL also urged that policy should promote facilities competition.

The Hundt Commission rejected these arguments, and it was only when the Supreme Court reversed and remanded on this ground that the Kennard Commission reconsidered. Upon such reconsideration, the FCC recognized that MCI, AT&T, and others could readily acquire switches (and co-locate them in central offices under FCC policies), and therefore restricted the policy very largely to residential customers. Since cable telephony competition is largely directed to residences, this still can pose a problem. One interesting and ironical twist is how AT&T will fare under the revised policy: The policy will help AT&T in areas where it has no cable interests, but where it has invested billions in cable in order to compete in local telephony, it now will face the same unfair competition that Time Warner and other cable operators complained of.

We are in a transitional period, and transitions are always messy. Hundt is certainly right that the new information developments - the Internet in particular - will eventually render moot the transitional problems. But in the meantime, Congress and the FCC should be acting with greater clarity and sense.

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