Few presidential appointees had as much promise as Michael K. Powell. The 39-year-old son of Secretary of State Colin L. Powell was named by President Bush to run the Federal Communications Commission in 2001. To Republicans, he seemed the perfect choice.
He had the resume: U.S. Army. Antitrust lawyer. Service on the commission since 1997. And he had the core belief in deregulation that his party believed would unwind eight years of Democratic rulemaking. He was a political star in the making.
“No FCC chairman, from Day 1, has been more politically powerful, more well connected and more knowledgeable coming into the job since perhaps Newton Minow during JFK’s administration,” said former FCC Chairman Reed Hundt, a Democrat who steered the agency through the initial writing of telecommunications rules in 1996.
But like so many others who came to Washington with the golden glow of great expectations, Powell failed his first big political test.
Two weeks ago, Powell suffered a stinging defeat in his effort to overhaul the rules governing competition in the local telephone market. The setback underscored that turning ideology into policy is as much about personal politics as tactics.
Now, he is in danger of squandering his opportunity to reshape the nation’s communications landscape. Powell’s failure to woo a majority of commissioners to his ardent deregulatory position has caused many in government and industry to doubt his ability to lead the commission. It also has cast doubt on Powell’s political future beyond the FCC.
“Powell had made telecommunications reform a key part of his tenure,” said Allan Tumolillo, chief operating officer at market research and consulting firm Probe Research Inc. in New Jersey. “But now he’s a weakened chairman.”
Although Powell continues to enjoy support from some elected officials, other lawmakers and industry leaders who asked not to be identified said he must adapt to survive.
“Powell doesn’t communicate well and doesn’t solicit opinions of others,” said one telecom industry executive. “He’s said, `I could have got some warmed-over compromise, but I didn’t want to sacrifice my principles.’ But every decision reflects a compromise. To be in an agency that necessarily requires some degree of consensus, you can’t operate like that.”
Powell’s defeat was particularly bruising because the Republican chairman was outflanked by someone from his own party: Commissioner Kevin J. Martin, a former FCC staff member with close White House ties.
Martin forged an alliance with the commission’s two Democrats to foil Powell’s proposal to free the regional Baby Bell phone companies from having to lease their lines to competitors at discounted rates.
The vote ended the commission’s first review of competition rules under the Telecommunications Act of 1996, which was designed to give consumers more choices and lower prices for local telephone service.
In the hours after the Feb. 20 vote, the financial markets wiped out $16 billion in shareholder equity in companies such as SBC Communications Inc., the dominant local phone provider in California.
`$16 billion boy’
The next morning, over Krispy Kremes with FCC staffers, Powell–with military-style gravity–told them that the stock market reaction was a reminder “that we are playing with live ammunition” and bitingly referred to Martin as the “$16 billion boy” who caused the market fallout.
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Although some speculated that Powell took the defeat personally, the FCC chairman put an upbeat spin on the vote and expressed little concern about damage to his political stature.
“Believe it or not, I’m largely satisfied with” the outcome, Powell said, adding that he was “ready to go on to the rest of the agenda.”
The FCC chairman, who lives in Fairfax Station, Va., is said to be interested in running for governor of the state one day. Powell associates say he has not talked openly about seeking political office.
Former FCC Commissioner Nicholas Johnson, a populist Democrat who disagrees with Powell’s policies, thinks Powell could be a viable candidate because of his name recognition and potential fund-raising ability.
“If Powell’s corporate friends, whom he has enriched to the billions of dollars, do the decent thing and pay him back a small portion of their winnings, he can have one of the best-financed races for anything,” Johnson said. “Since elections often disproportionately turn these days on who can raise, and spend, the most, he might very well be elected.”
But former Virginia Gov. L. Douglas Wilder said Republicans were unlikely to push Powell for governor, at least in the short term, because of the wealth of other experienced candidates in the state and Powell’s lack of political experience.
Powell and his wife, Jane, met as undergraduates at the College of William and Mary in Virginia, where he earned a degree in government in 1985. He originally planned to follow his father’s path as an Army officer, but his hopes for a military career ended after a jeep accident in Germany nearly took his life in 1987.
Powell instead turned to law. After graduating from Georgetown University Law Center, he became a clerk to a federal appellate court judge and then took a stint as chief of staff to Assistant Atty. Gen. Joel Klein, who headed the antitrust division during the Clinton administration.
Those law jobs, coupled with his military service, helped shape Powell’s reserved and judicial administrative style. Those experiences also gave him a broad grounding in economics and government enforcement power. Powell is a deliberate thinker who approaches problems tactically.
But this style–more aloof than collaborative–may not help in running an agency such as the FCC. By many accounts, it has produced friction and administrative miscues on issues that are largely non-partisan.
For instance, both Powell and Martin staked out traditionally Republican, but ultimately conflicting, positions in the phone battle.
Powell argued that competitors who use the Bells’ networks should build their own facilities rather than be able to lease equipment from the Bells at cheap, regulated rates.
States’ rights
Martin, on the other hand, said state regulators know their markets and should decide how best to foster competition. It was two classic conservative positions butting heads: free markets versus states’ rights.
Powell outlined his position in detail during one-on-one meetings with other commissioners, going so far as to sketch out his diagrams of how the telecommunications industry could change under his plan.
In the fall, he used his power as chairman to exclude other commissioners from the complex process of drafting the actual rules–a decision that alienated his colleagues.
On Jan. 17, just one month before the vote was originally scheduled, Powell released to them an 87-page executive summary. The next week, he followed with a 400-page tome that would have overturned seven years of telephone regulations.
None of the commissioners agreed with the proposed order. And they didn’t like the fact that they had only three weeks to review the document and work on compromises that could produce a unanimous vote–something the FCC historically prefers on major decisions.
Instead, Martin formed a coalition with the commission’s two Democrats, opposing Powell and the other Republican commissioner, Kathleen Abernathy.
“We kept waiting for them to walk over to us” and offer a deal, said one FCC staffer close to Powell. “But they never did.”
On Feb. 20, the vote split 3 to 2 against Powell, who took the unusual step of issuing a blistering dissent of the decision, calling it “legally suspect” and “harmful to consumers.”
Nonetheless, he concluded his remarks with conciliatory words: “This has been a tough proceeding, but I look forward to getting it behind us and moving to other matters pressing for the commission’s attention.”
Few believe that will be easy.This spring the commission takes up a high-stakes revision of rules on media ownership.