FCC's Powell Stands Up to Verizon Threat
By Steven Pearlstein
Friday, July 9, 2004; Page E01
It's time to play the Great Washington Lobbying Game, in which contestants can win or lose billions of dollars for their companies and shareholders. Here's today's final bonus question:
You represent a telecom giant with frequent business before the Federal Communications Commission. The commission has regularly favored your company, most recently by eliminating an onerous regulation limiting how much you can charge competitors to hook into your heretofore monopoly phone network. Now, after more than two years of study, the commission is days away from approving a spectrum swap designed to solve a serious problem that police and fire departments have with interference with their radio frequencies. Unfortunately, this deal also involves giving one of your competitors, Nextel, a sweet deal on a prime piece of radio spectrum. Do you:
1: Make one last, quiet approach to the commission to persuade it to force Nextel to pay a higher price or settle for a less choice bit of spectrum;
2: Begin exploring a way for your company to make a spectrum swap on similar terms; or
3: Write a threatening public letter to the commissioners saying they will face criminal prosecution if they approve the Nextel deal?
If you answered "3," threaten criminal prosecution, you might want to consider a line of work other than government relations. Or you might send your résumé to former attorney general William Barr, Verizon's general counsel, who did just that in a letter last week that had commission officials and members of Washington's communication bar shaking their heads.
"In my view, this is pretty high-risk poker to play with the commission," said Joe Markoski, a partner at Squire, Sanders & Dempsey, who has been practicing before the FCC for 30 years. "I've never seen anything like it."
It's fair to say that yesterday's 5 to 0 vote from the often fractious commission approving the Nextel deal was nothing less than a rebuke for Verizon. And it was delivered by none other than Chairman Michael Powell, normally a Verizon ally, who took the unusual step of departing from his prepared text to characterize Verizon's lobbying as the most ruthless he has encountered in nearly seven years on the commission.
As for the threat that the commissioners might go to jail for violations of the Civil War-era Anti-Deficiency Act, Powell was undeterred, saying the risks paled "in comparison to the risks that our first-responders face each and every day."
It was Powell's finest moment as FCC chairman. In last-minute negotiations that dragged into the early hours of Thursday morning, Powell demonstrated a mixture of flexibility and determination that has often been missing from his leadership style. And in his comments to a hearing room crowded with $600-an-hour lawyers, he was unusually eloquent in his plea for people to put aside the normal pursuit of commercial advantage in favor of enhancing public safety.
Under the deal, Nextel will get its new spectrum, but not without paying at least $3 billion, more than it had previously offered and anticipated. And to put to rest the legal objections raised so ham-handedly in Barr's letter, nothing will happen until the comptroller general gives the deal his blessing.
But none of that was good enough for Verizon, which will accept nothing less than total victory. Its lobbyists were already plotting with congressional allies to try to overturn the commission decision, even as Barr prepares the inevitable legal challenge that will be pursued to the Supreme Court, if necessary. A Verizon spokesman even went so far yesterday as to liken the FCC's decision to the arms-for-cash swap at the heart of the Iran-contra scandal.
As one old FCC hand told me this week, there is a steep price to pay at some point for practicing such political thuggery. Yesterday's 5 to 0 vote suggests that Verizon's day of reckoning may not be far off.
Steven Pearlstein can be reached at email@example.com.
© 2004 The Washington Post Company