Over the past decade, the Federal Communications Commission has played the leading role in spurring competition in the telecommunications industry, issuing order upon order to restructure the industry's giant, American Telephone & Telegraph Co., to make it a fairer rival to firms in the highly profitable communications business.
Now, as a result of the Justice Department's agreement with AT&T to end the government's eight-year-old antitrust case against the Bell System, the FCC's role in setting telecommunications policy may be sharply diminished--so much so that some communications experts say the agency will be doing well to win even a supporting part in the government's efforts to reorganize the Bell System.
"I have the feeling that we are being ousted," says FCC Commissioner Anne P. Jones. "Some decision making that has traditionally been here is being given to the courts and Justice. If the decree is implemented in a way that at first blush it looks like it will, we could become a very sleepy agency."
Although the FCC will continue to have authority to approve interstate long-distance rate hikes, as well the power to approve construction plans for long-distance facilities, the agreement will ultimately eliminate many activities now under the FCC's purview.
With AT&T agreeing to divest itself of the local operations of its 22 local operating companies, the FCC will no longer have authority to scrutinize about two-thirds of AT&T's assets. And with divestiture, the FCC will no longer oversee many of the contractual arrangements between the local operating companies and AT&T.
At the same time, the FCC may have to shelve its efforts to restructure AT&T to allow it to offer data processing and other unregulated services it has been barred from selling as a result of an earlier government agreement. For in return for divestiture, the consent decree lifts that ban and will permit the remaining AT&T to enter any business area it wishes.
Given the consensus for deregulation of all industries, "maybe its appropriate" that the consent decree will substantially reduce the FCC's rulemaking authority, says Jones.
But, FCC officials add, what may not be appropriate is that the 19-page decree makes absolutely no mention of the commission. As a result, unless Congress or the courts say otherwise, the agency that has been scrutinizing AT&T's activities for the past 47 years will not be called on to oversee what AT&T has called "the most signficant change in the Bell System's long history."
"What the decree seems to be saying is that Justice has a sense that it really represents the government more than the independent agencies," complains one FCC commissioner. "They really feel they are the experts--a statement which is subject to debate since Congress set us up to be the communications experts."
What has been particularly galling to the commission is that it wasn't even consulted during the negotiations that led to the settlement. Six years ago, the commission specifically asked the court for permission to review any plan that substantially alters the industry's structure to make sure "such action will comport with the 'public interest,' as perceived by the commission in light of its mandate under the communications act."
But, complains one commissioner, "we didn't learn of the settlement until an hour before it was publicly announced. We were never consulted. There was some resentment here about that."
Justice officials argue that the settlement was drawn up to end a legal dispute between two private parties and, consequently, no other party, including the FCC, should have been consulted.
But in the future, says one top Justice aide, "we will seek the FCC's counsel. I think it might well become very useful for the FCC to become involved." Yet, the official adds, the FCC would probably be given only "limited responsibility."
To guarantee a role, FCC officials say they will probably petition U.S. District Judge Harold H. Greene, who must approve the decree, for permission to participate in implementation of the settlement. In an order issued last week, Greene said that before he accepts the settlement he may seek the views of "any individual, group or agency of government" to see if the agreement is in the public interest.
But even if the FCC does gain a role in overseeing the settlement, it may be a sharply different part than the agency has played in the past. For instead of issuing orders on its own initiative to recast the telecommunications industry, the FCC primarily would be spending its time issuing rules in response to the settlement to make sure it is implemented fairly.
"It won't be business as usual," says James R. Billingsley, AT&T vice president for regulatory matters. "There will be an awful lot of new problems," not just for the FCC, but for the Bell System as well.
FCC officials don't expect the commission to become a sleepy agency anytime soon. In fact, if anything, they say, the lights will be burning even longer in the coming months as FCC officials reevaluate recent rulings and proposals in light of the settlment.
"The consent decree has a tremendous impact on this agency," says FCC Chairman Mark S. Fowler. "Many proceedings may no longer be valid. So, in the near term, there will be at tremendous impact on our resource requirements" as the agency reviews previous proceedings to see if they should remain on the books.
Among the issues expected to be reviewed:
The "Computer II Inquiry," in which the FCC ordered AT&T to set up a separate subsidiary to sell any unregulated service, such as telephone equipment and sophisticated computer processing. The separate subsidiary was set up to guarantee that AT&T didn't subsidize any of its competitive ventures with revenue from its local and long-distance monopoly service. Such a requirement may no longer be necessary as a result of the divestiture. At the same time, several of the specific provisions contained in the decree conflict with Computer II's requirements. As a result, the FCC is expected to ask the U.S. Court of Appeals, which is now hearing a challenge to this ruling, to return Computer II to the commission for further review.
Its mobile-radio decision, which required AT&T to set up a separate subsidiary for the offering of cellular radio systems, which will greatly expand the mobile radio service now available.
An inquiry on the procurement practices of Bell's operating companies to study ways in which these companies could be encouraged to buy less from AT&T's manufacturing subsidiary, Western Electric, and more equipment from AT&T's competitors.
A two-year-old effort to develop a uniform system of accounts for AT&T to provide easy cost data by jurisdiction and service for rate-making decisions.
An effort to determine how much local companies should charge long-distance companies for the use of local facilities in gaining access to customers.
Additionally, Fowler says, the FCC will still be busy enforcing laws on the books. "We do have an independent responsibility under the 1934 Communications Act which may not be affected by the consent decree." Included in those "public interest" responsibilities are the regulation of long-distance rates to make sure they are fair and of the construction of new interstate facilities to make sure they are needed.
Ultimately, Fowler acknowledges, the settlement could reduce the FCC's regulatory role. But that does not perturb the chairman, an avowed deregulator. "Hopefully in the long term, the decree will make it easier to unregulate large segments of the telecommunications industry." For if the decree accomplishes what the Justice Department promises--greater competition--"then we can find that regulation is not required."