Abernathy: Previous FCC Holds Some Blame for Telecom Bust

What caused the current, widespread bust in telecom companies? At least part of the answer lies in the policies of the previous, Democrat-controlled FCC, Commissioner Kathleen Abernathy told reporters July 9.

While declining to pin the blame on a single trend or culprit, Abernathy reiterated previous statements that the Kennard FCC over-stimulated investment in a drive to create new competition.

"The previous administration seemed intent on stimulating competition as quickly as possible without regard to the kind of competition that was being promoted and whether or not it would be long-lasting or beneficial," she said.

The result: excessive and unused infrastructure for markets that did not grow as quickly as expected. Plus, she said, advances in data-compression technologies further reduced the need for all the connectivity.

Another part of the problem, she said, was pressure from Wall Street for massive buildouts and earnings growth. And, in a few cases, "It was a fast and loose mentality combined with good old-fashioned greed," she said.

As for embattled giant WorldCom, she said an FCC priority would be to ensure continuity of service for the Mississippi-based company's customers, if it declares bankruptcy as is widely expected. But beyond a 30-day notice the company is required to give the FCC before abandoning customers, she said there was little the government could do. Other companies, she said, would probably snatch up the customers.

She said a disruption similar to the @Home fiasco earlier this year, in which thousands of Internet subscribers were cut off and had difficulties reconnecting, was unlikely.

"The good news is we have some statutory authority to ensure there's no disruption," she said. "The better news is the market forces are poised to not want to see a disruption."

Regarding the proposed EchoStar-DirecTV satellite services merger, she said she opposed FCC negotiating conditions as part of the merger-approval process. That did not preclude, however, merger applicants offering their own promises in a merger application.

"I think either the merger is consistent with the statute and our rules, and generally serves the public interest, or it doesn't," she said. "I do not support adding on requirements that have no basis in our rules [just] because we think it would be nice."

The 180-clock on the merger's approval is still stopped as the FCC awaits additional information from EchoStar, she said.