The Media Borg's man in Washington

Even as the issue of consolidation receives ever higher levels of scrutiny, Powell is also discovering that his attention is needed elsewhere. The economic collapse of the telecommunications sector is a bust that makes current dot-com woes pale in comparison, and it is happening on Powell's watch.

Local, long-distance and wireless telecom companies and network-equipment makers have already cut 225,000 jobs this year, according to the Wall Street Journal, and "wiped out almost $2 trillion in stock market wealth," making it nearly impossible for an economic recovery to take hold. Big losers have included Corning, Lucent, Nortel Networks and JDS Uniphase. The latter, once a tech stock favorite, announced in late July the largest write-down in business history: $45 billion. In just over one year the stock value of JDS, a leading manufacturer of components for telecommunications networks, has dropped from $153 to $9.

As the chairman of an agency that oversees the telecom sector, is Powell the unwitting captain of an economic collapse?

"The communications sector is his principal responsibility and it's suffering the deepest recession of its history; there's tremendous gloom," notes Hundt, who suggests Powell has not provided enough leadership to help lure investors back to the telecom table. "The situation here is Powell could end up looking like Herbert Hoover -- the best person for the job but who's hit with a downturn he's not personally responsible for, and then doesn't react in a useful way."

James Glen, an economist for Economy.com, disagrees. "I think the FCC chairman's role is to ensure competition. You can't blame [the bust] on regulators."

But even free-market advocates, who believe that even more deregulation is the necessary cure for economic ails, are sounding worried. To Cleland, Powell's responsibility is simple: "He said he'd be a deregulator. If he's not and the telecom sector languishes, then he should be concerned."

But is Powell simply a dedicated deregulator, or will his tenure at the FCC offer some surprises? Was the Chris-Craft waiver for News Corp. a sign of things to come, or simply a special deal for Murdoch?

Powell has given the public some mixed signals. When he first joined the FCC, Powell agreed that the rampant media consolidation uncorked by the 1996 Telecom Act was "scary."

"The reason the pace is scary is because it's hard to keep up with and to know when to put the brakes on," said Powell.

"We could do a lot worse than Michael Powell during a Bush administration," says one broadcast lobbyist opposed to further consolidation. "Perhaps with a sense of confidence and strength that he'll go on to bigger and better things in life, compared to most telecom lawyers, Michael Powell may have the potential to be like a Supreme Court justice. People think he'll vote one way and he turns out to be another Earl Warren."

Powell has already shown the ability to throw a curveball. In June his FCC levied a $7,000 indecency fine against a Colorado Springs, Colo., radio station for playing a clean, or edited, version of Eminem's hit song "The Real Slim Shady."

The penalty came as a shock because for years the FCC had all but ignored listener complaints about radio's increasingly raunchy programming. Also, during his inaugural press conference as chairman, when asked about broadcast indecency, Powell quipped, "I don't think my government is my nanny. I still have never understood why something as simple as turning it off is not part of the answer."

Powell also stressed concern about trampling over rights in order to regulate indecent content, telling the Washington Post, "It's better to tolerate the abuses on the margins than to invite the government to interfere with the cherished First Amendment."

Broadcasters, not to mention First Amendment activists who had viewed Powell as a hands-off pal, were incensed by the "Slim Shady" fine. "It was a little bizarre to go after Eminem, since everybody in the world is playing that record," says Mary-Catherine Sneed, chief operating officer of Radio One, the country's largest minority-owned radio station group. "It seems there are bigger fish to fry."

Days after the fine, hip-hop impresario Russell Simmons buttonholed Powell at an awards gala and pressed him about the Eminem fine. "He told me he was committed to the First Amendment and it was not an attack on rap," reports Simmons, who invited Powell to attend an upcoming Hip-Hop Summit in New York. Powell initially accepted, only to decline days later, citing "scheduling conflicts." (As a rule, it's best for rising Republican stars to avoid sharing a podium with Nation of Islam leader Louis Farrakhan, who gave the summit's keynote speech.)

So what explains the left-field fine over Eminem? It was either politics or process.

Like his father, Powell takes pride in his moderate roots, although he also stresses that he's "happy to call myself a Republican." But according to a former FCC insider, early this year FCC commissioners received letters from a group of Republican senators urging the commission to clamp down on indecency over the airwaves.

"What was important," says the senior source, "was it gave public cover for the commission to be more proactive in what it was doing. It emboldened Powell to be a more conservative Republican." And to bring himself more in line with Bush's culturally conservative administration.

The other explanation is process. Following a 1994 settlement with Evergreen Media over indecency fines levied against one of its stations, the FCC agreed to issue, within 90 days, new enforcement guidelines to help broadcasters better identify material that is potentially indecent.

For seven years the new guidelines were nowhere to be found as two Democratic-appointed chairmen, reportedly concerned about infringing on First Amendment rights, balked at issuing any new set of content rules. Within months of taking over the commission, Powell had the new guidelines distributed. The rules emphasized paying attention to overall context, and not just dirty words, so just bleeping out a few expletives would not protect a station against charges of indecency.

"Michael Powell is a stickler for process; it's from his military background," says Bill McConnell, who covers the FCC for Broadcasting & Cable magazine. "And he feels once he gets the guidelines out he has to enforce them." Thus the Eminem fine.

Interestingly though, "Powell insists he was blindsided by this Eminem fine," says McConnell. "The commissioners didn't vote on it, because it came out of the FCC's Enforcement Bureau. But he should have known about it."

A hands-on chairman with instincts as keen as Michael Powell's is not going to be blindsided by very many potentially headline-making initiatives promulgated by his own agency. But if such an embarrassment had to happen, it's probably best that the issue at hand was a fairly minor affair. Because in coming months, as the political storm gathers around media consolidation, and the telecom sector gasps for its economic life, the stakes for Powell will get much higher.

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