Blair Levin served as chief of staff to then-FCC Chairman Reed Hundt from December 1993 through October 1997. He has worked as an analyst since 2001 and is employed by Stifel Nicolaus, a securities brokerage and investment banking company with a research arm, which Levin heads. Before joining the FCC, Levin was a corporate lawyer who spent much of his time with rural wireless companies. As FCC chief of staff, Levin oversaw implementation of the Telecommunications Act of 1996 and has kept a steady eye on congressional efforts to revamp that law this year. xchange’s business and regulatory editor Kelly M. Teal talked with Levin in July, and got his reflections on the past 10 years of telecom change.
XC: You were at the FCC during the entire process of the 1996 Telecom Act. Tell me about it.
BL: Like all processes, it was very interesting, it was very amusing and very intense. There are a lot of different things, the major thing being that it was clear to pretty much everyone in Washington there was really a consensus that the breakup of AT&T – which I, by the way, think was a very good thing that the government did – and the line-of-business restrictions that were part of that should come to an end. And those [restrictions] prohibited the regional companies from going into the long-distance business and other intraLATA businesses; but, at the same time, something had to be done to make sure there was competition in local markets. So there was a broad consensus about the goal. There were a lot of disagreements about the tactics. At the same time, there was a tremendous technology shift coming, which made it very interesting, also very tricky. I think if the bill had been written two years later, it could have been a very different bill. If the bill had been written two years earlier, it would have been different too.
The two big things that the bill did not take into account, of course, were the rise of the Internet and the rise of wireless. Now, those were both known things, but the pace of those things was not well understood by anyone.
XC: You helped the FCC implement the ’96 Act. How did that work?
BL: It was a really fun management challenge. I think a lot of people don’t understand that. We did some things that had never been done before. First of all, as a matter of implementation, it was one of the largest tasks ever given to an American administrative agency in terms of both scope and timing – other than some really important things like World War II, which was far more important and far bigger. … Here’s a little known fact: The first six months after the bill passed, the extra utilities we had to pay, because people were working around the clock, was $500,000. So we had a really terrific staff; and what people sometimes forget about the implementation is, every one of those decisions was made on time, which is quite remarkable. And, every one of those decisions, with just one or two minor exceptions, was decided unanimously. In other words, it was not a 3-2 Democratic split [of three Republicans versus two Democrats].
XC: The ’96 Act was supposed to introduce local competition. Now we have even fewer local companies, even less local competition, than we did in 1996. Plus, AT&T and MCI, the biggest CLECs, have been gobbled up by the RBOCs. Why did it play out like this?
BL: I guess I’d make a couple of observations, though I will start from the premise that, partly because of my personality, partly because of job, I do not want to dwell on the past. I think the FCC did a remarkably good job implementing [the Act]. I think a lot of the criticism that I read is absolutely misplaced, but if I could do it all over again, there are lots of things I would change – there are certainly things I would change in the law.
… I think that the basic UNE idea made a lot of sense in ’96, but here’s what I mean about if the bill had been written later: Wireless and VoIP were not realistic alternatives in those days.
As to the law, I would simply say that with perfect hindsight, there are a number of things I, or anyone, might have done differently. But that is always true, both as to law and as to business decisions.
XC: How have the emergence of wireless and VoIP as “alternatives” changed things?
BL: They are in the process of doing so. As to wireless, dropping the cost of connecting a wireless call to a wireline number was critical to improving the competitiveness of wireless. As to VoIP, it still has not reached the penetration level of UNE-P, but [it] eventually will provide a significant competitive alternative to traditional switched voice service.
XC: How is life different for you this time around on telecom reform … being an analyst rather than an active insider on the bill?
BL: I think it’s a difference between being a basketball player and a former basketball player who gets to do commentary for television. I don’t sweat nearly as much. It is much more amusing – it’s much funnier watching the process play out. I don’t get hit – I don’t wake up in the morning feeling bruised. But there’s certainly part of me that misses the game. It’s a very, very different experience. It’s a very different thing when you’re trying to decide what’s right for the country than when you’re trying to decide what other people are going to decide.
XC: Provided Sen. Ted Stevens gets the 60 votes needed and his Advanced Telecommunications and Opportunity Reform Act – a bill originally addressing video franchising reform that since has become more sweeping – passes, do you think this is lasting legislation, or are we going to see another series of efforts to set rules for communications in another 10 years?
BL: Both Stevens and [Rep. Joe] Barton started from a notion of, ‘We’re going to have a comprehensive rewrite.’ Neither bill is what you would think of as a comprehensive rewrite. Rather, they are both efforts to address very specific issues, some of which relate to the prior act, some of which don’t. But it’s not a rethink of the way we regulate. The technology itself is causing a rethink of regulation. For example, what’s the No. 1 thing driving the bill? Telco entry. Well, look, if Congress doesn’t pass it, the states are going to pass a lot of laws, cities are going to let them in.
Network neutrality is a really big, important issue, but we don’t really know what the business models are. My guess is this issue will keep getting debated. Even if they were to write something significant and pass something this year, it may well be rewritten in a few years when people see what the business models are.
Blair Levin, former FCC chief of staff and current analyst for Stifel Nicolaus, & Co. Inc.
FCC www.fcc.gov
Stifel Nicolaus, & Co. Inc. www2.stifel.com
