On the surface, neither the odds-on re-election of President Clinton nor a dramatic upset victory by GOP rival Bob Dole in the presidential race should impact telecommunications policy.
The blueprint for a deregulated, competitive marketplace was etched in sacred stone with Clinton’s signing of the Telecommunications Act of 1996 on Feb. 8, an historic moment that allowed government to catch up with industry trends and technological advancements of the past decade.
“I can’t see major changes,” said Robert Crandall, a fellow at the Brookings Institution.
Yet Crandall warned that tensions between state and federal regulators may escalate in the aftermath of the new telecom law. “It’s clear states are unhappy at how aggressively the Federal Communications Commission is implementing the ’96 Act,” Crandall observed.
Bill Myers, a senior fellow at the Progress & Freedom Foundation, said Clinton and Dole have fundamental differences on telecom policy ranging from universal service to Internet regulation. Despite that, Myers said telecom policy debates are increasingly issue-driven.
“You’re beginning to see new coalitions form,” said Myers, pointing to support for digital TV auctions by liberal Barney Frank (D-Mass.) and conservative Dole.
Conventional wisdom has telecommunications being one of the few-if not the only-major policy area void of harsh partisanship. Indeed, it was the Republican-led Congress’ sweeping overhaul of the 62-year-old communications law that Vice President Gore-champion of the information superhighway-tried to claim credit for on behalf of the White House.
And what better example of how telecommunications policy cuts across party lines than Dole’s opposition (as Senate minority leader) to Democratic-crafted telecom legislation he considered too regulatory, effectively killing the bill in 1994, and his criticism (as Senate majority leader) of the GOP telecom bill for not forcing TV broadcasters to pay for new digital licenses worth billions.
It was an unforgivable slight to taxpayers, a giveaway in Dole’s eyes that amounted to corporate welfare.
Dole didn’t succeed in snuffing out his own party’s landmark bill, though. His successor as Senate majority leader, Trent Lott (R-Miss.), House Speaker Newt Gingrich and other key Republicans promised to delay digital TV licensing until spectrum reform was studied. Lott and a handful of GOP and Democratic lawmakers broke the pledge shortly after Dole left.
That was then. This is now. Dole-the-presidential-candidate is carrying the TV auction crusade in his White House run-but as a supply-sider rather than a deficit hawk. Even before supply-side slinger Jack Kemp joined the ticket, Dole unveiled a $548 billion tax-cut plan paid for in part by $34 billion in spectrum auction receipts.
Clinton, too, is hot on TV auctions, but would go about it differently. The president hopes to raise as much as Dole by selling analog video channels returned by licensees converting to digital technology. Under Clinton, broadcasters are guaranteed a digital channel. Dole would let the winning bidder decide how to use broadcast spectrum, a stark philosophical difference between the two candidates’ spectrum policies.
Like other issues in the ’96 presidential contest, Clinton and Dole have swapped positions. In this case, the one-time frugal legislative gourmet from the nation’s heartland is betting the farm on an economic plan that critics charge may supply the nation with more deficit than investment dollars.
Economic growth was greater in the Reagan years than under Clinton. But it was also during the Reagan-Bush years that the deficit skyrocketed, putting the economy on shaky ground.
For that, Dole is being skewered by Clinton and the press. And Clinton by Dole, for sitting on his laurels. There’s room for improving the economy, Dole declares.
For sure, Clinton, despite good company from favorable economic indicators across the board, is staring at an electorate uneasy and anxious about the new global economy. If the economy is so great, why the waning wages and dearth of high skill, high-paying jobs? Where are the manufacturing plants?
Motorola Inc., of Schaumburg, Ill., can claim bragging rights as the world’s biggest mobile communications supplier. And Lucent Technologies Inc. is a powerful force. But how many other U.S. firms are building wireless gear?
Clinton, who hadn’t planned to balance the budget until Republicans gave him that and many other ideas to redefine himself as a New Democrat, now unashamedly preaches the virtues of fiscal responsibility.
The spin and inside-out strategies make little clear and obvious.
For example, Clinton is running against Dole but campaigning against House Speaker Gingrich and the foot soldiers of the self-described Republican Revolution who were blamed for two government shutdowns and policies that critics called the Contract on America.
As a result, Republicans are trying to look more like big tent Democrats. And Democrats, like moderate Republicans.
So what does all this mean for the wireless telecom industry? Perhaps a lot, perhaps little. Technology is steaming ahead and making policymakers hindrances to progress, even irrelevant.
The wireless telecom sector, for its part, crossed the bridge to the 21st century in August 1993, when the then-Democratic led Congress declared all carriers equal (some believe more equal than others) and shook down the feds for spectrum so that it could be sold for the first time by the world’s top auctioneer-the FCC.
Now, three years and $20 billion later, wireless is the envy of the telecommunications world. Pagers, pocket phones and dispatch radios are everywhere, for everyone. Anything less than double-digit growth is considered disappointing. The digital age others dream about is here.
Yet, the tandem of deregulatory and pro-competitive policies appear to be causing the wireless industry to contract as fast as it expands. The challenge for policymakers is to keep competition ahead of consolidation. The spectrum cap should keep antitrust potential in check. If not, there’s the Justice Department.
But, while the clock will not be turned back to the days of heavy-handed government regulation and monopoly domination under either presidential candidate, the telecommunications industry would see differences-obvious and subtle-between a Clinton presidency and a Dole presidency insofar as regulatory, trade, antitrust, affirmative action, tax, science and technology, labor and fiscal policies.
Even if Clinton goes on to become the first Democrat since Franklin Roosevelt to be re-elected in an electoral landslide-as new polls predict-change could still be in store for the telecommunications industry in years ahead.
With two months left until election day, Clinton is running well in many key states save Republican strongholds in the South and Rocky Mountain West. Both candidates got a bump from smooth, tightly scripted-and successful-national conventions last month. Controversy and dissent censored, strained political analysis concluded Dole was helped by odd-couple running mate Kemp and Oprah-inspired wife Elizabeth more than Clinton was hurt by political guru Dick Morris’ performance that nearly upstaged the president as the convention finale.
If Clinton wins and his coattails aren’t long enough, he may have to resume battle with congressional Republicans. Keep in mind, however, that Clinton stumbled badly during his first two years when Democrats controlled Congress.
The president’s remarkable comeback, following the midterm election that put Republicans in charge of the House and Senate for the first time in 40 years, is as much due to the GOP (which gave Clinton countless openings) as it is to Morris’ strategy of centrist incrementalism.
The variables are many. Change could come from any direction. Here is a breakdown of key areas that are in play in Election ’96 and how the wireless indus
try might be impacted.
The House
Billy Tauzin (R-La.) would like nothing better than to succeed the retiring Jack Fields (R-Texas) as chairman of the Commerce subcommittee on telecommunications as a reward for bolting the Democratic Party. Newt told him he could have the post, denying Mike Oxley (R-Ohio) the post but not the influence he’ll continue to wield as second in command.
For that to happen, the GOP has to keep the Democrats from gaining a net of 19 seats. All 435 seats are up for grabs. If the GOP succeeds, look for Commerce Committee Chairman Thomas Bliley (R-Va.) and Tauzin to brow beat the FCC to deregulate more as the new telecom law kicks in. And when that’s done, say good-bye to the FCC as we now it.
But if the Dems upset the status quo, big John Dingell (D-Mich.) and Ed Markey (D-Mass.) will return-all smiles-to reclaim the Commerce Committee and telecommunications subcommittee chairs. With the Democratic boys back in town, deregulation would be curbed, industry consolidation scrutinized and investigations (a.k.a. Dingellgrams) expanded.
The lucky winners will be those who get a seat on the telecommunications panel, which in recent years has been the beneficiary of the seemingless endless flow of PAC money. Lobbying will be directed at tweaking the telecom reform act by those who didn’t like how the bill was written.
The Senate
The Senate may be even a longer shot for a hostile takeover by Democrats.
“The single most important thing to remember with regard to this year’s Senate contests is that volatility is driven more by the existence of open seats (14) than by any other factor,” according to The Cook Political Report. Cook sees about 26 Senate races in play.
One of those is between Larry Pressler (R-S.D.), chairman of the Commerce Committee and Senate author of the telecom reform bill, and Tim Johnson, a South Dakota congressman.
Were Pressler to lose, but the GOP able to retain Senate control, John McCain (R-Ariz.) would likely chair Commerce. Broadcasters have reason to worry. Dole and McCain want to auction digital TV licensees more than anyone on earth.
The communications subcommittee chair, left vacant by the forced resignation by Bob Packwood (R-Ore.) last year, is a plum assignment in the waiting.
Trade
If Clinton wins, the United States will continue to push for open markets in telecommunications and enforcement of existing trade pacts. Moreover, the United States wants to make inroads in high growth regions like Asia, South America and Europe. But under whom? Charlene Barshefsky, who became acting U.S. trade representative after Mickey Kantor left the post to run the Commerce Department in the wake of the plane crash in Croatia that killed former Commerce Secretary Ron Brown and 34 others in March.
No one argues about Barshefsky’s qualifications. Smart, tough, savvy and effective as a trade negotiator. Kantor is not missed at USTR. But there is the little problem of Barshefsky’s Canadian timber representation in her former life as an attorney. A new law prevents anyone with foreign lobbying ties from becoming permanent trade chief. That makes Barshefsky’s future at USTR uncertain, if not bleak.
Names mentioned for USTR in a second Clinton term include Stuart Eizenstat, Commerce undersecretary for trade and former domestic policy advisor to President Carter, and Clyde Prestowitz, another seasoned pro who directs the Economic Policy Institute.
This is another great flip-flop story. It’s 1996 and Clinton, a friend of organized labor, is out front on free trade. Democrats historically have been more apt than Republicans to embrace protectionism.
Nevertheless, the revitalized labor movement under new AFL-CIO leader John Sweeney, isn’t budging from Clinton’s corner. What does it mean for wireless?
The Communications Workers of America, thoroughly disenchanted with the massive layoffs by the seven regional Bells, AT&T Corp., GTE Corp. and others, want those employees absorbed in the high-growth wireless industry. CWA is angry about the fallout of the Nynex Corp.-Bell Atlantic Corp. merger. As such, organized labor is sending millions of dollars Clinton’s way.
That leaves Dole, a free trader, virtually speechless. Maybe not, Dole is now making protectionist noises that arch conservative Patrick Buchanan and independent Ross Perot once had a corner on. Dole and Kemp need to talk. Kemp is said to be cool to the idea of punitive sanctions against trade partners like Japan, which kept the cellular business to itself until the United States flexed its muscle two years ago.
As for Kantor, word is he has had it with Commerce and wants to be attorney general. No telling who would run Commerce if Clinton wins. If Dole is elected president, Republicans will try once more to abolish the department, along with several others.
Affirmative action
Clinton wants to mend it, not end it. Dole doesn’t care to ride the fence. He and Rep. Charles Canady (R-Fla.) sponsored legislation to end racial and gender preferences.
Besides not wanting to perpetuate the party’s image of intolerance, Gingrich and House Majority Leader Dick Armey (R-Texas) believe there is a chance of attracting middle class African Americans to the GOP and put the brakes on the bill.
What does it mean for wireless? The GOP’s mighty anti-affirmative action roar, coupled with the Supreme Court’s Adarand ruling last year, cowed the FCC into erasing bidding credits for females and minorities even though the high court didn’t require it-just made it harder. As a result, don’t look for the kind of diversity in wireless that lawmakers envisioned in 1993 legislation. The train has left the station and will enter the 21st century looking the same as it did the last century and the one before that.
Business
Dole would cut the capital gains tax from 28 percent to 14 percent, something that could stimulate mergers and acquisitions in the wireless industry. Clinton won’t go that far.
Technology
Democrats and Republicans believe in high technology, but have different ideas about government’s role in fostering innovation.
Clinton and the Democrats favor federal funding of research and development, while Republicans believe money should come from the private sector. The GOP-led Congress made big cuts in federally supported high-tech programs at the Commerce Department, which Clinton vowed to veto.
Clinton will continue to rely on Vice President Gore for high-tech advice. Mitchell Pettit, a Washington, D.C., lawyer, is heading a group to advise Dole on high-tech.
The Clinton administration continues to push for a key encryption standard. The White House, under Dole, would remove export restrictions tomorrow.
Antitrust
That Clinton came to Washington four years ago as a friend of business did not stop Justice Department antitrust chief Anne Bingaman from holding up major telecommunications mergers until problematic competitive issues were resolved. Bingaman is leaving this fall and Joel Klein, a deputy assistant attorney general for antitrust, will take her place.
Dole, and Republicans generally, are not fond of trust busters. In fact, the GOP did everything possible to limit Justice’s role in the new telecom law. Thus, the Clinton Dems will scrutinize coming mega-dollar telecom deals more than Dole’s crowd.
