Reed Hundt Goes Offline

Reed Hundt, the chairman of the Federal Communications Commission, announced last week that he was stepping down. In his three years in office, Hundt was charged with setting guidelines for the most dramatic liberalization ever in telecom and cable. But recent consolidations raise questions about whether deregulation is really working. Are we seeing the return of a telecom oligopoly? He discussed his legacy in an interview with NEWSWEEK'S Michael Hirsh. Excerpts:

Some are calling deregulation a failure. Even giants like Rupert Murdoch and AT&T seem to be having difficulty breaking into, respectively, the cable and local phone markets. What does that say about competition?

You're looking at a three-step process. First, we have to take away the laws that support monopoly. Second, we have to write rules at the FCC that permit competitors to enter previously monopolized markets. And third, only after you have the competitive entry can you have deregulation. Right now, we're still in the process of undoing the rules that support monopoly, and we're just completing the process of writing the rules that permit competitors to come in. In effect the laws and our rules have created the possibility of competition. An inevitable reaction in business will be to test the limits . . . to find out what is going to be permitted by way of joint ventures, consolidations and other ways to circle the wagons and deal with new competition . . . So you're seeing the testing of the limits.

Should the reported merger talks between AT&T and SBC be considered crossing the line?

We've got to draw the line first . . . We're looking at the Bell Atlantic-Nynex merger right now. We're cogitating about the BT-MCI merger right now. The way you draw lines about antitrust is you make a decision here, you make a decision there. They're like points, and when you connect the dots they're like lines.

And to the degree that you're able to connect the dots so far . . .

All of us in government should commit to guaranteeing that we should get real competition out of [the 1996 Telecommunications Act], and not just a reassemblage of huge communications monopolies.

That suggests you're not thrilled by the prospect of an AT&T-SBC merger.

We'll see what we're presented. All I'm really trying to communicate now is that the thought behind the Telecommunications Act of 1996 was that the barriers that kept industries apart . . . would be taken down.

What is your best vision of what this competitive, wired and digitized world is going to look like?

You can sit at your home and order bandwidth and communications services the way you order pizza. If you want a big pizza with sausage on it, you get two or three companies that'll race it to your door, and my vision is that if you want a multimedia display with a flat-screen liquid-crystal receiver, you'll be able to pick up a phone and order that and three or four or five people will be willing to race it to your door. If you want five channels or 500 channels you ought to be able to order it the same way you order fast food.

Are you disappointed at the pace at which we've moved toward this?

We're moving at a faster pace than any other country . . . The information revolution is unfolding at a blindingly fast pace compared to the Industrial Revolution . . . That took 300 years; here we're talking about three years. The change is already so fast that markets can barely keep up, Wall Street scarcely knows what to invest in. Our job in government is somehow to do the best we can to stay ahead of all that, to not be either in the way or out of the way but instead to be paving the way.

Any truth to the rumor that you're switching sides and going to work for that antitrust regulator's nightmare, Microsoft?

This has no basis in fact whatsoever.