Nov. 9, 2006

Democrat gains in the midterm elections effectively ends prospects for passage of a telecom-reform bill with broader wireless federal pre-emption this year and possibly even in 2007.

The altered political landscape encourages political gridlock in a way that shifts greater spotlight to the Federal Communications Commission and the states.

At the same time, the next Congress is expected to subject the FCC to greater oversight.

“The oversight, particularly of the FCC, could complicate the Bell push for telecom/broadband deregulation and broadcaster campaign for media ownership liberalization,” stated investment banking firm Stifel Nicolaus & Co. Inc. in an investment note.

“The congressional shift could also create more antitrust/regulatory static surrounding industry merger and acquisition activity in general at the Department of Justice or Federal Trade Commission and the FCC.

The two Democratic FCC commissioners probably have a bit more leverage to demand additional conditions for the pending AT&T Inc.-BellSouth Corp. deal, while mindful that a third Republican could still be enlisted to break the current 2-2 impasse.”

No. 1 Cingular Wireless L.L.C. is co-owned by AT&T and BellSouth.

With the House returning to Democratic control, Reps. John Dingell (D-Mich.) and Edward Markey (D-Mass.) are in line to head the House Commerce Committee and telecom and Internet subcommittee, respectively.

However, the choice of chairmen and committee assignments generally will not be officially sorted out until after a lame-duck session of Congress later this month.

Other than passage of stop-gap spending bills for the FCC and other federal agencies, little legislative action is expected during the brief legislative period.

As such, federal pre-emption, pre-texting, tax moratorium and other wireless measures likely are dead for the year and will have to await consideration in Congress next year.

It is unclear whether Republicans will retain their grip on the Senate.

The apparent failed re-election bid of former Senate communications subcommittee chairman Conrad Burns (R-Mont.), combined with other trending election results, could put the upper chamber in Democratic hands as well.

If the Senate goes to Democrats, Sen. Daniel Inouye (D-Hawaii) could play a major role in crafting wireless, high-tech and media policies.

Source: RCR News