Another warning of impending change came on April 30, 2002, when Powell gave a speech to the Broadband Technology Summit, held at the Chamber of Commerce in Washington, D.C.

In that address, Powell said "The Commission will conceptualize broadband broadly to include any platform that is capable of fusing communications power with computing power to provide high- bandwidth intensive content to meet the broad needs and demands of consumers. That is, we recognize that broadband is not merely cable modem service or DSL."

If broadband is defined as being several markets, and DSL and cable Internet are only part of the broadband market, then the FCC might not feel a need to ensure that there is competition within the DSL or cable Internet markets.

Regarding regulation, Powell went on to say "At this stage in the development, any broadband regulatory environment must serve to promote investment and innovation. Substantial risk investment is needed to either upgrade legacy networks or to develop new networks to support broadband capabilities and applications."

Historically, ILECs have claimed a need to charge higher prices to get adequate return on their broadband investment. By contrast, CLECs claim that the ILECs have never provided adequate service. Powell's emphasis on the touchstone issues of investment and infrastructure suggested to many observers that the chairman favored the ILEC position in this ongoing argument.

Preparing for chaos
Putting the FCC's current task in historical perspective, Powell noted, in a dialog with Brian Lamb on May 8, 2002 at the National Cable Show and Exposition in New Orleans run by the National Cable and Telecommunications Association (NCTA), that the FCC's job is tougher than ever before:

"One of the things we are going to have to get really used to is once upon a time the world was really simple. We knew who all the companies were. We knew all the CEOs by name.

I think what we are going to have to get used to is that there is never again going to be the ability to be very simplistic about a country this large and diverse and about whether the country is competitive, is this market segment this or is that market segment that. I think it's going to be much more dynamic and chaotic. It will be difficult to make broad generalizations about the entire space.

I think you will be able to go to cities that have four broadband providers. I think you will go to a town 100 miles away that will have none. I think you will go to other places that will have many. And I think the policy should always be attempting to get ubiquity and affordability. But I think we will have challenges because we are used to—I think policy is used to—a more simple picture of the players and the markets and the technologies, and they are fragmenting into many, many versions and variations across the country. So you will get this noise, this anxiety in Washington, and I think in policy, because you don't really know what is going on."

Eight days in October
The debate intensified during eight days in October. Powell reopened the public debate with a speech on October 2, 2002 [.doc] at the Goldman Sachs Cornucopia XI Conference in New York City.

He said in part "We must work to restore the financial soundness of the industry by taking the painful, but necessary steps of cleaning up bloated and often opaque balance sheets. Firms must find ways to cut costs and pay down the debt that hangs over this industry. The best companies with the best leadership are those committed to restoring financial fundamentals. Those that are should be rewarded and those that are not should be abandoned."

He further commented "To address over-capacity, hyper-competition, weak pricing power and falling revenues, many sectors of the industry must undergo some prudent restructuring. Let me be clear, this Commission will block transactions that are anticompetitive and harm consumers; however, where, as here, the market must shake out, no transaction can or will be deemed unthinkable before the application is even filed with the Commission."

Shortly after that, Level 3 Communications purchased Genuity from Verizon.

However, the Powell statement that truly made waves was this:

"Economic recovery means building business that can expand employment opportunities for our Nation's citizens.

It means bringing real competitive choice to consumers and enhancing consumer welfare through differentiated products and services and differentiated pricing packages.

It means, in short, investment in facilities. For only through facilities-based competition can an entity offer true product and pricing differentiation for consumers.

Only through facilities-based competition will corporate spending on equipment thrive.

Only through facilities-based competition can a competitor lessen its dependency on an intransigent incumbent, who if committed to frustrate entry has a thousand ways to do so in small, imperceptible ways.

Only through facilities-based competition can an entity bypass the incumbent completely and force the incumbent to innovate to offset lost wholesale revenues.

Only through facilities-based competition can our nation attain greater network redundancies for security purposes and national emergencies."

Acknowledging his heavy responsibilities, Powell said, "We have reached a pivotal point in this industry and we are in the process of determining what changes to the regulatory framework are indicated. The time has come to stop the finger pointing and recriminations about what happened and whose fault it is—and instead to focus on solutions."

He concluded: "There is little prospect Congress will act soon, so the task falls to us—and we welcome it. For in the immortal words of President Reagan: 'If not us, who? And if not now, when?'"

1. The playing field and the players

2. Preparing for chaos

>3. The bankers vs. the academics

4. No room for compromise

5. Course unclear