Telecom Experts to Appear on Capital Report at 9:30 Eastern
WASHINGTON, D.C. - Two noted telecommunications experts, Jeffrey A. Eisenach, president of The Progress & Freedom Foundation, and Reed Hundt, a former FCC chairman under President Bill Clinton, will discuss what went wrong in the telecommunications sector tonight on CNBC’s Capital Report. Co-hosted by Alan Murray and Tyler Mathisen, the program will air at 9:30 Eastern.
Tonight’s joint appearance on CNBC comes one day after Eisenach published an opinion piece in the Wall Street Journal critical of Hundt’s brand of telecommunications regulation and a week after the Foundation published a major paper on the nature of “the CLEC Meltdown.” Noting the recent scandal involving Winstar Communications, which resulted in fines being levied on Salomon Smith Barney and still more problems for telecom analyst Jack Grubman, Eisenach wrote yesterday that there is much more to the story. “What happened at Winstar was part of a cycle of failure set in motion by federal policy. And the policies that created the problem are still in place.”
Those policies, Eisenach wrote, set off a “vicious cycle of over-investment” and resulted in “too many firms drawing from a limited pool of financial capital, chasing too few customers and generating inadequate revenue streams.” Hundt, Eisenach wrote, “consciously exploited the notoriously ambiguous Telecom Act to write regulations” in the CLEC’s favor. While regular investors lost billions, investment banks and insiders – including Mr. Hundt – made handsome fees and profits. However, Eisenach emphasized, Hundt “apparently violated no laws or regulations.”
“The real scandal is not on Wall Street, it’s in Washington, “ Eisenach concluded. In addition to investigating wrongdoings at individual companies, he suggests, “If [Congress] wants to get to the root of the problem, it would do better to call as witnesses Mr. Hundt, to explain what he was doing when he created the conditions for this mess, and Mr. Powell, to explain why he still hasn’t changed them.”
The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.