Industry Concerned Sequestration Could Roil Telecom Marketplace
Telecom officials are concerned that sequestration will hamper federal regulatory policy and create marketplace uncertainty, said industry officials and others. Groups denounced the negative effects of an automatic 10-year, $1.2 trillion across-the-board budget cut set to begin on Jan. 2, following the release of an Office of Management and Budget sequestration report last week (CD Sept 17 p4).
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"$28 million for FCC, $4 million from NTIA, $3 million from RUS, those are dollars that matter and it matters and impacts industry in some way,” said Grant Seiffert, president of the Telecommunications Industry Association. Cuts to agency staff numbers could bog down rule-making and “create uncertainty in the marketplace, and then our member companies and the customers and the agencies are afraid to spend money,” he said. Cuts to federal travel budgets would prevent public servants from getting out and “kicking the tires and learning how the products and services work outside the Beltway,” he said.
One analyst projected that the proposed 8.2 percent cuts could shave staff levels at regulatory agencies like the FCC and FTC by nearly a third. “Cutting $28 million from the FCC between January 2 and September 30 would require slightly less than an 11 percent reduction in payroll,” said the Center for American Progress’s Scott Lilly. “If you get only a third of the money for each position eliminated it would require a 33 percent reduction in staffing.”
An FCC union representative told us the staff cuts will likely be less than 30 percent. “But they're still going to hurt,” said Ana Curtis, an FCC attorney and chapter president of the National Treasury Employees Union. NTEU represents FCC and Commerce Department employees, among others. “I know managers are worried because they are the ones looking for where to cut,” she said. Agency travel and IT budgets are likely to be trimmed, she said, “but most of our money is in salaries.”
Former FTC Commissioner Bill Kovacic told us the cuts were “just appalling” and will ultimately “diminish the quality of public administration.” If the sequester goes through, the FTC’s overall performance will suffer from budget cuts to salaries, IT and travel, said Kovacic, now a law professor at George Washington University. Kovacic said sequestration would “certainly hurt agencies’ ability to recruit and retain good people.” The proposed cuts would result in diminished retirement packages and reductions in benefits that he said will ultimately “chase good senior people out the door.”
The FTC is an agency that has “never had a chance to get fat,” Kovacic said. “It is forever performing miracles to handle a very ambitious set of policy commands, and if you carve out 8 percent from that kind of agency you have set in motion a real drop in performance.” Cuts would hurt the FTC’s agencywide IT system, which is already underinvested, Kovacic said, and sequestration “would push back still further the rehabilitation of those systems. … If you throw travel out the window all of the work the FTC has to do to achieve some level of commonality internationally for things like data protection and merger control, that suffers too.”