It's hard to tell exactly what happened. Powell apparently got screwed by fellow Republican commissioner Kevin Martin, who is also a fellow beneficiary of nepotism - sorry, "connections" - Martin's wife is Cheney's spokeswoman. Martin made a deal with the two Democrats on the commission and won the vote 3-2. The vote lets the Bells stop sharing their infrastructure with competitors.

A brief history lesson: last century, the government granted monopolies to phone companies, and, using what amounted to public money, they built big networks. It was basically a case study for socialism vs capitalism: the old phone networks were stable and reliable, and cost far more than they should have and many features were postponed decades. Deregulation tipped things the other way: now the systems are generally cheaper, and not nearly as reliable.

The 1996 Telecommunications Act, in a nutshell, randomly shuffled the industry. The Bells were supposed to start sharing their networks with competitors, and in exchange the Bells could compete in previously forbidden markets. The sharing has turned out to be fairly farcical - the Bells get fined regularly for not actually sharing (forgetting orders, randomly cutting lines - "oops, there went Hoboken. We don't care! We're the phone company." - and other dirty tricks) and they just pay the fines because it's much cheaper than real competition.

Anyway, the FCC decided last week to let the phone companies off the hook for even pretending to share. The idea is that, without the distraction of having to pretend to cooperate with competitors, the Bells could invest in real DSL infrastructure of their own. They promptly responded to the gift by complaining: "... forcing SBC and others to carefully consider how they will invest, where they will invest, how many people to employ and even what kind of consumer services to deliver." (SBC Press release). Reading between the lines, this means cutting DSL.

The Bells don't like DSL, because it's disruptive to their much more profitable main business. They wouldn't provide DSL at all if they weren't forced to for appearances and by competition from companies like COVAD. Companies that exist because they are legally entitled to share the Bell systems. The new rule phases out that mandatory sharing over the next few years, and thus the Bells will have much less pressure to provide DSL. The FCC naturally spins things differently: "The new framework ... brings the benefits of competitive alternatives to all consumers."

Basically everybody on the FCC is bought and paid for by phone companies, but the phone companies are even greedier (but stupider) than Chairman Bill. The Commissioners were tripping over each other to help them, and ended up giving them even more stuff for nothing. And despite all that, the phone companies still aren't happy. But at least Powell's position is starting to materialize:

After the ruling, many of the local phone companies announced that they would not be making new investments in high-speed services as a result of getting only half of what they wanted from the ruling. But Mr. Powell dismissed the Baby Bells' reaction, saying, "Here is a lot of crying crybaby reaction to the decision." He said he thought that the announcements were more like "public affairs reactions" than like reasoned management decisions. Mr. Powell also said he was getting tired of the "passion play between billion-dollar self-interested actors."