The revolving door that is Washington, DC swiveled rather loudly yesterday with the announcement that former Federal Communications Commission Chair Michael K. Powell will soon head the National Cable and Telecommunications Association. Powell ran the FCC from 2001 through 2005.

"Michael's exemplary record of leadership, deep commitment to public service, and vast insight into public policy make him an ideal fit to lead our industry in Washington, DC," declared NCTA Board Chair Patrick J. Esser, "as we address the regulatory challenges that lie ahead and continue to help policy makers understand cable's commitment to jobs, investment, and innovation."

The media reform outfit Free Press sent its congratulations as well.

"Former Chairman Michael Powell is the natural choice to lead the nation's most powerful cable lobby," Free Press managing director Craig Aaron declared, "having looked out for the interests of companies like Comcast and Time Warner during his tenure at the Commission and having already served as a figurehead for the industry front group Broadband for America."

I'd like to have one

Powell's tenure at the FCC is remembered for two things.

First—his unsuccessful attempt to gut many of the agency's restrictions on the ownership of combinations of television and radio stations, along with newspapers. Most of the deregulatory changes that Powell's majority enacted were thrown out by an appeals court in 2003.

Second—a rather curious commentary that he offered in 2001, which for many came to symbolize the perspective of the Bush era. At a "meet and greet" event held in February of that year, a reporter from the Chicago Tribune asked Powell for his perspective on dealing with the "so-called digital divide."

It was the last question asked at the event. "You know, I think there's a Mercedes divide," Powell replied. "I'd like to have one. I can't afford one."

Since FCC chiefs are often remembered for their one liners (former agency boss Newton Minow's "vast wasteland" speech being the most prominent example), this comment created quite a stir.

"Thanks in no small part to the policies he pursued at the FCC and to the cable lobby's unyielding fight against any real competition in the broadband market, the digital divide is still with us," Aaron added today. "But today we can finally say, at least in Michael Powell's case, that the Mercedes divide is closing."

But, curious about the full context of Powell's famous comment, we looked it up at the C-SPAN video archive, and transcribe it in full here. Context, as it often does, changes his remarks a bit.

The term is dangerous

"The digital divide means lots of things to lots of different people," Powell replied to his questioner, "much of which is not in our purview. Deployment of computers, for example, to personal homes. Whether the computer market is providing at reasonable cost accessibility to those services. There's almost nothing I have to do with that question."

He continued:

We are committing to providing, in whatever responsible and reasonable way regulation can, the full deployment of the infrastructures that will make this dream realizable and we do that in the name of all Americans. And I think we do it in a way that we think that will facilitate or at least eliminate barriers, to do it in every segment of the population and its geography. But that said, I also think that the term sometimes is dangerous in the sense that if it suggests that the minute a new and innovative technology is on the market there's a "divide" unless it's equitably distributed among every part of the society and every component, [that] is just an unrealistic understanding of an American capitalist system. That's not true of any good or service in the economy. And particularly in the early stages of innovation—you want to know what?—it is going to be the wealthier people who have more disposable income who buy four thousand dollar digital TVs first. Does that mean that there's an "HDTV divide" on the first day that they're out there? No. You know, I think there's a Mercedes divide. I'd like to have one. I can't afford one. I'm not meaning to be completely flip about it, because I think it's an important social issue. But it shouldn't be used to justify the notion of essentially the socialization of the deployment of the infrastructure, because what I get afraid of is that there is a real risk... if the standard is you can't have it, you can't produce it unless you produce it for all, always, I'm very worried it doesn't get produced. There is an alternative that we tend to forget about that producers have, which is: 'Don't make it. Don't deploy it.' And I assure you that happens. If you look at technologies, the best technologies rarely actually win. They don't win because they don't end up being able to be translated to mass markets... All these guys want to do is make money. And they will go to whatever product in whatever form they can to make money. And when there are consumers out there to sell to, they will want a way to sell to them.

"Now if we can do things that make the cost burdens and the deployment burdens less so they will also want to sell to people with less income or more in disadvantaged areas, we'll do everything we can to do that," Powell concluded.

"But I don't embrace the idea that digital divide is the same thing as, for example, a universal service concept. Because I think that this technology is going to be one of the most wonderful things that this society has produced to help poor and those less advantaged because I think it has a built-in low cost structure."

Low cost structure?

There's a lot more to challenge in this commentary than just Powell's "Mercedes divide" quip. For instance, broadband automatically has a "built-in low cost structure"?

And whether Powell thought that broadband was a universal service concept back then, he's going to have to get used to the idea now, given that the FCC plans to gradually require recipients of Universal Service Fund money to become ISPs.

But in Powell's defense, his full commentary reveals that this wasn't just some mean-spirited, off-the-cuff dismissal. He clearly saw the FCC as having some role in dealing with the digital divide problem. And the response was part of a larger, highly developed philosophy about government and the market... one that he will doubtless apply to his new job at the NCTA.