This is a partial transcript from "Your World with Neil Cavuto," March 3, 2005, that was edited for clarity.


REP. JOE BARTON, R-TEXAS, ENERGY AND COMMERCE COMMITTEE CHAIRMAN: A consciously opt in to buy that particular channel that particular program you've got a right to do it. I'm not arguing against that, but there's so much that happens that you're not opting into. That's what we're trying to protect.


NEIL CAVUTO, HOST: All right. Congressman Joe Barton (search) was on this show Wednesday. Got a lot of comments on this. He wants to regulate satellite TV and pay radio and pay cable just like the broadcast networks.

My interview prompting no less than Howard Stern (search) to question the money folks like Barton are taking from broadcast giants. As you know, Stern is headed to satellite radio next year. So does the shock jock make a good point? Who better to address the issue than FCC Chairman Michael Powell?

This is his farewell interview. After four years at the helm, he's stepping down later this month.

Mr. Chairman, good to have you.

MICHAEL POWELL, CHAIRMAN, FCC: Good to see you, Neil.

CAVUTO: What did you make of the congressman's goal to regulate cable, paid radio, much as we do traditional broadcast?

POWELL: Well, to be fair, I think the congressman said he was open to looking at it. But he said the important thing, which is one of the reasons I don't personally don't really support an extension. Which is A, it's very likely unconstitutional. The Supreme Court (search) affords much more significant First Amendment protection to medium other than broadcasting, like newspapers and cable and the Internet.

And the Supreme Court has made very clear that you have to use the least restrictive means. And when you use medium like cable and potentially satellite radio, you have other technical ways that you can restrict and block content where the consumer maintains more control.

And then finally the consumer has expressed some volition in its choices by choosing to pay for and subscribe to cable channels.

So I think when the Congress takes a hard look at this, if they really study the constitutionality, they'll find, as they have before, that it's difficult and unwise to extend it.

CAVUTO: So, Mr. Chairman, you agree with Howard Stern?

POWELL: On this point I probably do. Maybe not for the same reasons. But I do believe that modern media provides lots of venues and sources, and different levels of consumer expectation can be placed in different medium.

And I've always maintained that, whatever the merits of indecency enforcement in broadcasting, which we have supported, I do think it's a more difficult step to extend it to other medium.

CAVUTO: All right. Very Quickly on that last point, sir. The congressman was saying what Senator Ted Stevenson of Alaska and others are saying, is that people at home really don't distinguish between traditional broadcast and cable.

If you get 100 channels, you don't really know the difference between CBS and FOX News. You're in deep trouble if that's the case, by the way.

But I mean, you know, there is this idea that people are getting kind of lost in the sauce. What do you say?

POWELL: I think that point is fair. You know, I do believe that across all media regulation is a serious problem of needing to harmonize policy across many media, something we've tried to do in numerous proceedings.

But the problem here is not whether you should; it's whether you can. The Supreme Court, rightly or wrongly, has chosen to create different First Amendment protection levels for different medium.

And so whether you can make an argument that as a matter of refinement of public policy, you should extend it to these medium, I think that the Supreme Court said that it affords different levels of protection. And so I think that you're going to have a difficult time achieving, from a matter of legislation, that kind of policy extension without a new ruling from the Supreme Court.

CAVUTO: In the meantime, you seem to be going out of your chairmanship with a bang, particularly in defense of an Internet phone provider that might have been getting stymied by a regular telephone company. Could you update me on that?

POWELL: Sure. A little while ago, I gave a speech and have been following a principle I call net freedom, which means if you buy an Internet connection, as long as you're doing nothing illegal, you should be able to obtain the content of your choice without your provider blocking your access.

And what we have discovered is that there were some small companies that were actually blocking the ports, not allowing people to use Voice over the Internet services, which we're big fans of and have supported as a matter of public policy.

And we have taken today, just today, some enforcement action against that rural carrier, who was blocking access to Voiceover Internet Process. And I think it's a warning...

CAVUTO: Who is that carrier?

POWELL: I believe that carrier's name was Madison Telecommunications.

CAVUTO: A traditional telco, right?

POWELL: A traditional, rural...

CAVUTO: And they were blocking these phone calls that people were making on these new web phone services?

POWELL: Exactly. You know, Voice Over IP, somebody had subscribed to Vonage service, and what was happening is the local carrier was blocking the Internet port in which those communications came through.

This is a customer who had bought their broadband connection and was a willing customer of the Voice Over I.P. service and the carrier was blocking it, in our opinion, for anti-competitive reasons. And we took some enforcement action today and reached a consent decree with the company, who has agreed to stop the practice and pay a fine.

CAVUTO: Are you surprised -- I know you're heading out, Chairman, but the local telephone companies who were supposed to be the -- sort of the birth children of this new age of competition are themselves potentially thwarting competition. And now, ironically, they're the ones buying up, you know, the MCI's. They're the ones buying up the AT&T's.

POWELL: Well, I've always believed that the new world order in information industries, in which you have lots of convergence and vertical integration, was going to be natural.

I think the real error in public policy was years ago, when we allowed horizontal concentration among the big Bells and among the big long distance companies. The country would have been better off if the kind of mergers we're seeing today had happened at a time where there were more local companies to integrate that way.

But it's just a reality of the way communication services are moving and the way consumers are purchasing them that the market is going to have to do some restructuring.

CAVUTO: You seem to be saying on the way out then that it's best to leave this industry alone.

POWELL: Well, it depends on what you mean by that. I mean, I do think that it's right that the industry is going to have to remake itself in order to be effective in the information age and to deliver all of these fantastic Internet-based services that we all as consumers are hungering for. And I think that's legitimate.

But I don't think that's to say the government is not going to have to maintain some vigilance to allow that structuring not to lead to anti- competitive behavior.

CAVUTO: Mr. Chairman, thank you very much.

POWELL: Thank you, Neil.

CAVUTO: We've always enjoyed chatting with you. Wherever you go, we wish you well.

POWELL: Thank you very much.

CAVUTO: The outgoing chairman of the FCC, Michael Powell.

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