(FORTUNE Magazine) – The Federal Communications Commission, the sleepy government agency perhaps best known for fining radio shock jocks, is grabbing headlines. Aside from the FCC's EchoStar decision, which roiled the media world, the Supreme Court is debating one of the agency's wireless rulings, and The New Yorker just profiled Michael Powell, the FCC chairman. With the $662 billion telecom industry in disarray--and conditions worsening--the nation has turned to the commission to clean up the telecom mess. "The task falls to us," Powell told an investor group recently, "and we welcome it."

But don't expect the telecom equivalent of the sweeping Sarbanes-Oxley Act. In early October, Powell visited FORTUNE and outlined a handful of reforms, most of which are a couple of months from fruition. Under consideration are new rules that would treat telcos and cable company providers of high-speed Internet service the same way, and changes in the complex wholesale rates that competitors use to resell the Baby Bells' networks. Oh, and the agency will enforce rules and won't get in the way of most telecom mergers. Not exactly groundbreaking stuff.

In addition, there's growing consensus among industry executives and some policymakers--including Powell--that government actually helped cause the telecom meltdown. A big complaint: The sweeping telecom law Congress enacted in 1996 didn't deregulate the phone business but rather added rules to an already byzantine industry. Then the FCC swooped in with even more rules favoring the new-breed carriers, which unfortunately had unsustainable business models. The reforms hobbled big companies such as Verizon, SBC, and BellSouth; the unsound newcomers crashed anyway. Now all the survivors are cutting jobs and slowing new service rollouts.

No wonder plenty of Washington outsiders are pushing far more radical changes than the ones the FCC is weighing. Brian Adamik, CEO of tech consultancy Yankee Group, thinks the government should consider some sort of bailout program to help phone companies unload their debt. (He argues that government virtually foisted the debt on carriers through expensive auctions of wireless spectrum, for example.) Michael J. Price, vice chairman of investment-banking boutique Evercore, recently told a Senate panel that the Bells should be totally deregulated--once they lose some big chunk of their market share. While those big ideas are longshots, they underscore Wall Street's frustration with the government's response to the telecom crisis thus far. The message to Powell seems to be, Act decisively and quickly. Otherwise, this deeply indebted, no-growth industry will sink even deeper into depression.