Bloomberg News

Wheeler FCC Nomination Draws Tepid Support From Key U.S. Senator

May 08, 2013

Tom Wheeler, a venture capitalist and former lobbyist, moves toward a U.S. Senate hearing on his nomination to lead the Federal Communications Commission without stated support from the lawmaker who can most sway the process.

The taciturn reception from Democratic Senator Jay Rockefeller, the West Virginia Democrat whose committee will first vote on Wheeler’s confirmation, signals the nominee may face a fight as he seeks to lead the agency where he once argued on behalf of the wireless and cable industries.

Those scrutinizing Wheeler, 67, can mine a record in Washington that spans his work representing the cable industry in the 1970s to his current job as managing director at Core Capital Partners LP, a Washington-based firm that invests in startups. Not every investment worked out: Wheeler was on the board of a mobile-phone retailer that was ordered in 2005 and 2007 by the FCC to pay almost $1 million in penalties.

“It could be a tough confirmation hearing before Senator Rockefeller, but I think at the end of the day Tom Wheeler is confirmed,” Jeffrey Silva, a Washington-based analyst with Medley Global Advisors, said in an interview. “I don’t see opposition rising to a level to threaten his confirmation.”

Rockefeller, the Commerce Committee chairman, had supported Jessica Rosenworcel, his former aide and now a Democratic FCC commissioner, to succeed Julius Genachowski as chairman. Rockefeller didn’t issue a statement for two days after President Barack Obama on May 1 named Wheeler, and it said the senator respected Obama’s decision.

President’s Call

“I thought she was the best candidate but it’s not my decision to make,” Rockefeller said in a brief interview May 6. He said he’d had “a good conversation” with Wheeler and hoped to have a hearing before the end of this month for Wheeler and two other administration nominees, Penny Pritzker for the Commerce Department and Anthony Foxx for transportation secretary.

Wheeler’s nomination prompted congratulatory statements from largest U.S. telephone company AT&T Inc. (T:US), No. 2 Verizon Communications Inc. (VZ:US), and from Brian Roberts, chief executive officer of biggest cable company Comcast Corp. (CMCSA:US), who cited Wheeler’s “vast knowledge of the communications industry.”

Critics are also seizing upon Wheeler’s experience.

“We think he would be a horrible FCC chairman,” Sascha Meinrath, director of the Open Technology Institute at the New America Foundation policy group in Washington, said in an interview. “Show me the evidence that he supports a public- interest agenda. Don’t tell me that all the information I have, all the data, the decades of history on this guy should be ignored.”

‘Boo Birds’

For instance, Meinrath said, Wheeler as head of the wireless trade group opposed letting consumers take telephone numbers from one mobile carrier to another if they switched providers. Meinrath’s group and 27 others in March, before Wheeler’s nomination was announced, signed a letter to Obama saying “it’s time to end regulatory capture at the FCC” after “decades of industry-backed chairmen.”

Too many Americans lack access to high-speed Internet service and its price is increasing while competition declines, the groups said in the letter.

The critics are misreading the evidence about Wheeler, Gigi Sohn, president of Public Knowledge, a Washington-based policy group, said in an interview. She said she supports Wheeler and expects him to win confirmation.

“Obviously if Wheeler had just walked off the board of Comcast or AT&T, I would be joining the boo birds,” Sohn said. “But you have to look at the totality of the circumstance.”

Piracy Repeat

Wheeler in recent years has helped fund innovative Web startups, Sohn said. She called Wheeler “clearly pro-net neutrality,” or supportive of Obama’s policy that bars Internet-service providers from favoring some Web content.

The policy passed under Genachowski faces a lawsuit from Verizon, and depending on how a court rules could come back to the FCC under its next leader.

Some members of the Senate Commerce Committee have expressed support.

“He’s a strong candidate,” Senator Mark Warner, a Virginia Democrat, said in an interview.

“I think he’s a good nominee and we’ll see how the hearing goes,” Senator Amy Klobuchar, a Minnesota Democrat, said in an interview.

Meinrath, of the Open Technology Institute, said groups are weighing whether to attempt a grassroots, e-mail driven campaign like the protest that killed anti-piracy legislation backed by Hollywood studios.

“Given his industry backing it will be very difficult to derail unless the public weighs in,” Meinrath said.

InPhonic Investment

One of Core’s investments was InPhonic Inc., a Washington- based mobile gear-and-service retailer where Wheeler joined the board in 2004, according to filings.

The following year, the FCC proposed a penalty of $819,905 against the company for failing to register and pay into funds that subsidize service for the poor and the deaf. The agency in April 2007 proposed an additional $100,000 penalty for not registering as a provider of international services.

By then Wheeler had left the board, departing in June 2006, according to filings. A few weeks before his departure the District of Columbia’s attorney general accused InPhone of deceptive rebate offers. The company filed for bankruptcy protection in 2007 and sold its remaining assets.

David Steinberg, chief executive officer of InPhonic at the time, didn’t return telephone calls seeking comment. Wheeler didn’t respond to an e-mail seeking comment.

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net;

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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