As his transition team considers who will head the Federal Communications Commission, the power of the traditional telcos seems to be waning
President-elect Barack Obama may stand for change, but he's turned to some powerful Washington insiders to help him staff the nation's top communications regulator, the Federal Communications Commission.
Picking the FCC chairman may not be the top priority for the Obama transition team, which is focused on naming a Treasury secretary tasked with ending the economic crisis, and appointing foreign policy leaders who will need to navigate two wars and other pressing diplomatic issues. Still, the Obama Administration will need to put some emphasis on finding a deft leader to head up the agency responsible for regulating TV, radio, and other telecommunications services. The new Administration is expected to give greater prominence to emerging providers of communications products and services, such as Google (GOOG)—a departure from the Bush Administration, which has tended to favor traditional providers such as AT&T (T).
In making the choice, the Obama team is considering appointing the first African American woman to the post, while it also fields recommendations from advisers who served in the FCC under President Bill Clinton. Heading up the selection process is Henry Rivera, partner at Washington law firm Wiley Rein. Headed by former FCC Chairman Richard Wiley, Wiley Rein has represented such companies as AT&T, Verizon Communications (VZ), Viacom (VIA), Motorola (MOT), and Sirius Satellite Radio (SIRI).
Short List of FCC Candidates
Rivera was the first Hispanic FCC commissioner, serving from 1981 to 1985, and is considered an advocate for local telcos, wireless companies, and cable TV providers. "Henry is a wise man, a bipartisan with lots of experience," says John Muleta, former head of the FCC's Wireless Telecommunications Bureau and now CEO of M2Z, an emerging wireless broadband provider.
Rivera, who is not interested in the position, has drawn up a short list of candidates that includes two African American women, according to a person familiar with Rivera's thinking. One is Julia Johnson, a Florida consultant who chairs Video Access Alliance, an advocacy and advisory group for independent, emerging, and minority networks and Internet content providers. Johnson is also on the board of MasTec (MTZ), a contractor that designs and builds telephone, broadband, electric, and other networks. She didn't return a call or an e-mail. Rivera was not available for an interview.
Another possibility: Mignon Clyburn, who has been a commissioner for the Public Service Commission of South Carolina since 1998. After earning a bachelor's degree in banking finance and economics from the University of South Carolina, she worked as a newspaper editor and was general manager and publisher for the local Coastal Times. Clyburn is a daughter of House Majority Whip Jim Clyburn, South Carolina's most prominent black politician. Clyburn declined to comment for this story.
Obama's team is also weighing recommendations from former FCC Chairmen Bill Kennard and Reed Hundt, both of whom advised the Obama campaign on telecommunications-related issues. One contender is Blair Levin, who was Hundt's chief of staff from 1993 to 1997. During his tenure, Broadcasting & Cable magazine called Levin "the sixth commissioner." Levin oversaw implementation of the historic 1996 Telecommunications Reform Act, the first major overhaul of telecommunications law in more than 60 years. He also oversaw the earliest wireless airwave auctions, the development of digital television standards, and the commission's early work concerning the Internet—issues that remain on the FCC agenda. Currently, Levin is managing director at brokerage and investment bank Stifel Nicolaus (SF). Levin declined to comment. Kennard and Hundt were unavailable for interviews.
The Innovation & Technology Plan
Another Hundt staffer under consideration is Scott Blake Harris, who served as the first chief of the FCC's International Bureau, from 1994 to 1996, and was responsible for international and satellite communications policy and licensing. Currently, he is managing partner of influential law firm Harris, Wiltshire & Grannis, where his clients have included a broad range of information technology, telecommunications, Internet, software, and hardware companies. Harris declined to comment for this article.
Rounding out the list of Hundt staff members contending for the top FCC spot is Don Gips, who succeeded Harris as chief of the FCC's international bureau and spearheaded the drive to cut the prices of international calls. A Harvard University graduate, Gips later served as chief domestic policy adviser to then-Vice-President Al Gore and is currently group vice-president for corporate strategy and development at fiber-optic network operator Level 3 (LVLT), where he's worked since 1998. Level 3 didn't respond to a request for comment.
Kennard, currently managing director at buyout firm Carlyle, is said to be pushing a candidate of his own: Larry Strickling, who served as chief of the division that regulates local and long-distance carriers before he resigned in 2000 to work for the policy think tank Aspen Institute. Strickling, who—like Obama—is a Harvard Law School graduate, later worked for a variety of Internet companies such as Broadwing, now part of Level 3. "He knows the issues, he knows the people," says Andy Schwartzman, CEO of Media Access Project, a nonprofit advocacy group.
Like his former boss Kennard, Strickling also has been an Obama adviser. In late 2007, Strickling helped pull together the campaign's Innovation & Technology Plan, which drew support from such companies as Google and which includes pledges to protect the openness of the Internet, to encourage diversity of media ownership, and to build a nationwide wireless network for use by public safety agencies. Strickling is also said to be in the running for the post of the nation's chief technology officer, whose duties may overlap with those of the FCC chairman. According to the Innovation & Technology Plan, the CTO would "oversee the development of a national, interoperable wireless network for local, state, and federal first responders." Close Obama adviser Julius Genachowski, who used to be an executive at IAC/InterActive (IACI), is a possible contender for the CTO position or the FCC chairmanship as well.
Power Shift Ahead?
Some within the telecom industry expect Obama to appoint one of the FCC's current Democratic commissioners, most likely Michael Copps, to be an interim chairman until a candidate for the permanent job is selected, most likely in January. While Copps could stay on as the permanent FCC chairman, several Washington insiders view this as unlikely. The other Democratic commissioner, Jonathan Adelstein, a former Senate staffer, is expected to snag another position within the Obama Administration, sources tell BusinessWeek.com.
Whoever makes the final cut may have to pass muster with Tom Wheeler, who according to one person familiar with the matter is expected to have a big say in selections for technology-related appointments in the Administration. Wheeler is currently managing director at private equity firm Core Capital Partners. Previously, he was CEO of the powerful CTIA - The Wireless Industry Assn., which represents carriers like AT&T and Verizon Wireless. Prior to that, from 1979 to 1984, he was president of the National Cable Television Assn., which represents service providers like Comcast (CMCSA) and Cablevision (CVC).
Whoever is selected to head the FCC could shift the balance of power in the ongoing battle between telcos, cable companies, and Internet companies like Google, which have clashed in recent years over such issues as who should pay for high-bandwidth usage. "[Obama] has been more in tune with the…providers like Google," says Rebecca Arbogast, a principal at Stifel. "I'd expect that the very strong run the (telecom providers) have had under the Bush Administration has worked itself out."