March 20, 2013

FCC Commissioner Robert M. McDowell Announces Resignation- Paves Way for Big Changes as Chairman Genachowski is Expected to Depart Soon


Washington, D.C., is abuzz as a result of the not surprising resignation of Bush era Republican Federal Communications Commission (FCC) appointee Commissioner Robert M. McDowell. In a short statement revealing his intentions to end his five year term a bit prematurely, McDowell thanked his colleagues and mentors and said that other than a desire to step aside “soon” and enjoy time with his family he had no immediate career plans.  

The departure of the fiercely pro-competition McDowell not only opens up one of the two Republican slots on Commission, but speculation is rampant that it also is paving the way for FCC Chairman Julius Genachowski to resign very soon as well since it is known he does not wish to be reappointed when his term runs out in a few months. Interestingly, it came on a day when it was also revealed that Sherrese Smith, chief counsel and legal advisory to Genachowski the past four years will also be departing in the next few weeks. Ms. Smith is the last remaining member of the Chairman’s original team of legal advisors and has been responsible for managing the FCC’s overall policy agenda and coordinating activities between the commission’s bureaus and offices.

In short, we are in for a major personnel change. The intensity of speculation as to whether changes in people will mean changes in policy, as the Republicans get to fill one seat and President Obama gets to name a new chairman (who will bring their own team of advisors), has already reached a fevered pitch.

A legacy of pro-competition and non-government interference stances

Whoever replaces McDowell will have big shoes to fill. During his tenure he has been a visible and vocal voice regarding his belief that the Internet should remain free from government intrusion. 

This has meant not just the U.S. government but other nations through acting alone or via the International Telecommunications Union (ITU) whom McDowell and others feel are bent on extending U.N. control over the Internet to the detriment of free speech and international commerce. In fact, McDowell’s opinion piece in the Wall Street Journal in February 2012 on the subject of ITU expansionism into Internet regulation became mandatory industry reading.  

His consistency as a small government advocate can be seen in the high marks he earned in certain industry quarters for being a caustic critic of the FCC’s net neutrality rules which he felt were not just a regulatory over-reach but could actually cause irreplaceable economic harm. And, he expressed his belief that the industry was better at regulating markets than the government on numerous matters that came before the FCC.

Musical chairs, what’s next?

The reason the timing and atmospherics of this has Washington insiders transfixed is not just because any change at a time when the entire jurisdiction of the FCC is in the midst of historic upheaval is disruptive to say the least. After all the next regime is going to have to deal with a host of critical issues impacting the cable, telecom and broadcasting industries as they converge. Just to name a few, such matters as what to do about the death of the PSTN and whether VoIP should be regulated, making broadband universal service, states versus federal jurisdictional concerns, industry restructuring and foreign ownership challenges, being good stewards of the radio spectrum so that new services can proliferate and incumbents are not put in a squeeze, privacy concerns, consumer protections, cybersecurity, etc., in many case cannot and will not wait.  Plus, there is always the matter of dealing with lawsuits, since every decision the FCC makes is always “do or die” for some entity which means it goes to court where judges have the last say on critical policy concerns in many instances.

In addition, did I mention this is ultimately about the politics? I mean not just battles over policies, and which industry gets it way or not, but electoral politics, i.e., which party gets its way and continues to reap the rewards of its benefactors from a variety of stakeholder groups.

With gridlock and intransigence now a hallmark of approvals of on federal nominations, the fact that a McDowell and Genachowski replacement process could be bundled as a twofer actually is a good thing. Each side will be able to claim victory for their selection, even if the policy difference between whoever are the eventual nominees is expansive. 

On that front, while not much has been said about who the Republicans would like to see replace McDowell, there is already a short list of names for a new chairman. In fact, even prior to the McDowell decision, the Washington Post was out with the insiders’ list of top candidates which includes:

  • Tom Wheeler, a tech and telecom venture capitalist and fundraiser for President Obama, who served as the head of the cable TV and cellular industries in previous positions as well as having been on several important task forces.
  • Karen Kornbluh, President Obama’s ambassador to the Organization for Economic Cooperation and Development.
  • Lawrence Strickling, an assistant secretary for Commerce and head of the White House’s tech and advisory policy arm at the Commerce Department.

It is not exactly stunning that all of those mentioned have deep communications policy experience, and they are certainly going to need to draw on it and their respective personal networks given that we live in extraordinary times.

One thing is clear, what happens to the entire communications industry because of its criticality to “E”verything in a connected world, makes the FCC one of the most important agencies in the federal government domestically and internationally. It is not hyperbole to say that the decisions of the next few years will shape the prospects for winners and losers—various industry sectors as they continue to compete and converge, individual companies, and economic vitality of various states, regions and the U.S. as a whole—for possibly decades to come. 

It is for this reason that it will be fascinating to see who sits down in the chairs when the music stops. As Bob Dylan’s song says, “The Times They are A Changing,” and the new FCC is going to be front and center as to just how far, how fast and by whom.  People can and do make a difference, and while speculating about how much policy may or may not change based on nobody being forward yet for either of what will soon be two open positions, including the all important chairman’s one, that is going to be a critical fact to remember as we embark on the nomination and confirmation process. These are hearings that all of us in the industry need to be mindful of because the stakes are so high.




Edited by Stefania Viscusi



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