Telecom Policy Will Change Dramatically in 2009

With the drama of the 2008 election over, the punditocracy is now focused on how the outcome will translate into changes in governance. While not on most commentators top five list, telecommunications policy is an area which also may see substantial changes. At this early time, however, the crystal ball is still very hazy.

First, let’s start with the Congress. While the FCC is the body that makes most telecom policy in the first instance, the Congress is the body that oversees the FCC and chooses the Commissioners. Often times, FCC appointments come from Congressional staff positions, as was the case with the two sitting Democratic FCC Commissioners Copps and Adelstein. Both Houses of Congress have been in Democratic control since 2006, but by slim majorities. Those narrow margins, combined with the Republican 3-2 majority at the FCC, and Republican Chairman Kevin Martin, made the Congressional influence over FCC policy-making weaker than usual. This will be dramatically different in 2009.

The 111th Congress, which convenes this month, will have very significant increases in the Democratic majorities in both Houses. The House will go from a Democratic majority of 35 to about 75. The Senate will go from 51-49 to 58-42 or 59-41 (depending upon the Minnesota recount and counting the two Independents as Dems for voting purposes). Combined with the Obama Administration, the Democrats now have complete control of the FCC appointment and oversight process.

The election also will bring about changes in the names of the Members of Congress who are in charge of telecom policy issues. Most notably, California Congressman Henry Waxman successfully challenged fellow Democrat Michigan Congressman John Dingell for the Chairmanship of the House Energy and Commerce Committee. This could be significant because Dingell has always been among the most pro-Bell of the Democratic members of the Committee. On the Senate side, the ranking Republican on the Commerce Committee was Sen. Ted Stevens of Alaska. (Remember the “internet is not about trucks, it is a series of tubes” speech?) Stevens was the Committee Chair until 2006 and the ranking Republican for the past two years. As we all know, Stevens is now retiring, possibly to Club Fed. Two other prominent Republican Senators on the Committee also were defeated, Sununu and Smith. The related area of antitrust policy also will see a change in Senate leadership of the Judiciary Committee as Sen. Biden vacates that post to become Vice President. The Senate leadership on FCC issues and competition policy thus may change substantially.

All these changes in the Congressional Committees will be of immediate importance as the FCC could see almost complete turnover within the next six months. First, Republican Commissioner Susan Tate has been holding her seat on an interim basis since it expired on June 30, 2007. She will be gone from the FCC by the time this article is published. Tate’s departure leaves the FCC with a temporary 2-2 Republican-Democratic split. This will be followed quickly – probably on January 21, 2009 – by the appointment of a new interim Chairman. Most likely, sitting Democratic Commissioner Copps will be appointed interim Chair on that date and current Republican Chairman Martin will remain a Commissioner but no longer be the Chair. At some point thereafter, President Obama will pick a new Democratic FCC Commissioner to fill the seat vacated by Commissioner Tate. That new office holder may become the new Chairman, or may take Tate’s seat with Commissioner Copps retaining the Chair. While his term extends to 2011, it is widely speculated that Chairman Martin will not stay long at the FCC after he loses the Chairmanship and the agency has a 3-2 Democratic division.

Two other Commissioners hold seats that could possibly change in 2009. Democrat Commissioner Adelstein’s seat expired June 30, 2008, and he has since been holding it on an interim basis. He will either be reappointed or replaced in the first half of 2009. And Republican Commissioner Robert McDowell’s term expires June 30, 2009. His seat also will need to be filled, either through reappointment or replacement (by a Republican, as the agency must maintain a 3-2 partisan makeup).

Thus, it is possible that six months from now Commissioner Copps will be the only one of the current five FCC Commissioners still in office. Of course, it is also possible that only Tate will be replaced, but either way there will be a new Chairman and a switch to a 3-2 Democratic majority.

Who will the Obama Adminstration choose for the FCC? And what will the Administration views be on key issues? This is very unclear at this point. Perhaps the best general indicator is the make-up of the transition team chosen to oversee the FCC changes. The prominent advisors in this regard are nearly all former members or staff of the Clinton Administration. The technology transition is led by Julius Genachowski, a former FCC key staffer and longtime friend of President Obama from Harvard Law School. The team also includes two former Clinton FCC Chairmen – Reed Hundt and Bill Kennard – as well as former key staffers Don Gips, Larry Strickling, and Karen Kornbluth, and former NTIA Administrator Larry Irving. The specific person to work on the FCC transition will be former Democratic FCC Commissioner Henry Rivera. (Ironically, Mr. Rivera is a partner in the former law firm of both current Chairman Martin and current Bush Administration Counsel to the President Fred Fielding.)

If the earlier views of the transition team can be attributed to the incoming Obama Administration, we can expect more active involvement in the telecom industry in seeking particular developments and more willingness to promote competition. During the Clinton years, the implementation of the 1996 Telecom Act was vigorously pro-competition. The Bush Administration reversed or weakened many of those policies, preferring to tolerate industry consolidation and less competition (e.g., the combination of SBC-PacBell-Ameritech-SNET-BellSouth-AT&T Wireless-Cingular-AT&T) in return for infrastructure build-out by the behemoths. If the past is prologue, then the new Administration may return to a more pro-competitive and (somewhat) more activist approach to regulation. Not much telecom policy is likely to get made in the next six months, but by June we should at least know who is going to be making the policies for the future. IP

Danny E. Adams currently serves as managing partner of Kelley Drye & Warren’s Tysons Corner office and is a member of the firm’s Executive Committee. He is a member of the bar in Virginia, District of Columbia and Arizona.