Obama’s Bad Pick: A Former Lobbyist and Venture Capitalist to Head FCC
The New Yorker, May 2, 2013
Memo to a President who said, in November, 2007, “I am in this race to tell the corporate lobbyists in Washington that their days of setting the agenda are over”: If you are going to name a former lobbyist for big cable and wireless companies as head of the federal agency that regulates the cable and wireless industries, you had better find a public-interest-group advocate to say something positive about him (or her) before you make the announcement.
By Wednesday, when the White House confirmed that it was nominating Tom Wheeler, a veteran Washington insider who has headed not one powerful industry association but two, as the next chairman of the Federal Communications Commission, the nomination had already secured the support of Public Knowledge, an advocacy group that promotes open and unlimited access to the Internet. “Certainly we will have disagreements with the new Chairman (assuming Wheeler is confirmed), but we expect that Wheeler will actively work to promote competition and protect consumers,” Harold Feld, a senior vice-president at Public Knowledge, wrote in a blog post.
That’s a relief—or is it? The closer you look at Wheeler’s selection, the more questionable it appears. After being poorly led for more than a decade—particularly under the disastrous tenure of Michael Powell, son of Colin—a strong argument can be made that the last thing the F.C.C. needs is an industry insider with close ties to many of the companies it oversees. In recent years, the cable and telecom industries have consolidated into a handful of quasi-monopolistic corporations, such as Comcast, Time Warner Cable, A.T. & T., and Verizon, which, all too often, are busy trying to gouge their customers while asking Washington for covert favors. Perhaps what is really wanted is another Elizabeth Warren—a vigorous consumer advocate and proponent of competition who’s willing to stand up to these corporate giants. Even with the best will in the world, it’s hard to see Wheeler as this type of crusading figure.
From what I’ve read about him, Wheeler appears to be a knowledgeable and intelligent fellow with some independent views that he expresses on his blog. To some extent, though, you are your résumé. Between 1979 and 1984, Wheeler was chief executive of the National Cable Television Association (a job now held by, once again, Michael Powell). From 1992 until 2004, he headed up the Cellular Telecommunications and Internet Association, which represents cell-phone operators. Since 2005, he’s been a managing director at Core Capital Partners, a Washington-based venture-capital firm that invests in small technology companies.
To be sure, it’s been some years now since Wheeler was paid to influence Administration officials and Congressmen on behalf of big corporations. But in view of his long tenure in the lobbying industry, it’s hardly surprising that doubts have been raised about his independence. “All of the senators in the Commerce Committee know Tom as a lobbyist who funnels funds to them, not as a stand-up guy from a regulatory agency who is able to take heat,” another veteran Washington telecommunications insider told Reuters.
While Public Knowledge has come out in favor of Wheeler’s nomination, other public-interest activists have expressed serious reservations about it. One of them is Phillip Dampier, the founder of Stop the Cap!, a consumer group that campaigns for better broadband service and unlimited usage. In a long and detailed blog post, Dampier pointed out that, in 2011, Wheeler appeared to express support for A.T. & T.’s proposed merger with T-Mobile, one of its few viable competitors, which the Justice Department blocked on monopoly grounds. Dampier wrote:
What is almost completely absent in most of Wheeler’s writings is the perspective of, or concern for ordinary consumers. What would Mr. and Mrs. Joe Average think about yet another consolidating merger between AT&T and one of its smaller competitors? What impact would another cable merger have on the bills paid by ordinary people in Colorado, Nebraska, or Pennsylvania?…
It is a safe bet most of the industry will welcome and celebrate Wheeler’s appointment. Many know him personally. Many others will feel safe that he is a reachable industry insider already familiar with the issues that concern them. This is what makes the D.C. revolving door so insidious. When you move from the regulated to the regulator (and back again), the only real outsiders are average consumers.
Wheeler’s defenders, such as Harold Feld, say he saw the proposed merger between A.T. & T. and T-Mobile as an opportunity for the government to impose some meaningful oversight on wireless operators, which the 1996 Telecommunications Act explicitly excluded from rate regulations and other public-interest rules that apply to landline providers. Wheeler’s original post, from April 1, 2011, backs this up, but it also appears to assume that the merger would be nodded through, which would have been a travesty. And Dampier was right about the cable and telecom giants welcoming Wheeler’s nomination. As detailed in a story at Ars Technica, they could hardly contain their delight. A.T. & T., the biggest wireless carrier, called it “an inspired pick to lead the F.C.C.” Comcast, the biggest cable provider, said, “We applaud President Obama’s nomination and we look forward to working with the Commission under Tom’s leadership.”
When President Obama announced Wheeler’s nomination, he said, “If anybody is wondering about Tom’s qualifications, Tom is the only member of both the cable television and the wireless industry hall of fame. So he’s like the Jim Brown of telecom, or the Bo Jackson of telecom.” That’s a bit absurd. Last I checked, Brown holds the N.F.L. records for rushing yards, rushing touchdowns, and total touchdowns. Jackson won the Heisman Trophy and tied the record for consecutive home runs. Wheeler wasn’t out there on the playing field as a cable or telecom executive: he reached the hall of fame by exerting influence in Washington. A more fitting sports metaphor would be to compare him to one of the lawyers who helped finagle a lucrative anti-trust exemption for professional football and baseball.
In addition to being a former lobbyist, Wheeler has been a big campaign contributor to President Obama, giving $38,500 of his own money between 2008 and 2011, and also bundling together contributions from friends and associates. In the 2008 campaign, he raised between two hundred thousand and five hundred thousand dollars in this way for Obama, according toOpenSecrets.org, and he then led the Obama transition team focussed on science, technology, and the arts. During last year’s campaign, he raised more than five hundred thousand dollars for Team Obama.
Rewarding campaign contributors is par for the course in Washington, of course. Usually, though, the prizes are ambassadorships or appointments to obscure boards rather than the chairmanship of a big federal regulatory agency. That’s another thing that makes Wheeler’s appointment look like just the sort of Washington inside job that Obama used to decry as a candidate.
And it’s not as if there weren’t other candidates available. If the President had wanted to appoint somebody with regulation and Capitol Hill experience, he could have pushed for Jessica Rosenworcel, one of the five commissioners of the F.C.C., who had garnered the support of thirty-seven Democratic senators, including her former boss Jay Rockefeller. If Obama had wanted somebody with economic expertise, which has often appeared lacking at the F.C.C., he could have picked Jason Furman, the deputy director of the National Economic Council, whose name was frequently mentioned as a candidate. And if he had wanted a Warren-style firebrand, he could gone with Susan Crawford, a tech-policy expert and professor at the Benjamin N. Cardozo School of Law, who recently published a book titled “Captive Audience: The Telecom Industry and Monopoly in the New Guilded Age.”
Instead of selecting one of these names—and there were other plausible candidates, too—Obama went with Wheeler. Perhaps the best that can be said about his nomination is that, assuming he’s confirmed, he’ll have an incentive to demonstrate that he isn’t a patsy for the companies he used to lobby for. In the coming months and years, the F.C.C. will juggle a host of significant issues, including the establishment of new rules for media cross-ownership, a wireless spectrum auction, and the resolution of a legal challenge to its authority to enforce rules compelling Internet-service providers to treat all data on the network equally.
In all of these areas, the issues are complex, and they tend to go over the heads of ordinary Americans. Big corporations, with their lawyers and their lobbying budgets, can exploit this complexity to further their own interests at the expense of competitors and the public. That’s why it’s critical to have somebody heading the F.C.C. who gets up every day determined to protect the public interest. Is Wheeler up to the job? A lot of people will be watching.
Photograph: Mark Wilson/Getty