Would Tom Wheeler Really Have Approved The AT&T/T-Mo Merger? Why I don’t Think So.

After weeks of speculation, it now appears certain that President Obama will nominate Thomas Wheeler to replace Julius Genachowski as Chair of the Federal Communications Commission (FCC), with Commissioner Mignon Clyburn to serve as acting until Wheeler’s nomination gets confirmed by the Senate. In recent weeks, Wheeler’s background as a lobbyist many years ago for first the cable industry and then the wireless industry have raised concerns that Wheeler remains more sympathetic to business interests than the public interest. As anyone who has read Public Knowledge’s official statement in response to the nomination can see, while we understand those concerns, we agree with many other public interest colleagues who think that Wheeler has an independent perspective and an open mind. 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.

 

Yeah, I know, that sounds like either wishful thinking or Washington insider talk. So allow me to explain my line of reasoning (since, unlike a number of other Wheeler supporters, I actually don’t know Wheeler at all). In particular, I want to tackle the current “Tom Wheeler would have approved the AT&T/T-Mobile merger in 2011.” It’s easy to say “oh, all that lobbying for the cable and wireless industry was long ago when they were scrappy upstarts. Why, that was so long ago that the cable industry were battling the broadcasters and the wireless industry were battling the telcos (as opposed to these days when the cable industry battles the telcos and the wireless industry battles the broadcasters)!” But if Wheeler was actually a supporter of AT&T/T-Mo, then it would seem to prove he still has sympathies to his old industry incumbent comrades.

 

I examine the People v. Tom Wheeler in the matter of AT&T/T-Mo below . . .

I confess I don’t see the same enthusiasm for a combined AT&T/T-Mo that some have seen. Mind you, perhaps I am unduly charmed by Wheeler’s embrace of unlicensed spectrum, WiFi and federal spectrum sharing back in October 2011 – well before his supposed cable masters embraced it  and while his supposed wireless masters at AT&T and Verizon still rejected this as a “distraction” from clearing and auctioning. Or perhaps as a fellow who writes long winded blogs on complex telecom policy I’m unduly sympathetic to complaints that one’s blog posts get misinterpreted. But in any event, it’s worth looking at what Wheeler actually said.

 

The first blog post comes from April 1, 2011. For those too lazy to click through and judge for themselves, Wheeler argues that rather than block the merger, the FCC should view this as the opportunity to reregulate the (wireless) broadband industry after the fashion that the “Kingsbury Commitment” of 100 years ago – when AT&T and federal trustbusters agreed to allow AT&T to become a monopoly in exchange for universal service and – ultimately years later – public utility regulation. Wheeler argued that the inability of the FCC to muster the political will to deal effectively with net neutrality and other broadband regulation made a consent decree around AT&T/T-Mobile the best way to update consumer protection rather than leave these services essentially unregulated.

As Wheeler wrote:

 

“Given the statutory paralysis preventing the Communications Act from keeping pace with new technology and market structures, a mutually-agreed-to set of merger terms could become the de facto regulatory template for the wireless industry. While most merger terms last for a limited period, a Kingsbury Commitment-like agreement can have a longer shelf life. The FCC has the opportunity to follow the new template in reviewing all future mergers, as well as in establishing the rules for future spectrum auctions. Finally, future policy debates would be shaped by an attitude of “we’re already having to do it,” which could dull opposing arguments.“

 

Hardly the ringing endorsement of AT&T-TMO one would expect from someone still basically in synch with the largest wireless incumbents – especially when compared to what actual AT&T/T-Mo cheerleaders were saying. Further, in reading this blog post, it’s rather important to keep in mind that only a handful of us genuinely believed when we started opposition to the proposed transaction that the Department of Justice and the FCC would find their spines and block AT&T/T-Mo. After totally caving on network neutrality and permitting Comcast to acquire NBC-Universal, conventional wisdom (that those of us opposing the merger kept swimming against even after the DOJ filed its lawsuit against the merger) was that AT&T would get approval subject to far more modest and temporary conditions than the sort of comprehensive reregulation of the industry proposed by Wheeler.

 

The second blog post in The People v. Wheeler likewise, in my opinion, falls short of the ringing endorsement of consolidation and deregulation some would make it. Written after the DoJ filed their action to stop the merger, Wheeler recalls his previous suggestion that a consent decree could form the basis for reregulating the wireless industry. Lamenting this, he reflects on “the perverse situation where a government win means less regulation while a victory for the corporate interest opens the door to more. Absent a court ruling reversing the Justice Department the regulatory oversight of wireless carriers will continue to atrophy as the digital nature of the wireless business separates it from the legal nexus with traditional analog telecom regulation.”

 

Depending on one’s predispositions about Wheeler’s likely sympathies, one could as easily read these blog posts as expressing a desire to vigorously regulate the industry with a preference for reclassifying broadband as a Title II telecommunications service rather than support for AT&T/T-Mobile. Indeed, my friends most critical of Wheeler who regard these blog posts as proof of his pro-incumbent convictions point to Wheeler’s praise of AT&T’s chief lobbyist Jim Cicconi, and argue that the industry reregulation Wheeler proposed was a mere sham because “such preconditions are often mild, quickly expire, and are predictable for the companies involved.”

 

It’s certainly true that behavioral conditions often fall short, are short lived, and that companies generally find ways to work around them (and the FCC’s track record for enforcement is pathetic). Indeed, we at PK made these arguments in the context of the AT&T/T-Mo merger for why no set of merger remedies could adequately address the harms such a merger would cause. But there is a huge difference between my belief that Wheeler was wrong about the best strategy to advance the public interest and accepting that he was motivated by a covert desire to support consolidation and deregulation.

 

Finally, and again my own experience and sympathies betray themselves, it’s important to keep in mind that what someone writes in a couple of blog posts is not terribly indicative of what he or she would do as an actual policy maker. Absolutely a person’s writing is fair game. But in the ten years I’ve been blogging, I know that I’ve said many things that do not necessary reflect what I would have done if I had been the ultimate decisionmaker — as I have said on more than one occasion (noting that actual decisionmakers are not advocates). Certainly anyone who reads ten years worth of Tales of the Sausage Factory (has it really been ten years?)  will have an excellent sense of my overall priorities and approach. But I can’t swear that all approximately 500 or so blog posts could hold up today as being either accurate predictions (like Wheeler, I too was a big believer in WiMax) or final expressions of what I would have done as Chair of the FCC.

 

 

Conclusion

 

I understand where my friends are coming from when they look at Wheeler’s resume and think “oh God, another Washington insider, why can’t we ever get a real progressive!” But I cannot agree with Senator Rockefeller’s statement that “a lobbyist, is a lobbyist,” or the view of some that the taint of industry clings insidiously forever and corrodes the soul. It’s been ten years since Wheeler left CTIA, longer than that since he left NTCA. Had he really been interested in advancing the agendas of these industries, he was in an excellent position to do so when he headed up the Obama transition team. He did not. Indeed, Susan Crawford and Kevin Werbach,, long-time stalwarts of the public interest who worked for Wheeler on the transition team, have joined other public interest luminaries as Wheelers strongest public supporters. Had Wheeler been working behind the scenes in the transition to promote the incumbents, I expect Susan and Kevin would have known.

 

I also recognize that while support from public interest friends is also not conclusive. But surely it should weigh in the evaluation of Wheeler at least as much as any blog post. And I recognize I’m also a “Washington insider” and as likely to be led astray by my personal friendships and the whole “Washington Bubble” culture as any other human being. That’s why I’m glad people in the community are asking the right questions and putting Wheeler on notice that, like any Chairman, he needs toprove himself as a champion of the public interest. We at PK have also made it clear we expect Wheeler to not just talk a good game, but to get his hands dirty and make tough decisions that will piss off incumbents. And when we disagree, as we expect we will, have no doubt we will make our displeasure known.

 

But while it is important to ask the right questions and give no one a free pass, it is equally important to evaluate the answers and the evidence fairly and accept their logical conclusions. The evidence that Wheeler would have approved the AT&T/T-Mo merger had he actually been Chairman (rather than playing pundit) is pretty weak. To take that a step further and say that Wheeler’s justification for approving the merger as a means of reregulating the wireless industry was mere sham to hide his true sympathies seems to me exceedingly unjustified.

 

Stay tuned . . . .