As FCC's Political Prowess Grows, Corporate Boards Turn to Insiders

Amid the power shift in Washington, Bill Kennard and Reed Hundt find new board jobs—former commissioners are gaining stock in the eyes of corporate America.

by Bob Liu Executive Editor internetnews.com [April 12, 2001]

Thanks to political support from both the Bush Administration as well as Capitol Hill, the Federal Communications Commission has gained political clout inside the Beltway and is no longer being thought of as a politically charged bureaucracy. For this reason, corporate boards may have put more weight in the stock of former commissioners in hopes of influencing public policy on a wide range of issues from spectrum to common carrier, observers noted.

Who's hot
Intel Corp. this week nominated of Reed E. Hundt to the chipmaker's board of directors. Hundt served as FCC chairman from 1993 to 1997. Hundt was also high school classmate of Al Gore, a law school classmate of Bill Clinton. The announcement comes one day after Handspring, Inc. added former FCC Chairman William E. Kennard to its board. Kennard served as head of the FCC from 1997 through January 19, 2001.

Despite the fact that commissioners are barred from official contact with the agency for a set period of time following their departure, former commissioners—especially former chairmen—routinely make the transition from public service, to corporate service a profitable journey. In addition to Intel, Hundt's name can also be found on corporate letterhead from publicly held firms Allegiance Telecom, Novell, NorthPoint Communications, as well as five other privately held companies.

According to an agency insider who requested anonymity, former commissions are sought after because they still carry some clout in Washington, DC.

"It might help them get a door open. They'll be able to have a meeting. You turn to them for influence," the agency insider said.

Now that the Bush Administration has appointed Michael Powell Chairman of the FCC, his deregulatory agenda will likely solicit information from the same blue-chip firms that have former FCC chiefs as members of their board.

Both observers and agency insiders believe Powell's policies will lean toward allowing the market to resolve issues for itself—rather than create new regulations overseeing converging communication services in the U.S.

"In this market, given where the FCC is, perhaps in the future, there will be less of an opportunity to game the market through the regulatory process—but that remains to be seen," said Martin Stern, partner of Preston Gates Ellis & Rouvelas Meeds LLP, who previously has served as the deputy chief of the FCC Competition Division.

Indeed, even though Powell has not disclosed specific details of his deregulatory agenda, he is taking an active role in building support for key issues that will influence how Americans connect and communicate through the Internet.

For example, Powell along with Sen. Conrad Burns (R-MT) has embarked on an ambitious initiative to educate Capitol Hill staffers about spectrum management. Whereas previous commissioners viewed the nation's airwaves as merely a means to raise cash through auctions, Powell is more astute as to how the market uses spectrum for wireless voice or data transmission.

"[Powell] is much less inclined to used the commission for social engineering," Stern said. "He wants to allow the market to do what it does."

Who's not
But as fortuitous as it may be to have a former FCC member sit on a communication company's side, it does not guarantee that the company will influence the agency's policy. For example, Harold Furchtgott-Roth—who is being replaced by Republican nominee Kevin Martin—is likely to have little influence on policy making after his departure.

"He was his own island [Harold Furchtgott-Roth]. He was not someone that's going to influence anyone inside the agency. He always said we weren't going to do anything," the FCC insider said.

Democrat Gloria Tristani is rumored to be returning to politics in New Mexico following her departure, which is expected sometime later this year. She previously served on New Mexico State Corporation Commission from 1994-97, where she was the first woman elected to that office and served as Commission Chair in 1996. She has her own private law practice in Albuquerque.

Parting shots
In closing, Stern noted that having a former FCC chief does not necessarily guarantee a company's success, he said. Despite all the political rhetoric and insider networking, it still takes a strong business plan to survive.

"It takes more than a former FCC member to profit in today's market," Stern said. "What you now have is a new marketplace reality. Execution, that's the story."

—End