McDowell to Give Martin 3rd Critical Vote on Stalled Orders

Industry types have been waiting for McDowell to take his seat in hopes of seeing action on loosening of media ownership rules, a $17 billion Comcast and Time Warner acquisition of Adelphia systems, revision of multi-cast, must-carry rules and USF reform, among other items. But on a wide range of lesser matters, negotiation likely will remain the order of the day, as Martin pushes for 5-0 votes, especially on hundreds of non-political issues the FCC addresses every year.

McDowell, who represented CLECs in their battles with the Bells, could have more empathy for the telecom world’s smaller players, sources speculated. Outside the wireline arena, he’s not well known.

Filling the empty seat means Comrs. Copps and Adelstein will be positioned less forcefully to win concessions on major orders, a Commission source said. “As we saw with AT&T-SBC and Verizon-MCI mergers, the minority commissioners were able to get pretty significant conditions,” the source said: “Where you'll see the potential for 3-2 votes are really big industry-reshaping type orders.” At the same time, the source said, Martin likely will work at obtaining consensus on many other orders. “There’s almost as much pressure to not have a lot of 3-2s as there is to get things through now,” the source said: “That is something nobody wants.”

“There’s been a need to include the Democrats in some of the decision making,” an attorney with a broad portfolio of business before the Commission said: “But this chairman has been controlling from a top to bottom approach. The bureau chiefs aren’t really making recommendations anymore. They're just giving options. If he has the 3 votes I think there'll be less incentive to work with the Democrats.”

McDowell, like Comr. Tate so far, is likely to be a safe vote for Martin on most issues, a source said. “Tate is going to be highly supportive of the chairman and as a consequence having a 3rd Republican will strengthen his hand,” the source said: “There is a question whether the new commissioner’s background means he will be more sympathetic to the interests of smaller players, but that remains to be seen… Chairman Martin is very, very good at figuring out how to get things to come out his way and he has a long memory when people disagree with him.”

In rounding out Republican representation on the FCC, McDowell will have a key role. “Adelphia, indecency and media ownership are the 3 areas where the 3rd vote really matters. If it really drags on, BellSouth-AT&T also could get tricky,” said a regulatory attorney and former FCC staffer. Martin is most likely to dig in his heels on votes where he has a clear policy stance, this source said. “The Democrats have been more capable of getting concessions on this Commission,” the attorney said: “On the other hand, this chairman is committed to collegiality. If you look at prior Commissions, it’s unusual to have a split on a routine item. He wants to be perceived as working well with the other offices and he'd be reluctant to dramatically alter that on issues that aren’t partisan.”

For attorney Robert Rini, who represents broadcast and other clients, media ownership is the issue likeliest to see a clear partisan breakdown, he said. “Initiatives to put that proceeding back on track are really being delayed until there is a Republican majority,” Rini said: “Even the Democrats I think are sympathetic to TV-TV combinations in small to medium sized markets… But I think the greatest potential impact is on how the media ownership rules turn out. I think that’s where there’s the greatest difference of opinion.”

The chmn. has indicated he wants to let firms own a TV station and newspaper in the same geographical area. “We suspect all we're waiting for in terms of media ownership is for McDowell” to come on board, said Free Press Communications Dir. Craig Aaron: “As soon as the fifth vote is there, we expect the chairman to move pretty quickly at least on the broadcast ownership rule… When it comes to media ownership, all indications are that he will move forward to gut the rules.”

“The speculation has been that there is a backlog of controversial matters that are awaiting a third Republican,” Harold Feld, senior Vp of the Media Access Project, said: “If nothing else, it will give the chairman a freer hand in bringing things up for a vote. He will have confidence that even on some of these controversial things he will have the votes to bring them up for a vote.”

But Feld also expects civility to prevail on most issues, he said: “The commissioners have made it a priority to restore the damage done to the collegiality of the agency during the Powell tenure. I don’t think Martin is going to want to irritate people and kind of squander a lot of the sense of the mending he has done by having the Democrats lose on a number of 3-2 votes at the first meeting [with McDowell].” McDowell may be more of an advocate for underdogs, Feld said: “McDowell has his own philosophy and issues. McDowell comes from a different background. He is not necessarily as favorably inclined toward the Bell companies.”

McDowell’s background as a CLEC advocate may or may not figure in how he votes at the FCC, Gigi Sohn, pres. of Public Knowledge, said: “At the FCC, politics trumps everything. There’s a lot of pressure to go along with the chairman. The good news, obviously, for the chairman is that on core issues where Republicans are united he'll have a majority.” It’s hard to say how McDowell will change the FCC’s chemistry, Sohn added. “Anybody who tries to make predictions is playing a fool’s game,” she said: “It will be a more productive environment. Something will get done. What gets done one can only guess.”

Mark Cooper, dir. of research at the Consumer Federation of America, said the 2-2 split has made a difference on key issues. He cited net neutrality provisions in the SBC-AT&T merger as “the perfect example” of a substantive change that came only because of the split and Martin’s need to get a vote at least one Democratic vote. “Martin has tried to move things he could move that were time sensitive,” he said: “On some big things like media ownership, he’s been waiting for the 3rd vote. USF might be tough at 2-2. It clearly does change the conditions up there.”

Adelphia Deal Impact Unclear

Among McDowell’s first tasks will be to weigh in on a nearly $17 billion proposal by Comcast and Time Warner to buy Adelphia systems, a vote warmly anticipated by Time Warner Chmn. Dick Parsons (CD April 11 p4). McDowell is less likely to favor conditions on the deal than the FCC’s 2 Democrats, who have voiced concern about media consolidation, said industry sources.

McDowell’s arrival at the FCC may have a major impact on the Adelphia review, said industry sources. The new commissioner is thought to be something of a wildcard on the $17 billion deal: Some officials expect he'll push for conditions favoring independent programmers because of his background, while others said a 3rd Republican may reduce the number of conditions.

“He brings a unique perspective of how difficult it is for new and small entrants to compete with the very large entrants,” said Richard Ramlall, RCN senior vp, in an interview. He cited McDowell’s work at CompTel as an example of the experience that may shape his opinion. McDowell’s appointment will be “a neutral” for Comcast and Time Warner’s purchase of Adelphia systems, said Franklin Templeton money manager Grant Bowers.

McDowell’s arrival means one less barrier to the FCC acting on universal service issues such as reform of the contributions method, a pet topic of the new member’s patron, Senate Commerce Committee Chmn. Stevens (R-Alaska). Besides contributions reform, McDowell’s presence could speed the plough on pending mergers, such as AT&T’s with BellSouth, a lobbyist said. The 2-2 Commission gave FCC Comr. Copps an entree to force changes on some FCC orders, a circumstance that won’t necessarily change under a 3-2 array, he said: “Under a 3-2 Commission, Copps still has some cover to get strategic compromises.”

The pending intercarrier compensation proceeding has been hard to tackle without a 5th commissioner, another lobbyist said. Proceedings on special access, truth-in- billing and early termination fees also have faced “problems” in a 2-2 Commission, she said.

On most wireless issues, though, McDowell could be a nonfactor. “I don’t see it making a lot of difference,” said a regulatory attorney who mostly works on wireless issues. “It just sort of solidifies the status quo… It depends on the issue. For example, it looks like they're going to have to deal with a roaming proceeding. How would he view that sort of issue? Would he have some additional competitive concerns? Or would his colleagues have them anyhow? It’s hard to know.”