White House names Tom Wheeler as next FCC chairman

The Obama administration taps former lobbyist and venture capitalist to be the new leader of the Federal Communications Commission.

President Barack Obama has nominated former lobbyist and venture capitalist Tom Wheeler to serve as the next head of the Federal Communications Commission.

Tom Wheeler Core Capital Partners

The White House made the announcement Wednesday. Wheeler's appointment as chairman of the agency was widely anticipated. His name had been on the shortlist of potential candidates for months, and several news agencies reported on the impending appointment.

Wheeler would replace current FCC Chairman Julius Genachowski, who has headed up the agency since 2009. Current FCC Commissioner Mignon Clyburn will serve as the interim chairwoman until the Senate confirms Wheeler's appointment.

Wheeler has the support of both consumer groups and the wireless and cable industries. He has been around telecommunications policy circles for years and has served as a lobbyist for the cable industry's trade group, the National Cable and Telecommunications Association, and the wireless industry's trade association, CTIA-The Wireless Association. He spent 12 years as the head of the CTIA. He also has policy experience within the government, working as a member of the FCC's Technological Advisory Council.

"Tom has a deep understanding of communications issues, a passion for hard work and creative thinking, a diverse background that spans the realm of the Internet world, and a keen understanding of how mobile wireless broadband can drive our economy and innovation," said CTIA President Steve Largent. "His leadership of the FCC's Technological Advisory Council, combined with his private-sector experience, means he will hit the ground running."

Some consumer advocates have worried about his past as an industry lobbyist. They fear that his positions may lean too much toward the industries he once lobbied to protect. Still, some outspoken consumer groups, such as Public Knowledge, say Wheeler will be a fair and proactive chairman who will continue to push the president's policies of an open Internet and competition in the market.

Said Gigi Sohn of Public Knowledge: "His past positions should be seen in light of the times and in the context of his other important experiences and engagement with policy. ... I have no doubt that we will disagree with Tom at times. But I also have no doubt that Tom will have an open door and an open mind, and that ultimately his decisions will be based on what he genuinely believes is best for the public interest, not any particular industry."

Wheeler's experience is well-respected
It's true that Wheeler has been deeply embedded in the lobbying efforts of the two industries he will be regulating, if he is confirmed by the Senate. But it's also true that he is joining a democratic administration, Guggenheim analyst Paul Gallant noted in a research note to investors.

"We think investors will be encouraged by Mr. Wheeler's industry background: Before becoming a VC, he headed the wireless and cable TV trade associations, so he clearly understands the business and technology of the telecom sector and knows how to maneuver in high-level Washington. But we also caution against over-reading his job history. He will be joining the Obama Administration (not vice versa), which has stood for telecom competition and network openness."

Indeed, Wheeler headed up those industry trade groups when their respective industries were young and competing against entrenched technologies.

His experience in the private sector as a venture capitalist investing in and helping new companies grow is also seen as an advantage by those in the industry and those defending the chance for new competitors to emerge.

People in the industry who have known Wheeler for years also say that his industry experience and knowledge of communications technologies will make him a chairman who will take definitive stands on important issues. They see him as someone who will get things done. This has been a major criticism of the current FCC chairman .

"[Wheeler] understands the issues and the importance of competition and innovation in the industry and will be able to hit the ground running on day one of the job," Steve Berry, head of the Competitive Carrier Association, said in a statement. "He is not afraid to make the tough decisions -- an important quality for the FCC chairman to have. And it is heartening to know that if (he is) confirmed, we will have an FCC chairman who will focus on economic growth."

FCC faces pressing issues
If Wheeler is confirmed, he will face a long list of pending issues at the FCC. Not only will he be tasked with getting more wireless spectrum into the market, but his agency is also facing a court battle with Verizon Wireless over the agencies' Net neutrality regulations . A loss in this case could gut the FCC's authority. He also likely will face big questions about how the FCC should regulate the wired and wireline industries as older networks are updated to operate over modern Internet protocol technologies.

And as the wireless industry continues to consolidate, it's likely that a Wheeler-led FCC will weigh in on more mergers and spectrum license transfers.

It's not known exactly how or if Wheeler's positions on these issues will differ much from the current FCC chairman's views. But based on blog posts he wrote while working at the venture capital firm Core Capital Partners, it seems that Wheeler will continue to push for competition and new technologies.

Still, there are indications that he could favor market consolidation. In a 2011 blog post, he implied he may have supported the failed $39 billion merger between AT&T and T-Mobile. But it's likely that he would have used the merger to impose regulations on AT&T to help preserve competition in the market.

"The Communications Act, however, does not prohibit the regulation of the terms and conditions of wireless offerings, nor does it prohibit the FCC from imposing merger terms and spectrum auction rules that might seem to be regulation in another guise. It is this authority, which offers the Federal government the opportunity to impose on AT&T merger conditions, that could define the four corners of wireless regulation going forward -- rules that would ultimately impact all wireless carriers."

Even though he may look toward merger conditions as a way to regulate the industry, big companies still seem to favor his nomination. In a statement, AT&T's head of government affairs, Jim Cicconi, praised President Obama's choice in Wheeler.

"I've known Tom Wheeler for many years, and he is an inspired pick to lead the FCC," Cicconi said. "Mr. Wheeler's combination of high intelligence, broad experience, and in-depth knowledge of the industry may, in fact, make him one of the most qualified people ever named to run the agency."

TV broadcasters may be worried
One group that may fear Wheeler's nomination are television broadcasters. Wheeler has made it clear through his blog posts that he believes the broadcast TV spectrum could be put to better use. In 2011, he expressed frustration with the TV industry for not moving more quickly to deploy mobile digital TV that would allow mobile devices, like tablets and smartphones, to tune into broadcast TV signals.

In his post, he noted that while TV broadcasters have long boasted that mobile TV is just around the corner, "the vast majority of broadcasters, however, haven't invested the less than $100,000 necessary to begin distributing mobile DTV."

Meanwhile, Verizon Wireless has invested "billions in a new LTE network that will include point-to-multipoint broadcast capabilities."

"Actions speak louder than words," he said in his blog post. "And the broadcasters' inaction on mDTV resounds like a thunderclap."

Wheeler went on to write that the refrain "mDTV is just around the corner" is like "an over-exposed sitcom, growing stale." Absent any action, he said the "we're special, we're innovative, we can't quit using this valuable spectrum" argument just doesn't hold.

As a result, it's expected that Wheeler would push aggressively to make the upcoming incentive spectrum auction a success. This auction is a complicated one. It not only requires the design of a forward auction, in which wireless providers like AT&T and Verizon will bid on spectrum, but it also requires a reverse auction, in which TV broadcasters will voluntarily give up wireless spectrum in exchange for some of the proceeds from a forward auction.

It's unknown how much spectrum will be available for the forward auction. According to the statute authorizing the auction, it must generate enough revenue to cover the cost of the auction and to move broadcasters that are not willing to sell spectrum. It also must cover the funding for a national public safety network.

Chairman Genachowski set an aggressive target of finalizing rules for the auction by the end of 2013 and completing the auction in 2014. Many in the industry have expressed concern about the aggressive timeline. While it may be difficult to reach this target, Wheeler, if confirmed, is expected to move quickly.

In addition, Wheeler is expected to be more aggressive in freeing up additional spectrum used by the government. In one of his blog posts, Wheeler noted that the government is "the single largest user of spectrum." And he has called for a re-evaluation of the spectrum policy, including the government's use of spectrum. Analyst Paul Gallant says Wheeler's support "should bring new energy to wireless operators' push to move additional government spectrum into commercial use."

Update 2:26 p.m. PT: This story has been updated with additional quotes and analysis.

 

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