Handicapping the race for FCC chairmanship

Now that the chairman of the Federal Communications Commission has said he'll bow out, political insiders are scrambling to persuade President Bush to nominate their favored candidates as successors to Powell or to fellow commissioner Kathleen Abernathy, who is also said to be leaving.

Kevin Martin
commissioner, FCC

The person whose name pops up most often is Kevin Martin, a onetime lawyer for the Bush-Cheney campaign who's been an FCC commissioner since 2001. One benefit of elevating Martin to the chairmanship, the thinking goes, is that the promotion won't require Senate approval.

But Martin's voting record has made him an unreliable ally of deregulation and the high-tech industry. That's why some advocacy groups are backing a dark-horse candidate as a worthy heir to Powell: Peter Pitsch, who's currently an Intel lobbyist.

Pitsch has the right FCC credentials. He was chief of staff to the FCC chairman in the late 1980s and has spent years navigating the obscure byways of telecommunications policy on behalf of the world's largest chipmaker, where he's director of communications policy. Right now he's trying to convince Congress that TV broadcasters should return a chunk of spectrum real estate to the public for use by new Wi-Fi-like wireless services.

Pitsch also is deeply involved with the VON Coalition, which seeks to keep 1930s-era telecommunications laws away from Internet telephony. A source close to Pitsch tells me he'd be honored if nominated for the job.

Further, Pitsch gets high marks from James Gattuso, a longtime FCC hand who's now a fellow at the conservative Heritage Foundation. "I think Pitsch is one of the few candidates that has the background at the FCC that's needed, a practical understanding of the new economy by working in the sector, and a deep understanding of the principles of markets," Gattuso says.

Ed Feulner, Heritage's president, has written a letter to Bush endorsing Pitsch as FCC chairman. That should carry some weight: Heritage is the most influential conservative think tank around, and it boasts close ties with many White House aides (often former Heritage staffers themselves).

Peter Pitsch
director of com-
munications
policy, Intel

Adam Thierer, director of telecommunications studies at the Cato Institute, is unabashedly pro-Pitsch. If the Intel lobbyist got the job, Thierer predicts, technology companies "would have more of a voice in the policy-making process and would be viewed as an equal to some of the older players out there in the telecommunications and cable marketplace."

Powell began the process of dealing with disruptive technologies like voice over Internet Protocol (VoIP) and Wi-Fi. The marketplace is booming, more deregulated than before and, yes, considerably more repressed when it comes to the FCC's "indecency" enforcement.

Whoever succeeds Powell will wield tremendous influence during a period that promises to be no less disruptive. Congress is considering rewriting the 1996 Telecommunications Act to address VoIP--a process that would, if history is any indication, dump all the implementation details in the FCC's lap. Video is another huge area for regulatory rethinking.

The next FCC chairman also will have the chance to do something that Powell never did, or perhaps never could, which is to downsize the FCC.

In 1993, the FCC's "budget authority" was around $140 million, according to Ken Robinson, who edits a weekly newsletter called Telecommunications Policy Review. By contrast, Bush's recent budget request would let the FCC spend $392.7 million for fiscal 2006. And this is after the supposedly "deregulatory" 1996 telecom act took effect.

Put another way, the FCC's budget increase from 2005 to 2006 represents about a 6.6 percent increase--or about three times the official inflation rate of 2.2 percent. "'Deregulation' has proven a very positive growth industry for the smaller economic regulatory agencies, such as the FCC," Robinson says.

The FCC's employee head count also shows increases at a time when competition in the marketplace is growing and federal agencies should be doing less.

In 1993, the FCC had a ceiling of 1,770 employees. The suggested ceiling for 2006 is 1,999 employees, a number that doesn't even reflect the growth in outsourcing of administrative tasks at the FCC in the last decade.

(As you might expect from a Republican administration, the biggest portion of the FCC will remain the enforcement bureau, which is responsible for cleaning up the airwaves in the wake of the Janet Jackson wardrobe incident and will boast 330 full-time employees.)

Whether the next FCC chairman is Pitsch, Martin or merely a wealthy Bush campaign donor, he or she will oversee the nation's telecommunications rules during a time of rapid change. For the sake of the technology industry and those of us who enjoy its products, let's hope that the president nominates someone who's up to the task.