Commissioner won't break AT&T-BellSouth deadlock

FCC member who formerly lobbied on behalf of Bell competitors says he won't vote on merger because of ethics considerations.

Anne Broache
Anne Broache Staff Writer, CNET News.com
Anne Broache
covers Capitol Hill goings-on and technology policy from Washington, D.C.
4 min read
WASHINGTON--The bearer of the potentially tie-breaking vote on a proposed merger between AT&T and BellSouth said Monday that ethics considerations prohibit him from participating.

The decision by Federal Communications Commissioner Robert McDowell, a Republican sworn in earlier this year, is consistent with his earlier inclination to recuse himself from a decision on whether to approve the deal, now valued at more than $80 billion. He had declined to participate because immediately prior to joining the FCC, he spent seven years as an executive with the trade association Comptel, which lobbies for competitors of the Bell telephone companies.

"To earn the public's trust in the integrity and impartiality of their government, in light of these factors, I find that I have no choice but to abide by the terms of my ethics agreement, heed the independent advice of the Office of Government Ethics and my ethics counsel, and ultimately to follow my own personal sense of ethics," McDowell said at a press conference at FCC headquarters here on Monday afternoon. "Accordingly, I disqualify myself from this matter."

McDowell noted that he signed an ethics agreement upon leaving Comptel that bars him for one year from participating in FCC matters involving the organization. Comptel has filed comments with the FCC in opposition to the AT&T-BellSouth deal. He urged his four colleagues, two Democrats and two Republicans, to return to the negotiating table and work out a unanimous agreement, as they did with mergers last year involving AT&T and SBC Communications, and Verizon and MCI.

"I fear that my recusal from this matter has been used as a pawn for some to forgo meaningful and severe negotiations," McDowell said.

The FCC has postponed action on the deal multiple times because the remaining two Democrats and two Republicans have reached a deadlock over which conditions, if any, to impose on the merger. U.S. Department of Justice antitrust authorities approved the deal in October with no conditions.

Of particular concern to Democratic commissioners reportedly has been a Net neutrality mandate--that is, rules requiring that the combined companies do not discriminate against or prioritize Internet content. But their Republican colleagues have been resisting that idea.

Consumer advocacy groups were quick to applaud McDowell's decision.

"This is too important a transaction to be clouded by the ethical questions that would have come up had the Commissioner taken part in the proceeding," Gigi Sohn, president of the group Public Knowledge, said in a statement. Public Knowledge favors placing Net neutrality requirements on the deal.

In hopes of moving the process to completion before year's end, FCC Chairman Kevin Martin had recently asked the agency's top lawyer to weigh in on whether it would best serve the government's interest to let McDowell break the expected tie.

FCC General Counsel Samuel Feder went on to consent to McDowell's participation in a December 8 memorandum. He said he based his decision on a seemingly similar situation the FCC dealt with under then-chairman William Kennard.

Feder's letter amounted to "an ethical coin toss thrown in thin air," McDowell said Monday. "While I expected the legal equivalent of body armor, what I got was Swiss cheese," he added.

In particular, the letter failed to mention a number of "crucial facts and analyses" or his ethics agreement with Comptel, McDowell said. That assurance likely influenced senators who confirmed his nomination, because some had voiced concern that conflicts of interest would negatively impact his ability to serve on the FCC, he added.

McDowell said he was also dissatisfied with Feder's responses to a letter sent to the general counsel's office by U.S. Rep. John Dingell, D-Mich., the incoming chairman of the Energy and Commerce Committee, and Rep. Ed Markey, D-Mass., who is likely to become chairman of a telecommunications panel. The Democrats presented Feder with 15 questions aimed at probing which laws he planned to consult and historical situations in which commissioners have recused themselves.

In a statement Monday, Dingell praised McDowell for "adhering to high ethical standards in this matter" and encouraged the remaining commissioners to bring the matter to a "fair and timely resolution."

AT&T spokesman Michael Balmoris said the company plans to continue urging the federal regulators to sign off on its acquisition of Atlanta-based BellSouth as quickly as possible.

"State regulators, minority organizations, small business groups, educational and community groups and elected officials from both the Democratic and Republican parties have all recognized the concrete benefits that our merger brings to consumers and the public interest," he said in a statement.

FCC Chairman Martin said he respected McDowell's decision to abstain from the vote and would "continue to try to work with my colleagues to bring our consideration of this merger to conclusion."