Editor’s note: After only a little more than a year as chairman of the Federal Communications Commission, Reed Hundt has spearheaded some of the most dramatic changes ever for the wireless communications industry. He has, in effect, redesigned an industry by creating a commercial mobil radio service and crafting a platform from which small businesses, women and minorities might have an equal opportunity to participate in the spectrum auctions. It is, infact, the auctions for which Hundt will be most noted: He will be known as the one who took the “air” out of the industry and put it on the “block.” Whether liked or disliked -and there are those on either side of the fence – he has impacted the wireless industry in 1994 more than any other person. He is RCR’s 1994 Person of the Year.
He came. He saw. He reinvented. Perhaps no individual has ever played a bigger role in reshaping wireless telecommunications regulation than Federal Communications Commission Chairman Reed Hundt did in 1994.
In just his first 12 months of a five year stint, Hundt stole the show.
A free-market advocate with a social conscience, the controversial Hundt would make as many enemies as friends with his policies and practices. Take away the fireworks of cable television reregulation – mandated by Congress and implemented by Hundt – and he might look like a popular FCC chairman today. So much for what-ifs.
What he did do is turn the FCC upside down and inside out before pulling out a new Wireless Telecommunications Bureau.
New wireless policies had the unmistakable Hundt imprimatur.
Along the way, he artfully dodged one bullet after another from Capitol Hill, only to clumsily step on industry land mines here and there. Somehow, though, he managed to survive and keep the revolution at 1919 M Street alive.
Next year, he’s vowed to take on state regulation, tower site, numbering, access changes, interconnection, equal access and other wireless issues that industry leaders say stand in the way of progress. To this day, though people still scratch their heads and are perplexed about the guy at the FCC with the Alfred E. Neuman grin.
Like a hat that holds its shape no matter how it has been contorted, Hundt remains Hundt even as he transforms everything around him. The world be damned if you don’t like his policies, speeches or answers that sometimes have little to do with the questions. Know only this, the 46-year-old FCC chief harps countless times: Telecommunications competition is good for the economy and good for America.
“The most challenging part about the job is coping with the tremendous range of issues, because their are no issues that we deal with that aren’t crucially important to the industries and consumers involved,” said Hundt in an RCR interview.
“The other thing that is very challenging,” he added, “is trying to make sense in the public forum about how to communicate effectively our policy and how to send guidance to industries about the long-term, public policy issues, We don’t make decisions on a week-by-week basis, but week by week, people are getting an impression of what we’re doing from the media, and it’s our job to try to get that across in a right way so that people have a sense of the country’s direction from a public-policy perspective.”
For all their attempts, lawmakers in the Democrat-controlled Congress could not pass sweeping telecommunications reform legislation. The new Republican majority in the House and senate will try next year. Hundt believes they will succeed.
Even Vice President Al Gore, father of the information super-highway and long-time friend of Hundt since their days at St. Albans prep school in Washington, D.C., was forced to watch from the sidelines after promising greatness from the Clinton Administration.
Telecommunications business deals seemed to come and go, though a few went the distance. Hundt, though, delivered. Big time. Most everything Congress, the White House, industry and the American public wanted, they got.
So much so, it turned into a political liability.
Hundt’s critics asserted the FCC chairman was too accommodating, particularly to Democrats in charge of Congress and the White House. They said Hundt, appointed by President Clinton last year to oversee the independent regulatory agency,was too beholden to his former Yale Law School classmate.
As such, the first year of the Hundt regime was marked by odd turnabouts, clashes and reconciliation. For example, conflict of interest rules kept Hundt from addressing one of the most highly publicized and politicized issues in years: pioneer’s preference awards for broadband personal communications services licenses.
Over time, it would become clearer where Hundt was taking the wireless telecommunications industry as it nears the 21st century. The FCC chairman would find success had its price, however.
But no one, not even his detractors, could deny that Hundt – the change agent – was making history. Top U.S. telecommunications firms beat a path to his door to bid billions of dollars on next-generation paging and mobil telephone licenses in the biggest sale of public property the nation has ever seen.
Women, minorities, small businesses and rural telephone companies saw a historic window of opportunity open in an emerging wireless field of dreams called personal communications services. designated entities, as they would come to be known, would be given a menu of bidding credits, tax certificates and installment payments to help them compete in a bidding war against larger firms for narrowband PCS (advanced paging and messaging) and broadband PCS (digital pocket telephone) licenses.
“That is what PCS is a little slice of,” said Hundt. “It is the opportunity to include everybody, of all race, color, creed and gender in the communications revolution.”
Taxpayers for the first time were compensated for commercial use of the airwaves, and wireless competition got one hell of a jump-start. “There are lots of people who are used to getting some thing for nothing, and they’ll have to change their attitude,” said the FCC chairman.
Dogged, determined and tireless, Hundt set a pace that even his devoted cadre of Yale aides and heady staffers at the FCC found hard to keep up with. He is demanding of those around him, but his supporting cast produces for him, protects him and fervently sells him to the world.
Close aids swear by him; his detractors sear at him.
Hardly anyone is neutral when it come sot Reed Hundt. Nearly everyone has an opinion – a strong one at that – about him.
In a whirlwind year of endless rulemakings triggered by congressional mandates, Hundt took on the wireless world – the old – world and created a new world of auctions, designated entities, narrowband PCS, broadband PCS, low-earth-orbit satellite services, commercial mobil radio service and private mobil radio service.
Hundt’s regulatory philosophy is simple and straightforward: Create competition and get out of the way. “Preserving competition in markets is an ongoing battle,” Hundt explained.
In only 16 months since Aug. 10, 1993 – the day Clinton signed legislation making auctions, designated entities, spectrum reallocation and regulatory parity part of the FCC’s regulatory lexicon -Hundt has translated the law into groundbreaking wireless policies and assigned new licenses in record time.
The FCC sold 10 nationwide narrowband PCS licenses in July for $617 million, and auctioned 30 regional narrowband PCS to a smattering of women, minorities and established players for $395 million this fall.
“They don’t have a guarantee of success; they have a ticket of opportunity,” said Hundt. “I don’t know whether they’ll be able to cash in on the ticket. I don’t know whether the big businesses will be able cash in on the ticket.”
On Dec. 5, the biggest-ever government auction began with the bang of Vice President Gore’s gavel. “I’m so proud of the joy you’re doing,” Gore told Hundt at the open ceremony of the broadband PCS auction. The FCC’s auction program became a sterling example to Gore of how government can be reinvented to operate more efficiently
But it also set up Hundt as a target, one with dollar signs in his eyes. Private mobile radio users, representing a large segment of the wireless industry, lamented the FCC’s focus on PCS came at their expense. All the hoopla over PCS auctions does little for them. They feel abandoned.
“The pat answer we’re getting out of the commission is that you can bid on spectrum or get it from a commercial service provider,” said Jeffrey Sheldon, general counsel for UTC (formerly the Utilities Telecommunications Counsel). “It just seems like he doesn’t have an appreciation for why private services were created,” added Sheldon.
Alan Shark, who represents specialized mobil radio operators as president of the American Mobil Telecommunications Association, give Hundt credit for being an activist on some issues but not others. “I cannot help but feel that the real emphasis has been on big money,” said Shark. “I think small specialized wireless contenders were put at a disadvantage,” he noted, “and some may have been put out of business because of his policies.”
Every day SMR applications stand still, Shark pointed out, hundreds of cellular subscribers are signed up.
Shark and other share particularly angered over the 800 MHz mobil radio application filing and processing freeze imposed in early August by the FCC in advance of a proposal to auction wide-area and local SMR licenses.
Three months later, the FCC agreed to accept computer software and hardware donated by industry to help clear the backlog of 40,000 applications at the FCC’s Gettysburg, Pa., licensing offices.
“We should not have to have auctions at 800 MHz at all,” said Shark, noting that little SMR spectrum is available to sell.
George Petrutsas, a former FCC lawyer who represents private mobile licensees, stated, “This has to be the year when private radio reached its low in terms of attention and spectrum allocation.”
Mark Crosby, president of the Industrial Telecommunications Association, was more blunt: “We have actually taken worse than a back seat.”
Jack Richards, another former FCC attorney who serves as general counsel of the Land Mobile Communications Council in private Practice, said the process of policy making under Hundt is troublesome and “the regulatory atmosphere creates uncertainty in the business world and raises questions regarding the priorities of the commission.
“It used to be that the bureaus – especially the Private Radio Buras (recently folded into the Wireless Telecommunications Bureau) – took care of business in due course, without a great deal of oversight from chairman’s office,” said Richards. “Now, the bureau’s discretion to handle mobil radio issues and to allocate resources to get that job done, seem to be subject to more intense oversight at the commissioner level.”
Hundt also got on the wrong side of fellow commissioners now and then, and more than once did battle with the news media.
He applied a level of economic and antitrust analysis to wireless issues unprecedented at the FCC. The agency imposed a 45 megahertz spectrum cap to keep any one carrier from getting too much bigger than any other carrier and just said no to management and marketing alliances the FCC believed could undermine the competitive balance in individual markets. To know the man is to better understand where his policies come from.
Hundt confounds many people, which he seems to relish. He is a complex individual, whose regulatory paradigm is shaped by an electric combination of worldly ideas and experiences. He cannot be pigeonholed. Reed Hundt is many things. He can be scripted or spontaneous, serious or whimsical.
He came to the FCC from the Washington, D.C., law offices of Latham & Watkins, where he had the reputation as a tough litigator. Hundt tended to represent telecommunications clients in the courtroom rather than at the FCC, making him a muster man after nominated by Clinton in June 1993 to head the agency.
Highly intelligent with a skilled and creative legal mind, Hundt tends to listen to reasoned arguments and is less persuaded by hyperbole. In public, he presents a thoughtful, easygoing persona. But he’s said to have lost his temper on occasion. He is an intense man.
He has a strong antitrust background, but that doesn’t mean he thinks big is bad. “We are happy to have national companies, even though they are going to be very big and very powerful, but only because we want to have lost of them,” said Hundt. “It’s a simple but all-important point,” he emphasized.
