Person of the Year: Kevin Martin: FCC Chairman is this year’s most influential wireless player

Official Washington is big on labels, quick to pigeonhole this elected official or that presidential appointee based on party affiliation, past government actions and off-the-record scuttlebutt. It is a convenient baseline utilized by lobbyists, journalists, political operatives and others to establish battle lines and otherwise explain life inside the Beltway, where the blood sport of politics is celebrated daily.

So it was that when President Bush promoted Kevin J. Martin from commissioner to chairman of the Federal Communications Commission in March 2005, the die was cast. Martin, a son of the South with Harvard Law School credentials, serious White House ties and boyish looks that invited unsolicited “Harry Potter” comparisons, would put the FCC on deregulatory cruise control. He would wave his wand and let market forces do their magic. There was one caveat, though. Whatever Martin would do to get government out of the way of telecom companies it would be different from how his immediate Republican predecessor – Michael Powell – did it. That was the lay of the land as insiders saw it. That instant snapshot of Martin would soon be supplemented by whisper-campaign rumblings about a management style viewed as secretive, controlling and at times vengeful, inviting scrutiny from the Government Accountability Office and Democrats who control Congress. Where reality ended and fiction began remains unclear, though perception is at least as good as fact in this town.

Flexible

No matter. When it came to overseeing the wireless industry, Martin broke with script.

At one time or another, Martin has managed to enrage, gratify and confound various factions of the wireless industry. And he’s not done yet, having at least a month left to continue stirring it up before giving way to an Obama-appointed successor. The list is as long as it is controversial: open access, public safety, white spaces, major mobile phone and WiMAX merger approvals (and conditions), advanced wireless services-3, enhanced 911 location accuracy, roaming, backup power, universal service/intercarrier compensation reform and more.

In some cases, particularly regarding open-access and public-safety conditions attached to highly valuable 700 MHz spectrum rights sold in an auction that raised record-breaking receipts of nearly $20 billion in March, Martin faced enormous pressure from the wireless industry and lawmakers of his own party to stay the course on bidding. They frowned upon the idea of attaching strings to licenses. But Martin didn’t cave, and even made reluctant converts of those opposed to his policies in some cases. Though regarded as stubborn by critics, one telecom insider associated with the Obama-Biden transition team remarked not so long ago that he admired Martin’s willingness to change his mind and make adjustments to move gridlocked proposals forward. When public safety and industry reached a compromise on an E-911 location accuracy standard that was more relaxed than one Martin (and first responders) embraced, the FCC chief didn’t stand in the way.

With the 700 MHz auction, white spaces, the Sprint Nextel Corp.-Clearwire Corp. merger, AWS-3 and other actions, Martin makes a persuasive case for the claim that the FCC has effectively laid the foundation for transforming a mobile-phone industry into a wireless broadband industry. Far from being cautious and risk-averse as was his reputation early on, Martin evolved as somewhat of a risk-taker. He experimented with auctions, using them as incubators of sorts to advance public policies while avoiding the heavy hand of government. Martin’s approach was to steer clear of sweeping mandates in favor of targeted initiatives designed to prod industry to change direction. Though it appears doubtful a national policy on early termination fees will emerge due to disagreement among stakeholders over a federal pre-emption component, the fact that Martin joined Congress (and trial lawyers) in shining a light on the issue has prompted national wireless providers to pro-rate ETFs.

Doing what’s right

The results of Martin’s wireless agenda have been mixed. The biggest constant has been controversy. Martin doesn’t seem to shy away from it. He has plenty of detractors in the wireless industry and other telecom/media sectors (broadcasters ranted endlessly about the dangers of white spaces and Martin’s stormy dealings with the cable industry are already legend), but there is little doubt about his disruptive impact on the wireless space. Indeed, policies that have reconfigured the wireless landscape will comprise a big chunk of Martin’s legacy.

So why then did Martin, a product of a highly deregulatory Bush administration, blaze a divergent path to the delight of some and to the derision of others?

“First and foremost, I thought it was the right thing to do,” Martin said in an exclusive interview with RCR Wireless.

The FCC chief, it turned out, was not completely bound to or blinded by his own guiding-light free market principles. When push came to shove on some high-stakes, cutting-edge issues, Martin opted for pragmatism over dogmatism. His critics, especially those focused on issues like roaming, universal service fund reform and AWS-3, undoubtedly still feel dogmatism dominated. T-Mobile USA Inc. remains outraged over a planned Dec. 18 vote on a national free, family-friendly wireless broadband plan that it claims will cause interference to mobile operations in adjacent spectrum it paid billions of dollars for at a 2006 auction. Martin is sticking by FCC engineers, who have given AWS-3 a clean bill of health.

“My general philosophy is that the free market and competition are going to drive innovation and lower prices for consumers, and then consumers are best served by vibrant competition,” said Martin. “That does not mean the government does not have an important role to play both in terms of setting up the rules of the road to allow these companies to compete fairly and to step in and take action to address issues when the marketplace is not working. In all the areas that the commission regulates, there is certainly some degree of competition. But it’s also a challenge because these are all high fixed-cost infrastructure industries in which it is difficult for a new entrant to immediately get into a market and compete. As a result, the regulatory framework is very critical to making sure we are adequately protecting consumers. I always start from the premise that marketplace competition will best serve consumer interests and generally that we should not unnecessarily interfere with those forces. But, I can be persuaded on the facts in specific situations to take additional, aggressive regulatory action to support expanded competition and consumer choice. In the cases where additional action is necessary, I am aggressive about doing it. I think that is critical to your credibility when you are a government official.”

Opening wireless

Martin used the 700 MHz auction’s open access requirement both as a targeted mandate and a catalyst to entice wireless carriers to allow third-party devices and applications on their networks. While public interest and consumer groups prefer an industrywide open-access wireless rule, progress on that front is palpable. Verizon Wireless ($4.7 billion worth of C-Block licenses and its open development initiative) AT&T Mobility, Sprint Nextel Corp. (the national WiMAX venture with Clearwire Corp. that is expected to have an open platform) and T-Mobile USA (recently unveiled the HTC Corp. G1 phone based on Google Inc.’s Android open operating system) show signs they’re on the bandwagon.

Martin said FCC rules to require open access on one-third of the auctioned 700 MHz spectrum and to free up television white spaces for unlicensed devices – including Wi-Fi gear – should not be viewed in isolation. They’re about the wireless broadband transformation that Martin has championed even as he is hounded non-stop about why the United States lags behind other countries in uptake of high-speed Internet connections.

“In today’s world it’s not just a voice phone connection anymore, it’s mobile broadband,” Martin said. “To build out broadband networks it takes a significant amount of capital infrastructure and spectrum

to be able to deliver those services. The commission as a regulatory agency needed to recognize that the wireless industry was rapidly moving away from simply being that mobile-phone market that we are all accustomed to and in doing so we needed to make sure that companies were investing in the next generation of wireless broadband infrastructure. . That is what I have been focusing on. In other words, it is important that we put policies and initiatives in place that provide for another platform with the capability of delivering broadband services across the nation the way that consumers have come to expect in a mobile environment – anywhere, all the time. It is critical for the commission to continue to drive toward that policy goal.”

Public-safety struggles

Martin has yet to see comparable signs of progress as a result of efforts to forge a union between the private sector and public-safety community to bring interoperable communications with broadband capability to first responders throughout the nation in the post-9/11 era.

But Martin arguably has done more than anyone in the Bush administration and Congress to advance the state of public-safety communications, remaining open to new ideas in the wake of the 700 MHz D Block failure earlier this year and pressing ahead to set rules for a re-auction next year.

“In an ideal world,
the government would be able to allocate the resources for public safety to be able to build their own interoperable broadband network,” Martin said. “In the absence of that, is there any way to use a public-private partnership to be able to achieve that same goal and try to piggyback onto a private-sector wireless carrier’s network to provide public-safety services? That remains the central question. I admit that it is a challenge and that from what we’ve seen in the public comments is that it continues to be a fundamental a challenge. There is a group of public safety officials who continue to believe that this is an urgent need that should be addressed as soon as possible by the commission. In essence, this is the only tool the commission has to proceed. . The lives of public-safety officials – local police and firefighters – are at risk every day by not being able to communicate with each other effectively, and that means that all of us are not as safe as we could be. So I believe it is, without question, worth it for us to continue to try to move forward with a public-private partnership and maximize our ability to use that tool. If Congress comes forward with another expansive approach, I would be supportive of that as well. I am in favor of whatever it takes to solve what is really a public-safety crisis in the United States.”

Consolidation concerns

While some lawmakers and consumer groups have grown increasingly concerned about industry consolidation – eminently represented by the four national wireless carriers – Martin said the focus should be less on particular companies and more on the consumer as it relates to choice and competition in individual markets.

The bottom-up approach is grounded in the Chicago School of antitrust, which emphasizes consumer welfare first and foremost and stresses competition over competitors.

Perhaps that’s why Martin has been perhaps least popular among small, medium-size and rural wireless carriers, which have managed to get some concessions on voice roaming but have failed to convince the FCC chairman to make automatic data roaming the law of the land. Some of those same carriers have been angered by Martin’s efforts to reform the ballooning high-cost universal service fund, viewing the potential loss of hundreds of millions of dollars in federal support for rural wireless deployment as discriminatory.

Management policy

A major irritant to Martin is the perception he is the major cause of the now-infamous FCC meeting delays. Those delays, according to Martin, had a lot to do with other commissioners seeking one change after another at the 11th hour. Martin has often been accused of presenting proposed orders to other commissioners at the last minute. Martin asserts there’s more to the story, adding that he feels responsible for holding the line on scheduled FCC votes even if it means not being punctual. Martin reiterated that he runs the agency no differently than his Republican and Democratic predecessors.

In fact, Martin said the FCC is more transparent than it has ever been. Once derided for lack of press availability, Martin earlier this year began holding monthly briefings with reporters to outline tentative agenda items for upcoming public meetings and fielding questions on other issues. As time went by, he appeared increasingly confident and comfortable in press dealings. Martin said he didn’t hold such briefings early in his term because it was not part of past FCC protocol.

“If I could have started over again, that is definitely something I would have done from the beginning – just tell the press everything that we knew when we were moving forward on key proposals, rules or initiatives,” Martin said.