The Progress & Freedom Foundation Blog

The FCC's endemic dysfunctionality and lawlessness is on full display with the AT&T/BellSouth merger. The daily soap opera reached an interim crescendo last week with Commissioner McDowell's decision to recuse himself from the proceeding. Given we are now at the two minute warning, or halftime, or early in the first quarter of the proceeding, here is some color commentary.
It is premature to ask, "Who lost T/BLS?," as the proceeding will undoubtedly end up in approval, just with a much higher shakedown price. Instead, let's ask: "who is to blame for this circus?"
There is plenty of blame to go around, in order:
1. The Law FCC Commissioner Furchtgott-Roth many times bore witness to the dubious and lawless FCC merger review process. Quite rightly, Furchtgott-Roth questioned the capriciousness of merger reviews that were generally pro forma, but opportunisitically turned into shakedowns with wish lists of non-germane goodies added. The T/BLS merger has turned into the ultimate shakedown at this point, and the capacious legal standard (and non-reviewability) makes it possible.

2. The Holdout Commissioners The holdout commissioners -- though fine fellows both -- come from the Hill, and are behaving as if they are still there. There is no pretense any more that this is a legal review of the competition effects of the merger. Rather, it is a political free-for-all, where their discussed demands have absolutely nothing to do with the merger itself, but are just baubles from a political-regulatory wish list. The commissioners here are simply bent on pressing a political advantage, and there is not even a rational relationship between what they want, and what the merger will accomplish.
3. The White House Personnel Office The personnel office cared so little about the FCC - and so much about pleasing Senator Stevens - that it cleared through McDowell, a lobbyist for Comptel, which is active in nearly every major FCC telecommunications docket, despite knowing that in the first instance he would have to recuse himself from telecom dockets for some time. Thus, it created the conditions for the stalemate. This does not excuse the Democrats and their lawless embrace of the "merger as shakedown" mode of review, but one look back to the Reed Hundt/Bill Kennard-era at the FCC, and you knew they wouldn't be able to help themselves. Rob McDowell is a young man, and a seemingly decent fellow, with a long career ahead of him in Washington. He chose to preserve that career for perfectly defensible reasons, instead of being Dingle-d to death for the indefinite future. The mistake was first made in the WH, which if it cared about giving Chairman Martin a working majority, would have made sure it appointed someone who could vote on major telecom matters.

So, in the end, legal laxity, partisanship and indifference are the culprits here. For AT&T and BellSouth shareholders and customers, it means more time in regulatory purgatory.