Dumpster Ethics

Federal Communications Commission (FCC) Chairman Kevin Martin played his hole card the other day to break the FCC’s deadlock over approving the AT&T-BellSouth merger that would create the world’s largest telecommunications company.

The newly emboldened Democrats say the Republican chairman is throwing his and the FCC’s ethics in the dumpster to do it. They may have a point, but in Washington ethics are often a vague concept.

Power, however, is not and Martin, too, has a point: it’s good to be the chairman. For unlike in the U.S. House and Senate, Republicans still hold the majority at the FCC, three votes to two.

The chairman and fellow Republican Deborah Taylor Tate support the merger wholeheartedly, so much so they originally pushed for a no-strings-attached package. In that version, AT&T wasn’t even legally obligated to abide by the FCC’s own network neutrality principles.

Why not, they must have thought?

The Department of Justice blessed the deal with no conditions in October. Regulatory authorities in the states impacted by the $67 billion merger have also obligingly moved the deal along with little or no conditions of consequence.

Democrats Michael Copps and Jonathan Adelstein want more conditions for approval, particularly in the area of network neutrality.

So where is the third Republican vote?

That would be the recused Robert McDowell, the former telecom lobbyist whose most recent employers oppose the deal as anti-competitive. McDowell says his participation in the vote would appear to be a conflict of interest.

Without a Republican majority, Copps and Adelstein have already won concessions from AT&T that neither the DoJ nor state authorities required for approval. AT&T, for instance, has agreed to adhere to the FCC’s four network neutrality principles for 30 months after the official closing of the merger.

AT&T promised to offer standalone DSL over that same period and pledged to offer free modems for those customers upgrading from dial-up to broadband. The company said broadband of some flavor will be available to 100 percent of the living units in the merged territory within the next 12 months.

That’s not enough, say Copps and Adelstein.

They want AT&T to drop its commercial broadband business model that calls for charging Internet content, application and service providers based on bandwidth consumption.

Instead, they want AT&T to agree to an additional network neutrality principle requiring broadband carriers to offer their networks on a non-discriminatory basis, including price.

AT&T says it is willing to “discuss” further network neutrality issues involving non-discriminatory handling of network traffic, but it is making no more legal concessions. Martin wants the deal done before the end of the year.

Which brings us back to McDowell, the erstwhile, recused commissioner. Late last week, Martin ordered FCC attorneys to determine if McDowell could be “unrecused” from the vote. Presumably, that would give Martin the third vote needed to approve the merger.

In a letter to Congressional telecom leaders, Martin declared the current merger negotiations have reached an impasse. Martin said FCC regulations and precedent allow a recused commissioner to vote if the “government’s interest” outweighs concerns “that a reasonable person may question the integrity of the agency’s programs and operations.”

The new Democratic majority in Congress immediately began to howl over the ethics of forcing an FCC commissioner to vote on an issue he himself has said is an obvious conflict of interest.

“When public servants have identified and recused themselves from legitimate conflicts of interest, they should be commended for upholding the highest standards of public integrity,” said U.S. Rep. Mike Doyle, a Pennsylvania Democratic who serves on the House Internet subcommittee.

U.S. Rep. Ed Markey (D-Mass.), the incoming chairman of the subcommittee, complained, “Forcing a commissioner to participate in a proceeding in which he or she would otherwise be recused is an extraordinary notion for an independent, impartial regulatory agency.”

Ironically, the conventional conflict of interest here is that McDowell would vote against the merger in favor of his former employers. That does not appear to be case, suggesting that the Democrats are more concerned with his possible “yes” vote than they are with a conflict of interest.

In other words, politics as usual.

McDowell, it should be noted, did not ask for any of this. The call for his unrecusal came from Martin. Even if the FCC lawyers clear McDowell for the vote, he is under no obligation to vote for or against the merger. He could, in fact, abstain from the vote.

But by bringing McDowell into the process, Martin hopes to conclude the eight months and counting vetting of the deal. Because of his background representing groups opposed to the merger, McDowell may even wring some further concessions from AT&T.

McDowell’s possible swing vote participation also undercuts Copps’ and Adelstein’s position, perhaps forcing the two Democrats to concede the vote with the concessions they’ve already won, a good battle fought within a greater policy debate.

In any event, if cleared to vote, most FCC observers think McDowell will ultimately decide in favor of the merger.

“We think [the approval] is prime for either December or January and no later than that,” an AT&T executive told internetnews.com earlier this week.

As for the Democrats in Congress, they have a wide open door to accomplish what the FCC refuses to do: force network neutrality laws –- not rules, regulations or principles — on broadband carriers. With Democrats in control of both the House and the Senate, they have the mojo working for them.

Let’s see if they have moxie.

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