You Say You Want a Revolution: A Story of Information Age Politicsby Reed Hundt
This book is a unique account of the way politics has shaped the information age in America. Reed E. Hundt, chairman from 1993 to 1997 of the Federal Communications Commission, the nation’s chief regulatory agency for media and communications industries, tells of the battles for political advantage that lie behind the enormous creation of wealth and social
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This book is a unique account of the way politics has shaped the information age in America. Reed E. Hundt, chairman from 1993 to 1997 of the Federal Communications Commission, the nation’s chief regulatory agency for media and communications industries, tells of the battles for political advantage that lie behind the enormous creation of wealth and social changes that are generally called the “New Economy.” The central theme of the narrative is the surprising passage and fascinating implementation of the 1996 Telecommunications Act, which authorized the Federal Communications Commission to replace monopoly with competition and to guarantee access to the Internet to all Americans, including every child in every classroom.
Depending on the leadership of his high school classmate Al Gore and finding unexpected allies in the ranks of free market ideologues, Hundt led the FCC to make the decisions that helped start a wave of entrepreneurship, which in turn has given the United States the world’s leading Internet economy. As the memoir shows, every decision involved prodigious political battles—between existing industries and start-ups, between Newt Gingrich and the Clinton-Gore White House, between inside-the-Beltway lobbyists and the new grassroots advocacy of e-mails, between the politics of money and the politics of ideas. In the same period, the often ignored and historically maligned FCC was the place where government decided whether to undertake the largest national initiative to reform K–12 education in the country’s history: the program to connect every classroom to the Internet by the year 2001.
Hundt’s reportfrom the political battlefield offers significant insight into the motives and personality not only of Al Gore but other prominent figures in political life, as well as many of the media moguls of our time. Told with great energy and wit, it is a tale that inspires both concern for and confidence in our democracy in the information age.
Gore proceeded to tell him a story about a dog-food salesman who created the best product ever made. But the man went out of business. The problem? "The dogs don't like the dog food," Gore said. Gore's message: It doesn't matter how good your decisions are if the top dogs in power won't accept them.
So begins Hundt's tale of passing the 1996 Telecommunications Act. As FCC chairman through the first term of the Clinton presidency, Hundt weathered the 1994 Republican takeover of the House and Senate - a time when Newt Gingrich indirectly declared war on the FCC, among other branches of the government. He also weathered such descriptions of himself in the press as "The Curse of Yale Law School."
But by the time Hundt stepped down, he saw his vision come to fruition - auctions of the wireless communications spectrum, federal requirements for educational television and new rulings that encouraged competition among the telephone and cable industries, which helped in no small part to fuel the Internet boom.
From Hundt's description in his new book, You Say You Want a Revolution, he was in for a rude shock on his first day at work at the FCC. The refrigerator emitted noxious odors and the walls were covered in textiles that, according to Hundt, needed to be mowed. But the stories he tells from his days inside those walls are lively and instructional, especially for the high-tech community. If those who don't understand history are doomed to repeat it, then Hundt's book is a good read for those who want to ensure technology continues on an upward climb.
When Hundt writes about himself, he's a one-man band of self-depreciation. At first it's humorous to see him bumbling his way through lunches with Washington's power elite and making one bad political move after another. At one point he remarks during a lunch at the Washington Post that the cable industry should be "grateful" he demanded rate reductions.
But while he's clear on his own version of events, his grasp of technology is more muddled. He fawns over Bill Gates, crediting him with creating the Microsoft operating system - when Gates in fact bought the original MS-DOS from a Seattle programmer.
Other famous characters take center stage as well. We meet Ted Turner, who sarcastically praises Hundt for killing Turner's plans to donate part of his fortune to charity. And we cringe under Mike Ovitz's predatory stare. But eventually these meetings begin to sound cliche, such as when George Lucas - apparently startled at an awards show when Hundt asks him to lobby for wiring classrooms to the Internet - replies Yoda-like, "Help can I? Let me know."
The book also jumps around. Although organized as a diary, it can be difficult to follow. In some places, even Hundt appears confused, as he often repeats himself. While the chronological style may be true to the timing of events, for the layman it can make for glazed eyes. And it is the average reader who should read Hundt's book, not only the high-tech entrepreneur who might learn from whence his current opportunities sprang.
Toward the end of his job, Hundt learns a crucial lesson. A Republican governor gloats about his use of convicts in wiring classrooms. "But in my new nonglib era," writes Hundt, "I let the moment pass." In politics, he finally learns that while journalists may appreciate a razor-edge comment, it always comes back to bite you.
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July 1992-November 1993
Good government, independent thinking, the love of the fight for the right thing ought to begin herethe enthusiasm of it all. Hang it, I can't express it; but the idea is immense, and no one sees it.
Owen Johnson, Stover at Yale
Under the stage of Madison Square Garden, I stood in a conga line behind Mike Dukakis. The foot-stomping event above me was the Democratic National Convention of 1992. I was on my way to dance on television, along with hundreds of others, in honor of the party's nominees for the only two nationally elected offices in our democracy. The line began a rapid shuffle upstairs. I worried about tripping and falling on the former Democratic presidential candidate. I hoped my wife, Betsy, was watching on television back home in Bethesda. I wondered if the cameras would single me out. Perhaps I should have worn a funny hat; but that had not worked well for Dukakis.
We broke into the noise. Dukakis was swept up a level on the stage; I was shunted toward the bottom. Strobes played over our ranks. "Don't stop thinking about tomorrow," sang Fleetwood Mac. "Yesterday's gone. Yesterday's gone."
Yesterdayand if I wanted, tomorrow and all the days thereafter until retirementI was a lawyer at Latham & Watkins, a successful national law firm. Long hours, hard work, good money, seventeen years of seniority so far. But in the Garden, I was a jiggling prop reeled onstage by the convention choreographers, third dancing line down from the top,stepping left and then right, left and then right, through innumerable renditions of the same song.
Above the dance lines, on the highest level of the stage, stood a fellow I had gone to high school with and another I knew from law school. The former, brown-haired, hazel-eyed, shy, strong, smiling. The latter, taller by a couple of inches, gray-to-blond bushy hair not much shorter than it had been when I met him in Admiralty class in 1972, seeming to greet everyone in America by his or her first name as he beamed at the distant camera. The former, Al Gore; the latter, Bill Clinton. They held uplifted hands. They believed they were on the way to the White House.
I started thinking about tomorrow, as Fleetwood Mac insisted. If my friends won the general election, I would be, according to my research, the only person in American history to have gone to high school with the Vice President and to law school with the President. Such syzygy of coincidence should not be under-utilized. If yesterday was gone, I had better make a plan for the future.
The day after the November 1992 election, Al Gore's closest advisers sat in attendance on the Vice President-elect in his modest suite at the Colonial Hotel in Little Rock. Al grinned at us and said, "Now we're running the White House. This is going to be fun."
We all laughed. Government would be fun. We would slay enemies, reward friends, celebrate victories, and find out what the Navy stewards served at the White House mess.
Al proceeded down a list of things to do, assigning everyone some task. He asked me to serve on Bob Reich's economic policy planning team. I had been at law school with not only the President-elect but also Professor Reich of Harvard, as well as Hillary Clinton and other members of Bill Clinton's team. I would be a good bridge between the Clinton and Gore camps.
Al would stake out both the environment and communications as his domestic policy specialties. Reich assigned me the job of outlining the Administration's agenda for the environment. I would work with Al's congressional aide, Carol Browner (destined to be head of the Environmental Protection Agency), and another of his aides, Katie McGinty (eventually head of the Council on Environmental Quality).
For the purpose of carrying out Al's vision for the information highway, the most important presidential appointment was chairman of the Federal Communications Commission. Inside the Beltway, the FCC drew a great deal of contempt from lawyers and lobbyists. I did not understand the reasons, but the private sector generally disparaged the Commission's methods and accomplishments. Partly for this reason, the FCC chairmanship was somewhat obscure and none of the President's many close friends sought the post. Nor did Al have a particular candidate from his own circle.
I had long wanted the opportunity of public service. Al's interest in promoting new technologies meant that it could be interesting and even important to be the chairman of the Federal Communications Commission. If the Vice President-elect wanted to cause change in this part of the economy, he needed someone dependable at the FCC. I decided to seek the post.
To broach the subject of my ambition, I had lunch with Roy Neel, designated to be Gore's chief of staff. In the clatter of the cheap silverware and heavy china of the Excelsior Hotel coffee room in Little Rock, open to the lobby where other office seekers could see us, I could not hear what Roy was saying. I asked him to repeat.
He said, "It's kind of cold in Little Rock in November, isn't it? I was freezing at the election party. Did you think Al went on too long? It didn't seem to bother Clinton. They sure make a great couple of families."
Roy continued, "I wish we could move back to Washington right away. Have to wait for inauguration, I suppose; that's traditional. So Al will have to stay at the Colonial at least through Christmas. Then he's going to have to move from Arlington. He won't like that. Loves his neighborhood, and I hear the Vice President's mansion is a rat trap, wind blowing through the clapboard."
He explored his soup with his spoon. "Now who do you think should be secretary of Education or Labor or HHS?" he asked. "The Governor, or President-electwhichever we're supposed to call himasked Al this morning."
Ignoring his question, I made my move, "Roy, I would like to be chairman of the Federal Communications Commission."
I explained that as Al's lieutenant at the most important communications agency, I could effectively implement his agenda. And, I added, from the work of Bob Reich's committee I could tell that the new Administration would want to promote investment by pushing a pro-competition agenda. In that event, an antitrust lawyer like me would be the right sort of person for the job.
"What's your second choice?" asked Roy, as he brought the bisque up from the bowl.
"There isn't one."
He took a sip of iced tea and said, "Well, I'll see what Al thinks. Did I tell you that the Clintons gave me golf balls and a golf shirt for my birthday? Wasn't that thoughtful?"
Everyone in Washington knew that Roy would rather play golf than do anything else in the world. But how did Bill Clinton know? Bill Clinton knew everything about everyone.
Several weeks later, Al said to me, "You've got to understand distance learning. I need you to study the impact of the media on families. We have to see the world through the eyes of a child. And we have to get the economy going through private investment instead of public spending, because we're going to balance the federal budget." When the meeting was over, Roy explained that Al had promised he would do what he could to get me the FCC job.
What could be more aggressively named than Renaissance Weekend, with its suggestion that the work of several centuries could be re-created in a couple of days at a resort? This annual gathering in Hilton Head of mostly modestly accomplished folks for easy-going seminars and a very staid New Year's Eve celebration was elevated in 1992 by the election of one of its own to the presidency. Suppressing the embarrassment of demonstrating ambition, I attended. I looked everywhere for the President-elect, but I found him nowhere.
Then, out running on the beach one morning, I encountered a hoard of bicyclists. Leading the pack like a tame, suburban version of Marlon Brando in The Wild One was Bill Clinton. I had seen him twice in the two decades since law school. As he passed, he called out, "Hello, Reed!"
Possibly he had studied the weekend guest list. Possibly he recalled that I had loaned him notes from tax class. But my heart skipped a beat at the hope that Al Gore had sold him on my candidacy.
However, the weeks passed, and rumors about the FCC were discouraging. In politics, all rumors are true. Another person was offered the FCC nomination. Miraculously, she declined the post. Then, in March, as I was leaning back in the chair in my law firm office, pondering questions I would ask at a deposition the next day, the phone rang.
"Hello, Reed? This is Al."
"Hello," I said, pulling my feet off the desk as if the Vice President had just walked through the door.
"The President is going to nominate you to be the chairman of the FCC."
For almost six months I had dreamed of this moment, and when it arrived I almost fell out of my chair, literally.
"Did you hear me?" asked Al.
Sitting up straight, I said, "I'm so grateful. I won't let you down. Or the President."
"Just do the best you can for the country," said the Vice President. He paused, and added, "Don't forget, public service is a privilege."
He hung up, and I realized my career had suddenly changed in a rare way. The President makes only about 500 Senate-confirmed appointments at the beginning of an Administration. I owed the job to Al Gore, of course. Indeed, I had never even been interviewed for the FCC chairmanship.
My duty, as I saw it, would be to fulfill Al's vision for the information highway. We would cause the new technologies of communications to spread across the country. We would not use public spending; the deficit precluded new spending. Instead, the Democratic Congress would rewrite the 1934 Communications Act to replace monopoly with competition, in accordance with Al Gore's wishes. Academics had long argued for this policy. It followed logically from the 1984 breakup of AT&T into a long distance company and the seven separate local telephone company monopolies called the Baby Bells. After this divestiture, competition had flourished in the long distance telephone market. Now it was time to introduce competition in the local markets. The technical regulatory challenges, I believed, were within the competencies I had developed in 17 years of litigating in antitrust and communications. From the White House, Vice President Gore would negotiate the new law with Congress, and at the FCC I would handle the fascinating details of issuing the regulations that put any necessary law into specific meaning and effect.
Upon announcement as the President's choice on June 29, 1993, I contracted laryngitisa metaphor for the speechlessness urged by White House handlers on all nominees pending Senate confirmation. Cindy Skrzycki, poison-penned gossip columnist for the Washington Post, phoned me at home.
"What is your agenda?" she rasped.
"I can't talk to you," I croaked.
"That's what they tell you, isn't it?" she hissed. "Your handlers? Can't you give me any reason why you should be FCC chairman?"
"I can't talk to you."
"Not even one reason?"
"I really can't," I coughed.
She snapped, "That's ridiculous."
"No," I eked out of my throbbing throat, "I'm sick."
"Oh," she said, "that's a new excuse. You're faking, aren't you?"
Not really. If we could create the right marketplace conditions for investment in new technology, then private funds might build the information highway. But how exactly the Administration wanted Congress to rewrite the communications law, I did not know. And what, by the way, to do about violence on television, I had no idea. Not only did I have no new or old answers, I could scarcely describe the issues.
The White House staff assured me, however, that the confirmation process is when the nominee does not reveal the answer to any question. Everything is to be taken "under advisement." In the absence of information about my views, the industry magazine Broadcasting & Cable ran my photo on its cover under the label, "Mystery Chairman." A lobbyist for a public advocacy group told the press, "He looks splendid on paper and seems to have the right equipmentintelligence, understanding of the D.C. scenebut there are lingering doubts because he is an unknown quantity and has no track record."
Despite the dubiety, the Senate reviewed my financial statements, tolerated my "courtesy visits" to each of the Senators on the Commerce Committee (which had supervisory jurisdiction over the FCC), and held a committee hearing. Learning of my willingness to work with all the Senators on everything, the Senate Commerce Committee voted on me favorably, and I then began the wait for a full Senate vote. Meanwhile, as these steps in the process consumed the summer, Al Gore assembled a communications policy team, including Greg Simon from Al's staff; Commerce Secretary Ron Brown and his representatives Jonathan Sallett and Larry Irving; Gene Sperling from Bob Rubin's economic advisory team; Joe Stiglitz from the Council of Economic Advisers; Sally Katzen from the Office of Management and Budget; Anne Bingamann, head of the Antitrust Division of the Justice Department; and myself, albeit still as a private citizen. We began to design a complete revision of existing law.
A dozen of us met at least once every two weeks in Al's West Wing office, large by the standards of the White House, but small for our group's size. In each meeting, Al proceeded down a checklist of items. He heard discussion, asked questions, then resolved each matter with an explicit and prompt decision.
In order to promote economic growth, the group wanted to stimulate investment in new communications technologies. In order to produce consumer benefits, we wanted to promote competition. To these ends, Al and his team crafted a policy that reversed the century-old ordering of the information sector into separate monopolies, each tightly regulated by the FCC and local governments.
We wanted to permit the cable companies to compete in the telephone business, and the telephone companies to sell video, encouraging these industries to rebuild their networks to sell multimedia content against each other. We wanted to order the local Bell telephone companies to lease their phone lines to competitors. We planned to forbid the Bell companies from entering into the long distance business until competition actually existed in the local telephone market. And so forth, for months, the Gore team made dozens of separate decisions amounting to reform of almost every element of existing communications law.
At the end of one meeting, Al said, "Now we have to do something to connect the schoolgirl in Carthage, Tennessee, to the information highway."
We all grinned.
"I've used that expression before, have I?" he asked us.
Everyone continued to smile, and he deadpanned an earnest look. He had included the image of the Carthage schoolgirl rolling down the information highway in hundreds of speeches over the previous decade. "Should we put in the law a prohibition on that metaphor?"
"Whatever you say, Mr. Vice President," said an attention-seeker in the back of the room.
Al pretended to make a note in his pad. He often tried out his jokes to these friendly audiences. If we did not laugh, the press certainly would not. One of the requirements of public office in America is to be a stand-up comic, but the patter has to be self-deprecatory. Professional comedians rarely make jokes that put themselves down; another double standard.
"So what about education?" he asked.
"We need to build networks into schools," I said.
"Schools must already have telephone lines," said someone in the back.
"Telephone lines are surely in every school's principal's office," I said. "But if we want to make a difference in the way teachers teach and the way kids use technology, we have to build networks that connect to kids in their classrooms."
"This is a good thing," said the Vice President. No one disagreed. Not much more was said in those 1993 meetings about the reason to connect all classrooms to the information highway. Only later, for unforeseen reasons, did we develop a detailed explanation of the importance of this national mission.
In that first year of the Administration, our thinking on this topic was simple. Our agenda was stated in the campaign. We won. Now we had to fulfill the campaign promises. One was to use technology to improve education. Al Gore had long wanted this. And I wanted to do something for education from the FCC, based on my own difficult experience as a teacher in a public school after I graduated from college. I learned then that in public schools, America teaches inequality of opportunity to its next generation. The haves learn that they get everything the rich world can offermore money spent per student, more athletic facilities, more art and more science, more, more, and more. The have-nots are taught that the country denies them an equal opportunity to learn: that is why their school buildings are decrepit and their books are old and their art classes are canceled and their sports equipment is second-hand. In our time, technology is a critical path to opportunity. Al Gore wanted it to be a benefit that was extended everywhere and to everyone on an equal basis. In that way we would improve not just the quality but also the equality of education.
In that long-ago year of 1993, Marc Andreesen and Netscape had not yet popularized the Web browser. Word of the universal addressing system called the World Wide Web (www), accessible through the footnoting technique known as hypertext markup language (html), had only begun to reach Washington. It was during our planning of the new communications law reform that Jon Sallett at the Commerce Department and Greg Simon, Al's chief domestic policy adviser, first showed me these "cool new tools" on their computers, and under Gore's leadership, the Administration quickly began putting government information on the Web. But in the Vice President's office, we did not talk about putting the Internet in classrooms; we did not know what specific technology would bring change to the education world. We only believed that government should guarantee that all necessary beneficial technologies were available equally to all students and all teachers.
Lines or pipesthe connections included in Al's term "the information highway"were the physical links necessary to disseminate the new opportunities of technology to everyone. If these links were built to all classrooms, teachers, and students, then revolutionary change would come to education. The dimensions of the change were unforeseeable. But less than one percent of all spending in education was dedicated to technology. That amount would have to be doubled or tripled in order to link every classroom to the information highway. Cash-strapped public schools did not have the financial resources for this new spending; only schools for the well off would provide the new technologies to students. If the national government did not act to link all students to the information highway, then Gore's vision of the connection between any schoolchild and the world of knowledge would not be fulfilled.
As Al Gore formed the Administration's communications policy, the Senate and House Commerce Committees, led by Senator Ernest Hollings and Congressman Ed Markey, also moved forward with telecommunications reform bills. Negotiations among the Administration and these two powers produced a Democratic consensus that a new law should repeal the 1934 Communications Act's authorization of communications sector monopolies, subject to FCC regulation on the prices and services of the monopolies. Underlying this agreement was the desire of different industries (cable, local telephone, long distance telephone) to gain regulatory advantage against their rivals. Despite differences on the role of the Department of Justice, Democrats generally agreed that the FCC should be given the power to write rules that opened the local telephone, long distance, and cable markets to new competitors and that protected consumers from monopoly prices. As chairman of the FCC, I would have the interesting, technical, lawyerly job of doing that work.
Senator Bob Dole, Republican minority leader, extracted various prices from the White House before permitting my confirmation vote in the Senate. He demanded the right to pick one of the Republican members of the Federal Election Commission. Then he insisted on selecting a Republican commissioner for the FCC from a list submitted by the White House, which his staff said could only include Real Republicans"meaning they had not publicly supported Bill Clinton.
The FCC is an independent agency with five commissioners appointed by the President and confirmed by the Senate. The President selects one of the commissioners to be the chairman. Only three of the commissioners can be in the same political party as the President. The agency's rules and orders are enacted when a majority of commissioners votes for them. The Commission's authority to write detailed rules and specific orders comes from laws passed by Congressthat is why Congress regards the agency as its creature, whereas the White House prefers to think of it as related to the Administration.
The new President had only one Democratic seat to fillthe chairmanship. Incumbent Democratic commissioner Ervin Duggan was a Bush appointee, but I was told he was a friend of Bill Clinton's from Renaissance Weekend and would be helpful to me. Commissioner Jim Quello, 79the chairman pending my confirmationnominally filled a Democratic seat, but that was only a flag of convenience he had been asked to fly by Presidents Nixon, Ford, Reagan, and Bush each time they had appointed him. Republican commissioner Andrew Barrett's term ran until 1996. However, if Dole picked a "Real Republican" for the other Republican seat, then that appointee could join Barrett and Quello to form a majority against me.
On the other hand, if Democrats Jim Quello and Erv Duggan were with me, I would have the upper hand. Despite the closeness of these calculations, I believed that, regardless of party labels, we at the Commission would take our decisions judiciously, with a minimum of partisanship. In the high-minded atmosphere generated by legal and economic analysis, I assumed that, as a career advocate, I could persuade the others to adopt my point of view, such as it might be on a given issue.
While waiting on Dole to allow the confirmation vote, I persuaded a friend of nearly 20 years, Blair Levin, to become my chief of staff when I was confirmed. Upon my confirmation, he would leave his North Carolina law firm, and at the end of the school year move his wife and children to Washington. During the weeks before the Senate confirmation, commuting from North Carolina by car every Monday morning (a dawn ride through the tobacco fields), Blair joined me for confidential meetings with each part of the Commission.
The FCC career staffers swaddled us in details, acronyms, procedural requirements, legal prohibitions. They told us little of the Commission's inner workings. Their reticence suggested distrust. Or perhaps they anticipated a short term of office for Blair and me. That was not unusual for political appointees. If I stayed only a couple years, there would not be much reason for the career staff to teach me, much less to take any political risks for me. Or possibly they were only waiting to be told what I planned to do at the Commission.
I learned that the historical tradition of the Commission was that the chairman, working with the bureaus among which the Commission's jurisdictions were allocated, made the tentative decisions on major issues. The lobbying corps, press, and congressional staffs judged the chairman on whether he obtained majority votes for his recommended decisions. These expectations encouraged the chairman to compromise issues with other commissioners, so as to be sure of obtaining a majority. This process encouraged commissioners to run the agency by committee. During his interim chairmanship, Jim Quello created such a committee; it was his chance to run the agency in the way he had preferred in his nearly 20 years as a commissioner. If, as chairman, I adopted the same method of governance, Quello would retain enhanced power even upon return to the status of commissioner.
Each bureau and office of the Commission briefed me on its reason for being and explained the various "items"proposed rules and ordersthat it was preparing for Commission vote. In several thousand decisions per year (of which several hundred were voted by the commissioners and the rest made by bureau and office chiefs), the Commission determined the shape and the rules of the information sector of the economy. A feature of the Commission, as far as I could tell, was that in some respects it regulated too much, in others, too little. Some determinations were wildly wrong, in that the rules shrunk economic growth, limited jobs, increased prices to consumers, and minimized entrepreneurship. Other determinations were arguably useful to business and, occasionally, consumers; but these often appeared compromised, incomplete. Even as the staff taught me the substance of the Commission's work, the question of which rules were right and which were wrong was hardly discussed. It was as if the decisions emanated from an invisible and unalterable machine.
In sum, the FCC drew a blueprint for the most important economic activity of the country: the information sector. In this part of the economy, then about seven percent of the whole, five lanes of the information highway ran toward the future: broadcast, cable, wire, wireless, and satellite. Since the 1934 Communications Act, these were legally separate industries; for the most part none was permitted to compete with any other. Each was regulated so as to work well and to earn steady but unspectacular profits. FCC rules kept the monopolies intact, and drew the dividing lines between the lanes.
Over the decades, technologies evolved in ways that threatened the legal division between industries: different delivery mediums could deliver similar content and services. To maintain separateness, the FCC's rules grew increasingly complex and ridden with compromises. For example, I learned that under the rules, television broadcasters had a right to have their wares distributed on cable television channels, but they could not buy cable companies. Local telephone companies could not provide long distance service to consumers, but they could charge long distance companies an average of six cents per minute for originating and terminating long distance calls. Local television stations could not merge with local newspapers, but newspapers could buy television stations in cities in which they did not publish. By the 1990s, academic commentators had concluded that the hodgepodge of regulatory restrictions made no sense.
Technological advances permitted firms to enter new markets. Relaxing restrictions on the use of technologies could be pro-competitive. For example, the telephone companies could use new technologies to deliver video to the home and, even more readily, could offer long distance at new cheap prices. Consumers should enjoy the benefits of convergence of technologies and business organizations: specifically, consumers should have a choice of sellers, who would become both innovative and efficient in order to compete successfully.
Behind the existing rules, however, were two unwritten principles. First, by separating industries through regulation, government provided a balance of power in which each industry could be set against one another in order for elected figures to raise money from the different camps that sought advantageous regulation. Second, by protecting monopolies, the Commission could essentially guarantee that no communications businesses would fail. Repealing these implicit rules was a far less facile affair than promoting competition.
Between 1983 and 1993, for instance, the country had two cellular telephone companies in every geographic area. These companies did not compete vigorously on price or quality. They built the worst quality, most out-of-date cellular systems of any developed country in the world. But in this duopoly system, each cellular telephone company generated great value for investors.
The two-firm market was protected by the FCC's refusal to make more spectrum (or airwaves) available for cellular firms. But in the Omnibus Budget Reconciliation Act of 1993, passed by Al Gore's tie-breaking Senate vote, the Democratic Congress gave the FCC authority to dissolve this oligopoly by auctioning new licenses. Consumers, and the economy, would benefit hugely from the investment and innovation in wireless markets that followed, but existing companies reacted negatively to the threatened deterioration of their political alliances and the effects of new entry into their markets.
The Clinton Administration had the conviction that astute and sharp-edged rules could open markets to competitors not only in communications but in energy, environmental technology, health care, and other markets. In every market, some firms would succeed, others fail. But the competition would create choice for consumers, and the diversity of the competitors would weaken the political influence of the big, established (and typically Republican-leaning) firms. The new competitive markets would stimulate investment in new technologies and lead to fair prices for consumers. All five lanes of the information highway would converge in a race to tomorrow (which we would not stop thinking and talking about). If Congress passed the new telecommunications reform law that the Vice President wanted, I would then receive the delegated power to put the new convergence blueprint in place. In a couple of years, my job done, I could return to law practice, like Cincinnatus back to the farm.
As I waited through November for my Senate confirmation vote, I arranged to meet the popular Jim Quello for lunch at the Palm on 19th Street, across the street from the Commission building. Aware that I needed a voting ally and a mentor in the ways of the Commission, I assumed my place in Quello's "favorite booth," where Jim greeted a legion of well-wishing lobbyists under a huge cartoon painting of his cheery countenance.
He opened with what I hoped was the bottom line: "Kid, I'll support you all the way. I'm loyal. I know who got my mug on the wall." He referred not to the painting but to the addition of his photograph to those of the other FCC chairmen that were displayed on a wall in the Commission meeting room. That was by dint of President Clintons selection of him as chairman while my nomination was under Senate consideration. He assured me that he knew Al Gore was responsible for picking him over the other incumbent Democratic commissioner, Erv Duggan. Knowing nothing about the facts of the matter, I nodded.
Quello continued over his corned beef hash, "But I've got some advice for you."
I leaned forward to listen.
Poking his chin at my sole, Quello said, "Kid, don't order the special."
He explained that the regular meals on the menu were less than ten dollars; the waiter's daily additions, always about twice as much. I got it. From time to time, he would take me to lunch at the Palm (meaning, he would teach me the Commission's ways) as long as I did not order the specials (there were limits to his support). I said I looked forward to regular lunches (I'd be his ally). Afterward, he commented to the Associated Press, "[Hundt] looks like a very solid guy. I'll help him."
Yet I was still not confirmed as the end-of-the-year congressional recess approached. Blair Levin had a friend at the White House fax us the Administrations list of choices for possible Republican nominees for commissioner, culled from letters sent to the President by a hodgepodge of interest groups and Congressmen. I found a reference to a lawyer from California, Rachelle Chong. Nothing in her file revealed a vote for Bill Clinton in November 1992. I put her on a list that, with a push from the Vice President, the White House sent to the Senate minority leader for his review. Predictably, Dole found "Real Republican" Chong's profile compelling and selected her. The White House promised that she would be nominated when the Senate returned in January. On this understanding, on November 20, 1993, a day before the Senate adjourned for the year, Senator Dole permitted me to be confirmed.
The Vice President swore me into public office on November 29, 1993. My family and Jim Quello met the Vice President in his glittering ceremonial office in the Old Executive Office Building and walked from there through the hallways to the high-vaulted, cacophonous Indian Treaty Room (the room where Native Americans had signed away their claims on the continent). In the classic triptych of our democracy, I raised my right hand while placing my left on the Bible (Old Testament only) that my wife Betsy held, and as I looked at Al, I repeated the oath after him (part of its magic), swearing with all my heart to protect and defend the Republic from all enemies foreign and domestic (and who would decide who they were?).
Then it was my turn to speak to the crowd, according to the custom. I was amused to recall that when we debated in Government Club on Thursday nights in high school, I had never successfully silenced Al. But now I had him, the Vice President, in a captive audience.
I conceived of my job as calling for an opaque, judicial demeanor, but I knew the occasion called for something personal. As a compromise, I told the story of my father's childhood.
During the Depression, when my father was nine years old, his father died. His mother, my grandmother, was left jobless, living in an apartment in Milwaukee. She got a job as a switchboard operatora new invention of the telephone industry. The communications revolution kept the mother and son going. My father went on to the University of Wisconsin, and after the war he got a law degree on the G.I. Bill. In turn, I explained, I received the education that had led to my wonderful opportunity to help build the information highway to all Americans.
"If by our work at the FCC, I can add only one job," I concluded, "I will call my family's account with history balanced."
A smattering of applause, not too long, but long enough in the echoing room. Al grabbed me by the arm and whispered to me briefly before trooping down the Secret Service-marked path to the elevator and the next event in his day of ceremonies and deliberations, experiences of pomp and exercises in persuasion. "Only one job," he said. "That's good. Best not set the bar too high."
The night I was sworn in, Betsy and I went to the White Housefor the first time not as touriststo a jazz concert hosted by Ameritech, the midwestern Bell telephone company. We sat with Jim Quello and his wife, Mary.
Quello leaned across his wife and said, as he had at the Palm, "I'll work with you. We need to knock those cable rates down. You can count on me." Then the President and the First Lady entered the room like gods descending to Ilium, unpredictably altering human destiny, immortal (at least through 1996). Ameritech's fate depended on how the Administration chose to rewrite the nation's communications laws. The company's corporate officers sat with the President. I was in the back of the room with Quello. The Commission had its place in the pecking order of Washington, and it was not that high. But from the quaint, edenic politics of friendship, I had won the job I wanted.
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Meet the Author
Reed E. Hundt is senior adviser at McKinsey & Co., an international business management consulting firm. He also teaches at Columbia University’s business and law schools and at Yale Law School and Yale School of Management.
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