A Rising Star Begins to Dim : FCC Chairman’s Influence Fading Fast, Analysts Say

After stewing over press leaks that cast his leadership in an unfavorable light, FCC Chairman Reed E. Hundt earlier this year fired off an e-mail message urging his fellow commissioners “to respect our decision-making process by not conducting or revealing that process in the media.”

The head of the Federal Communications Commission was furious over what he termed “wildly inaccurate” news reports about an FCC review of eight Fox TV stations that were alleged to be foreign-owned in violation of U.S. law. Hundt complained that leaks of the confidential review made “a mockery of our process.”

But Hundt’s appeal for greater discretion fell on deaf ears: His e-mail memo was promptly leaked to the press too, bringing the beleaguered chairman further embarrassment.

The ride has suddenly gotten bumpy for America’s top cop on the information superhighway. Hundt, 47, who two years ago catapulted from being a little-known Washington antitrust attorney to one of the most visible and influential operators in the nation’s capital, now finds himself and his powerful agency under siege.

Virtually abandoned by his White House benefactors and increasingly disparaged by his co-workers and the media at a time when many Republicans are calling for the abolishment of his agency, Hundt finds his influence “shrinking faster than the surgeon general’s,” Adweek magazine recently observed.

The turnabout has translated into even more delays and infighting at an agency that, even under the best of circumstances, has trouble making its often-complex and controversial communications policy decisions with dispatch.

And the FCC’s responsibilities have never been greater: The agency is now in the midst of redefining how the burgeoning telecommunications industry will expand to serve business and consumers with new technology.

Critics say the FCC--which in the 12 months before Hundt’s arrival made a slew of major rulings, including imposing 500 pages of cable rate regulations, approving new wireless communications services and resolving an impasse over network TV financial syndication rules--has slowed to a crawl under Hundt’s stewardship.

Telephone companies, for example, waited years for the FCC to act on their applications to offer video programming over their communications networks. By the time the agency began examining them this spring, technology had changed so dramatically that at least two phone companies have sought to suspend their requests, saying they needed to re-evaluate how best to deploy the service.

Meanwhile, scores of entrepreneurs--like satellite radio pioneer David Margolese and Shant Hovnanian, a real estate developer who helped create a new wireless cable TV system--have waited two years or more for the FCC to give them a green light to market their inventions.

Similarly, the FCC has collected no money since fining Infinity Broadcasting Co. $6,000 in 1989 and issuing another $1.7 million in “notices of apparent liability” in the ensuing years, following listener complaints that Infinity aired indecent broadcasts by shock jock Howard Stern.

“We last responded to the FCC in 1993 and I haven’t heard from them since then,” Infinity lawyer Steve Lerman said.

Although Hundt is armed with a quick wit, an easy smile and powerful friends such as former schoolmates President Clinton and Vice President Al Gore, his woes, some say, stem from his injuring of Washington egos.

“At best, Reed Hundt is a very powerful voice for competition; at worst he is central casting’s answer to a runaway bureaucrat,” said Thomas Hazlett, a former FCC chief economist who briefly advised Hundt before he joined the agency. “His downfall is that he tends to personalize things too much and gets too defensive on some of the issues.”

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That assessment is an abrupt reversal from last winter, when Hundt was receiving kudos for raising $9 billion in the federal government’s first auctions of the airwaves and accompanying White House officials around the globe to spread the information highway gospel.

Back then Hundt was a rising star.

Taking to heart Clinton’s goal of “reinventing government,” Hundt moved with religious zeal to overhaul the FCC. With a reach that extends from broadcast television to telephones to the review of electronic equipment makers to ensure that their products don’t produce electronic interferences, the FCC has enormous influence over some of the world’s biggest industries--but has not always seemed up to the task.

Hundt helped modernize the agency and engineered an extensive shake-up of its staff.

With the burgeoning communications industry playing an ever bigger role in the nation’s economic and social life, Hundt by the end of last year was being hailed by American Lawyer magazine as “the most powerful lawyer in Washington.”

For a while, Hundt was able to enjoy the glory. “The proudest day of my entire career was giving the President a check for $7.7 billion,” representing the amount raised in the biggest of the airwave auctions last winter, Hundt said. “That’s not too shabby.”

Hundt said the efficient auctions--which took a scant 18 months--show that the FCC is “not just oatmeal in the gears of the great American economy. We’re trying to create opportunities for new businesses, to solve problems that businesses can’t solve on their own and make sure consumers have a voice.”

And it’s certainly true, as Hundt’s supporters say, that much of the ire recently directed at the FCC chairman reflects the frustration of lawyers and businessmen who did not get their way. Even some past commission officials who have had differences with Hundt say the agency’s present squabbles are no worse than in previous FCC administrations.

Infighting at the agency “is endemic and historic,” former FCC Chairman Mark Fowler said. “I remember one commissioner actually picking up a chair and threatening to bring it down on my head.”

Today, however, FCC detractors are not just after the head of the chairman: They’re seeking nothing less then the outright abolition of the agency. The Progress & Freedom Foundation, a nonprofit group allied with House Speaker Newt Gingrich (R-Ga.), released a report asserting that overzealous regulation by the FCC has thwarted competition and new services in the telecommunications industry--and that the agency therefore ought to be dismantled.

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Congress is unlikely to close down the FCC. But the foundation report has found a receptive audience on Capitol Hill: Its findings were invoked by conservatives during the recent Senate debate over telecommunications reform legislation.

This political groundswell, along with the growing complaints about Hundt’s “litigator style” personality and political naivete, have rendered some of his information highway missions at the FCC mission impossible.

Emboldened by the Republican majority in Congress, Republican Commissioners Andrew C. Barrett and Rachelle B. Chong have begun forming voting blocs with frequent Hundt critic James H. Quello, a Democrat, and even Hundt ally Susan Ness, to block the chairman or force him to significantly alter his positions.

Hundt, for example, failed to build a consensus among fellow commissioners to force broadcasters to air more children’s TV. And he was unable to win unanimous support for a complex FCC staff proposal that--among other things--recommended fining media mogul Rupert Murdoch $500,000 and forcing him to undertake a costly restructuring of his Fox television network for allegedly running afoul of U.S. foreign-ownership laws.

Hundt’s difficulties have been most apparent in his run-ins with Quello, an easygoing 81-year-old Democrat appointed to the commission by President Richard Nixon.

“You have to be able to disagree without being disagreeable,” Quello said of Hundt. “But the chairman doesn’t seem to understand that. He has a rather hard-nosed approach.”

Quello echoed other critics’ sentiments that Hundt’s management of the agency has harmed policy-making and helped fuel the outside political attacks.

Barrett, the only African American on the commission, has also clashed with Hundt.

In an incident a few weeks ago, Barrett and Hundt engaged in a bitter exchange after the chairman gave a long discourse defending his decision to oppose using lotteries to allocate licenses for a new wireless service.

“I have never, ever been so insulted as to have someone tell me that because I disagree with them I have not voted in the public interest,” Barrett said at the meeting, after Hundt sided against him, Quello and Chong.

“There’s no personal content to this,” Hundt said. “The court often rules that the FCC . . . “

“Then let the court decide that,” Barrett interrupted, “because you are not the court.”

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For his part, Hundt says he has never publicly disparaged any commissioner and says he gets along with everyone, including Quello.

“I don’t necessarily agree with every policy call [Quello] makes, and I know he doesn’t agree with every policy call I make, but we get along great and he’s a wonderful guy,” Hundt said.

Hundt’s closest ally on the commission, Ness, echoes Hundt’s claim that only a fraction of the 600-odd commission decisions made during Hundt’s 18-month tenure have generated much dissent--and notes that the tougher issues under consideration by the FCC make winning a broad consensus more difficult these days.

With Congress nearing a final vote on sweeping reform legislation that may give the FCC important new duties to police a more freewheeling telecommunications marketplace, the issues could get tougher still. But Hundt believes the new duties will also enable his agency to once again reaffirm its relevance--and its role as an advocate for the consumer.

“It is rhetoric--not reality--to talk about slashing us or eliminating us while this country is just about to get into a position of really needing a referee for the big telecommunications battles” that loom, Hundt said.

“Fundamentally we are the ones who are in charge of advocating the public interest,” he said. “You can’t just let business privatize the whole thing. . . . I will be a part of the debate.”