Telecom Upheaval : FCC’s Hundt to Resign; Departure Will Leave 4 Vacancies

WASHINGTON — Reed Hundt, the politically well-connected lawyer who presided over a radical restructuring of the U.S. telecommunications industry, said Tuesday he would resign as chairman of the Federal Communications Commission.

Hundt said he would stay on as FCC chairman until after his successor is on board, which could take several months. His five-year term on the commission does not end until next year.

Hundt’s seat will be the fourth on the five-member FCC that will need to be filled in short order by the Clinton Administration, which has already nominated two Democrats and one Republican to the three other seats that are now coming vacant.

The vacancies come as the FCC faces a number of key issues, including the nation’s transition to digital television, possible regulation of the Internet and a review of the proposed merger of British Telecommunications and MCI.

Nevertheless, industry observers said they doubted the changes in personnel would lead to any significant changes in the regulatory initiatives already underway.

“The die is cast,” said Laurence E. Harris, senior vice president and general counsel of Associated Communications, a Virginia-based developer of local microwave communications networks. “We’re on the road to more open competition” in telecommunications.

Hundt’s departure means the loss to the FCC of an aggressive, and frequently contentious, regulator who moved fast to implement congressional mandates to expand competition in a deregulated telephone industry--but also espoused stronger regulation of television content aimed at children.

“Obviously he’s been a great champion of the public interest and will be sorely missed,” said Donald Gips, chief domestic policy advisor to Vice President Al Gore.

In more than three years on the job, Hundt oversaw the implementation of the Telecommunications Reform Act of 1996, a complex process opening telephone service to a wide range of local and national phone and wireless communications competitors; began a multibillion-dollar series of auctions of public airwaves to private TV and telecommunications companies; and set terms for the conversion of U.S. broadcast television to digital technology.

In the process, he irritated many business leaders and members of his own commission with what many complained was his arrogant, high-handed approach.

“It has not been a happy commission,” said a telecommunications executive who had followed Hundt’s career. “He’s not good at consensus-building, and he might have achieved more with a soft hand.”

Hundt clashed in particular with Commissioner James Quello, a 30-year veteran of the FCC who is retiring this year. Although the two shared many of the same regulatory goals, their personal relationship was tinged by hostility. At a news conference Tuesday announcing his resignation, Hundt tried to downplay the personal animosity between the two men, observing that of some 1,500 decisions the FCC had undertaken during their joint tenure, they had disagreed over only 12.

Still, Hundt has won high marks from industry executives and other observers for his determined work on implementing the massive Telecommunications Reform Act, which was aimed at setting new rules for competition in the local and long-distance telephone and cable television markets.

Within six months of the act’s signing in February 1996, Hundt’s FCC had promulgated a major set of regulations governing how the regional phone companies, wireless service providers and long-distance carriers would be permitted to compete with each other to provide business and residential service.

Although the regulations have been stayed by a federal court pending legal challenges, many in the communications industry were impressed by the speed with which the complex task was accomplished.

“To pull this off and get the rules in place is really outstanding,” said Frederick Voit, a telecommunications analyst for the Boston-based Yankee Group. “Not everyone agrees with the rules, but he managed to accomplish it when the pressure on him must have been tremendous.”

For all that, Hundt’s legacy does not win unanimous praise from the industry--although given the welter of conflicting interests within the communications business, it might well have been impossible for him to please everybody.

For example, the FCC’s recent decision cutting $1.7 billion a year from the $15 billion annually that local phone companies may charge long-distance carriers for “access” to their local lines angered the latter group. The long-distance companies argued that almost none of the $15-billion charge was justified.

Hundt is expected now to return to private legal practice in Washington with the Los Angeles-based firm of Latham & Watkins--although his name has come up in connection with such jobs as commissioner of major league baseball and chairman of a putative presidential campaign in 2000 by Gore, a personal friend.

Hundt said Tuesday that he has completed a draft of a novel about student life at Yale, where he attended college and law school, and was contemplating a nonfiction book about communications reform.

Among the leading candidates for the chairmanship, according to Washington sources, are Kathleen Wallman, the former head of the FCC’s common carrier (or telephone) bureau, who is currently a White House aide; FCC Commissioner Susan Ness; and William Kennard, the FCC’s general counsel, who has already been nominated for one of the vacant commissionerships and would be the agency’s first African American chairman.

Knight reported from Washington and Hiltzik reported from Los Angeles.