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FCC chief Tom Wheeler, a former cable TV lobbyist, is making his old industry sweat

FCC chief Tom Wheeler, a former cable TV lobbyist, is making his old industry sweat
FCC Chairman Tom Wheeler last year in Spain (David Ramos, Getty Images)

Tom Wheeler, the hard-charging head of the Federal Communications Commission, is a history buff who’s written books on Abraham Lincoln and the Civil War.

Cable TV executives – infuriated at a series of recent agency actions, including placing them under utility-like oversight through his net neutrality initiative – might suggest a new research subject: Benedict Arnold.

Wheeler was a lobbyist for the industry during crucial formative years, from 1979 to 1984, earning induction into the Cable Hall of Fame. When President Obama tapped him to be FCC chairman in 2013, a top cable trade group called the selection “an exceptional choice,” while some consumer advocates worried the nation’s top telecommunications regulator would be too friendly to his former employers.

Fast forward three years and those views have flipped.

Wheeler has become a hero to consumer advocates while the cable industry portrays him as a turncoat.

He’s pushed an aggressive agenda that helped torpedo a major merger between Comcast Corp. and Time Warner Cable and has subjected the industry to tougher regulation. 

Wheeler earned a big victory Tuesday when his net neutrality rules – which Obama strongly backed –  were upheld by a federal appeals court panel after a legal challenge by the cable industry and other opponents.

The actions by the FCC’s Democratic majority reflect the broader approach by the Obama administration to leverage regulation and enhance consumer protection.

There are more industry-rattling changes on Wheeler’s to-do list before he steps down as chairman, most likely after the next president takes office in January.

They include opening up the market for the set-top boxes that cable companies lease to their subscribers, placing tough limits on what cable and other Internet service providers can do with the personal information of their customers and imposing price regulations on data services sold to businesses.

Wheeler said one of his goals is to promote competition to lower costs for consumers.

For example, the average household pays about $231 a  year to rent set-top boxes, according to a Senate study. Allowing third-parties to more easily manufacture rival devices would make it easier for consumers to purchase them instead of renting while also spurring technological advances, such as the ability to stream Web programming through the boxes, Wheeler said.

Last month, Michael Powell, the head of the National Cable and Telecommunications Assn. trade group – the job Wheeler once held  – accused the FCC of targeting the industry with a “relentless regulatory assault.”

And a top Comcast executive recently pondered publicly whether Wheeler’s mantra of “competition, competition, competition” had morphed into “regulation, regulation, regulation.”

“When you look at all these regulations combined it does seem we’re being singled out,” said Matthew Polka, president of the American Cable Assn., which represents about 800 small and medium-size companies.

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FOR THE RECORD

7:11 a.m.  An earlier version of this article said the president of the American Cable Assn. was Michael Polka. His name is Matthew Polka.

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Wheeler, a Democrat, denied he was targeting the cable industry. He said he’s just doing his job in a time of fast-moving change.

“If I were sitting in their shoes and the choice was between regulation or no regulation, there is no question what the answer I would prefer is,” Wheeler said.

“But there is also this public interest obligation and the issue of the rights of consumers in this evolving world, and we’re just not going to go stick our head in the sand on that,” he said.

Richard Greenfield, an industry analyst with BTIG Research, said Wheeler is using new regulations to try to promote competition as cable companies have become the dominant providers of high-speed Internet service.

The top cable companies have about 62% of the nation’s broadband subscribers and are growing much faster than the top phone companies, accounting for 99% of the 1.1 million new subscribers in the first quarter of the year, according to Leichtman Research Group.

In his first speech to National Cable and Telecommunications Assn.’s annual gathering as FCC chairman in 2014, Wheeler said cable TV companies were insurgents when he worked for the industry. Now, he said, they are the powerful incumbents and that more regulation is needed to spur competition.

It’s a big change for cable, said Andrew Jay Schwartzman, a Georgetown University law professor and long-time consumer advocate.

“The cable industry has had a remarkable run of getting favorable treatment from government,”  he said. “Now that they have succeeded in becoming immensely powerful and a defacto monopoly for high-speed broadband in most of the country, the cable industry is understandably unhappy that it’s receiving regulatory scrutiny.”

Not all of Wheeler’s decisions have gone against the industry.

He voted to allow cable companies to raise rates without getting approval from local governments. And he gave the green light to Charter Communications’ purchase of Time Warner Cable and Bright House Networks, although with several significant conditions.

Still, cable companies are fighting back.

The two leading cable trade groups – National Cable and Telecommunications Assn. and American Cable Assn. -- were among the plaintiffs in a lawsuit challenging the net neutrality regulations. The rules prohibit broadband providers from blocking, slowing or selling faster delivery of legal content flowing through their networks to consumers. To enforce them, the FCC changed the legal classification of high-speed Internet service so it could be regulated like conventional phone service.

Although a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit upheld the rules Tuesday, the National Cable and Telecommunications Assn. and other opponents indicated they would appeal.

Cable companies also have joined Hollywood studios, minority programmers and members of Congress in opposing Wheeler’s set-top box proposal.

The cable industry worries that the plan could allow companies such as Google to produce boxes that wrap advertising around programming or viewing guides without having to pay to license the content.

Robert McDowell, a former Republican FCC commissioner, said some people incorrectly assumed Wheeler would be friendly to business because of his work as a lobbyist for cable and later the wireless industry.

But Wheeler “believes in the power of regulation to shape markets,” said McDowell, now an attorney at Wiley Rein.

“Cable’s not alone” in facing tougher FCC regulation, he said. “But cable came from an historic posture where it was less regulated, so this is an ugly new world for them.”

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