All eyes turn to FCC nominee

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AT&T will on Thursday be given a rare opportunity: the chance to hear what Robert McDowell, a Republican nominee to the Federal Communications Commission who fills a crucial tie-breaking seat at the telecoms regulator, thinks of the telecoms giant’s $67bn acquisition of BellSouth.

Mr McDowell will be testifying before lawmakers on the Senate commerce committee ahead of his expected confirmation by the Senate in the next few weeks.

Although antitrust experts and analysts believe the transaction is not at risk of being blocked by the FCC, which last year approved two other mega-telecoms deals, some say the impact of Mr McDowell’s addition to the commission is hard to judge. His ties to a lobbying group that vigorously opposes the merger raises questions about whether the Republican nominee would side with Democrats at the FCC and seek tough conditions on the deal.

At the time it was announced last month, Mr McDowell’s nomination was seen as crucial for Kevin Martin, the FCC chairman who has been forced to compromise with the commission’s two Democrats because a Republican vacancy has left the five-person commission with a 2-2 split. Mr Martin has been unable to rally enough support at the FCC to tackle controversial issues, including media ownership limits.

The FCC last year unanimously approved AT&T’s merger with SBC, and Verizon’s acquisition of MCI, but imposed conditions that Mr Martin said were unnecessary. The addition of a fifth Republican, along with Deborah Tate, a former regulator from Tennessee who was sworn in this year, would give Mr Martin the votes he needs to approve the merger without conditions.

But it is unclear how closely Mr McDowell will align himself with Mr Martin on the AT&T merger. As general counsel at Comptel, a trade association that represents alternative telecoms companies, the FCC nominee was a vociferous critic of SBC’s takeover of AT&T and Verizon’s acquisition of MCI.

Attorneys and analysts who know Mr McDowell – who, like Mr Martin, worked for the Bush campaign during the controversial Florida recount in 2000 – say it is likely that he would seek to distance himself from his previous industry ties.

“Lawyers represent their clients but when they become judges – or in this case, commissioners – their personal views reflect a broader range of considerations,” says Blair Levin, an analyst at Stifel Nicolaus.

“Last time, the Democrats were worried they could only do so much before a third Republican [was nominated], that provided for a lot of horse trading. That dynamic is certainly different now,” says one former FCC official.

Some regulatory experts say Mr McDowell’s position at Comptel raises questions about whether he will remove himself from the AT&T deliberations. That, in turn, would leave the FCC and Mr Martin with a 2-2 split between Republicans and Democrats.

“Whether or not he has to recuse himself is a matter of timing [of Mr McDowell’s confirmation] and a matter of whether Comptel involves itself in the merger,” says Andrew Lipman, an attorney with Bingham McCutchen in Washington.

Comptel on Tuesday said Mr McDowell, who continues to be employed by Comptel, had recused himself internally from all Comptel policy and advocacy work.

Earl Comstock, president and chief executive of Comptel, has called the combination of AT&T and BellSouth the “anti-competitive resurrection of the old Bell monopoly”.

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