Outgoing FCC Chairman Tom Wheeler has often been criticized for his lack of effective leadership (0). Politicization, the decline of analytical work, and lack of transparency have plagued the agency. Perhaps the most challenging job for the new chairman will be rebuilding the agency’s credibility, pushing back the political opportunists, and mending the commission’s internal divisions. Fortunately, previous chairmen have provided some lessons on how to do this.
Stop the wolves at the door
It takes a strong organization to withstand political pressures. Chairmen Reed Hundt, William Kennard, and Michael Powell provide lessons in building the FCC by building its staff. Chairmen Hundt and Kennard served under President Bill Clinton. Mr. Powell was chairman under President George W. Bush.
An imperative for leading an organization is protecting it from outside threats that would derail its work. This was an important quality of Hundt’s chairmanship. He often told the staff, “Read the law. Study the economics. Do the right thing.” This was his way of freeing the staff from political concerns so that they could focus on analyzing policy problems and developing analytically correct solutions. Commissioners would bear the political burdens. Hundt’s approach was also reflected in the work of Professor Michael Katz when he was Hundt’s Chief Economist. Katz emphasized what he called the theory of the case, asking the staff to always answer three questions: (1) What is the problem they are trying to solve? (2) Why is the problem important? And (3) How does the proposed solution actually solve the problem?
Engage the larger mission
Chairman William Kennard helped the agency find a larger purpose by engaging it in helping newly formed regulatory agencies in developing countries learn from the FCC’s experiences with pro-competitive regulatory models. The FCC staff wrote a book (1) – “Connecting the Globe: A Regulator’s Guide to Building a Global Information Community” – that provided insights on establishing and maintaining independence, performing the essential functions of a regulator, providing due process, building trust, adopting regulations that enabled the essentials of competitive markets, and maintaining a hands-off approach to the internet.
Mr. Kennard also ensured that decisions were well formulated before they were voted upon by the commissioners. A common practice at the FCC is for commissioners to vote on a decision and then release text later. Since the 1970s the time interval between vote and release has stretched from a few days to sometimes weeks. Under Wheeler (2) it has been clear that post-voting negotiations resulted in written decisions that were inconsistent with the vote. Under Kennard’s leadership the FCC experienced the shortest time intervals between vote and release since the 1970s, which improved the credibility of the commission.
Build a strong staff
Chairman Michael Powell sought to strengthen the FCC though capacity building for staff, strengthening internal relationships, and helping the staff find greater meaning in their work. One of his initiatives was a four-part program called FCC Best. One part of FCC Best was called FCC University, which provided training opportunities and brought thought leaders to the FCC in forums that allowed staff to test ideas, think more creatively, and gain key insights and new ways of understanding the FCC and the industries it regulates. Another element of FCC Best was a series of town hall meetings – both within bureaus and building wide – and other intra-FCC dialogues that gave staff ownership of how the agency worked. These discussions led to decreases in backlogs, improved communications and morale, and a stronger esprit de corps. Chairman Powell built deep commitment, ownership, personal worth, and shared success within the staff.
Manage political capital
Regulation is about disappointing people at a rate that they can endure. Achieving that proper rate was something emphasized by Chairmen Mark Fowler and Dennis Patrick, who needed to make difficult, but necessary reforms.
Their terms covered some of the most controversial times for the FCC as it addressed issues emanating from the breakup of AT&T and pressures aroused by ending the Fairness Doctrine. Fowler would advise his senior staff, “Use up your political capital to accomplish your goals and then get out,” emphasizing that controversy consumes political capital and managing the spend rate is an important skill for regulatory leaders. During Fowler’s chairmanship, the President was Republican (Reagan) and Congress was majority Democrat. Fowler pushed multiple controversial issues that were consistent with his strongly held beliefs and those of his president, but contrary to the wishes of the congressional oversight committees. He yielded to congressional pressure when it was clear that otherwise his proposals would be overturned by legislation, such as his proposal to end the financial support that interstate long distance services provided to local telephone networks. His modified plan decreased the support, but did not eliminate it. He also cooperated with state utility regulators to put in place backstops and monitoring in case their worst fears of unaffordable telephone service materialized.
Mr. Patrick’s practice of leadership was consistent with Fowler’s with respect to how and when to use political capital. Patrick, perhaps seeing that his tenure would be brief because his president’s second term was coming to an end, moved quickly to finish eliminating the Fairness Doctrine. Under his leadership the FCC also rewrote how the agency would regulate telecommunications prices, effectively bringing to an end decades of rate of return regulation and instituting price capping, which had been pioneered in the UK. Patrick faced strong opposition from many state utility regulators, some politicians, and consumer groups, but he succeeded in putting the new system in place. He is remembered for ensuring that he chose bureau chiefs who supported his goals and knew how to carry them out in detailed and analytically rigorous orders and decisions.
Strong leadership at the FCC is needed regardless of the new administration’s regulatory agenda. If the FCC’s work remains largely unchanged, the rebuilding is needed to ensure that the agency is strong enough to provide substantive decision-making and to withstand future politically-oriented chairmen. If the administration follows the other extreme and moves to largely disband (3) the agency, effecting the change will require strong leadership.