Verizon vote deals blow to FCC chief

by Jim Puzzanghera, Los Angeles Times

The chairman of the Federal Communications Commission rarely finds himself on the wrong side of a vote. But that's exactly where Kevin J. Martin was this weekend, casting the sole dissent in a 4-1 decision that could signal trouble for his agenda in what probably is the last six months of his term.

Both of Martin's fellow Republicans on the FCC, Robert M. McDowell and Deborah Taylor Tate, joined the commission's two Democrats in ruling against Verizon Communications Inc. in a dispute over marketing practices to retain phone customers lured away by cable company calling plans. It was the second time in seven months that McDowell and Tate have balked publicly at one of Martin's decisions. But it was the first time they had taken the step of voting against him on an issue in which he needed their support to win.

"It's a real punch in the nose," said James H. Quello, a Democrat and former FCC chairman who could not recall such a 4-1 vote during his 23 years at the agency.

McDowell salted the wound by issuing a statement last weekend revealing the vote's outcome before it was officially released Monday. Martin, who is in Asia, then issued a statement blasting his colleagues for what he said was an "indefensible" and "arbitrary and capricious" decision that favors cable firms over phone companies to the detriment of consumers.

The case prevents Verizon and other phone companies from making marketing pitches to retain customers based on proprietary information required to transfer a phone number to another service once a customer decides to switch providers. The FCC sided with a complaint originally filed by three cable companies -- Bright House Networks, Time Warner Cable Inc. and Comcast Corp. -- that Verizon violated privacy rules by using the information for marketing purposes.

It was a rare win for cable companies, which have said that Martin treats them unfairly. The case is not a major one, but its effect on the rest of Martin's tenure could be significant, some FCC insiders said.

With Martin most likely to be replaced when a new president takes office in January, the independence of McDowell and Tate could endanger his ability to pass controversial initiatives. Among other issues, Martin wants to regulate early termination fees charged by cellphone companies and approve the merger of Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc. with certain conditions. His proposals may go too far for McDowell and Tate but not far enough for Democrats Michael J. Copps and Jonathan S. Adelstein.

The FCC chairman has complete control over the agenda and normally postpones a vote when a majority does not back his position. That happened in November, after McDowell and Tate publicly questioned the reliability of data Martin intended to use to trigger new regulatory powers over cable providers. Martin delayed a meeting for nearly 12 hours to negotiate a compromise seeking additional data.

But the complaint against Verizon was on an expedited track and the FCC had to vote by Saturday, giving Martin little room to maneuver. Martin declined to comment Monday. But FCC spokesman Robert Kenny said Martin would continue to reach out to other commissioners "to move forward in a bipartisan manner."

McDowell sought to downplay any fallout.

"On the face, it was a garden variety complaint and we looked at the statute and had a different interpretation, voted accordingly and moved on," he said in an interview Monday. Tate declined to comment.

Andrew Jay Schwartzman, president of the Media Access Project, a public-interest group frequently before the FCC, said the dispute may have been just "a principled disagreement about a particular case."

"I can't recall a 4-1 vote against any chairman," he said. "Until events prove me wrong, I'm going to treat this as an outlier rather than an indicator of some sort of significant realignment on the commission."

article originally published at http://www.latimes.com/business/la-fi-fcc24-2008jun24,0,4319382.story.

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