Change Sweeping to the FCC
Obama's Pick, a Venture Capitalist, Could Shift Commission's Focus to Internet

By Cecilia Kang
Washington Post Staff Writer
Wednesday, January 14, 2009

Julius Genachowski, technology adviser to President-elect Barack Obama, is poised to become chairman of the Federal Communications Commission at a time when communications policy lies at the intersection of sweeping changes in the high-tech business landscape.

With Genachowski's private-sector experience and ear to Silicon Valley, the appointment could signal greater focus on new Internet technologies for the agency, analysts said.

The 46-year-old is a Harvard Law School classmate and longtime friend of Obama and raised $500,000 for his campaign.

He worked as an executive at Barry Diller's IAC/Interactive and as a local venture capital investor. He has invested in "Web 2.0" companies like the social-networking site MyGameMug and the mobile game distributor MPowerPlayer through his incubator, LaunchBox Digital, based in the District.

Genachowski also served as general counsel to then-FCC Chairman Reed Hundt, as a Supreme Court clerk and as an aide for Sen. Charles E. Schumer (D-N.Y.).

Though his appointment hasn't officially been announced, sources in Obama's transition team said Genachowski is expected to be named chairman. His nomination would have to be approved by the Senate Commerce Committee, a process that could take several weeks.

Under the past few chairmen, the FCC has focused on policies of telephone and cable carriers like AT&T, Verizon and Comcast, analysts said. Reform of a $7 billion federal fund to bring phone service to rural and underserved areas, for example, has been wrangled over for years even as consumers increasingly cut their traditional wireline phone service for cellphones.

But high-tech Internet and software giants and start-ups have expressed more interest in communications policy, highlighting the expanded scope of an agency that was first formed to hand out broadcast licenses but now oversees wireless industry competition, the convergence of Internet technology with phone and televisions, and new uses for radio wave spectrum to bring high-speed Internet to urban centers.

Over the past year, the Internet search giant Google pushed more aggressively at the FCC and won a rule that forced Verizon to open part of its network to outside technologies. Microsoft founder Bill Gates has also lobbied the commission over the past year to free up unused radio waves for anyone to use for high-speed Internet access.

"The regulatory initiative is likely to shift some from incumbents . . . to new entrants and other nontraditional telecom and media players, including Internet application/content providers," Rebecca Arbogast, an analyst at the investment firm Stifel Nicolaus, wrote in a report.

That could mean greater opportunities for high-tech companies like Google, Yahoo and eBay and for nascent start-ups in social media and networking. Genachowski, who helped spearhead Obama's online strategy during the campaign, used the social networking site Facebook to spread campaign messages and organize volunteers. The Obama transition has also used the video-sharing site YouTube and applications on its transition Web site for weekly addresses. In a bid for greater transparency, documents and meetings between transition staff and lobbyists on education, health care and energy are tracked on the transition Web site.

"It used to be that communications policy was about voice and hardware. Now it's about voice, video, chat, conference calling and screen sharing," said Josh Silverman, president of Skype, a service that provides voice calls and video conferencing over the Web. "It's at the bleeding edge of where innovation is happening."

Indeed, the transition staff has been guided by executives at Silicon Valley giants like Google. Google's chief executive, Eric Schmidt, became an adviser on technology, along with the Silicon Valley search company's chief Internet evangelist, Vint Cerf.

That has some worried that companies like Google might have too much influence in the new administration's tech agenda.

Hundt said that rapid changes in technology have long affected communications policy and that Genachowski would synthesize those themes with a Wall Street sensibility.

"That's what the next 10 years is going to be about -- the integration and convergence of technology and media," said Ted Leonsis, a former AOL executive.

As the lead writer of Obama's technology plan, Genachowski is expected to focus on a concept called net neutrality, which would prevent carriers from blocking or slowing Internet traffic.

"Your job as the FCC chair is to play a shaping role with respect to market structures of the future," Hundt said. "Julius is more equipped than anyone for the job in the FCC's 70-year history to actually understand fundamental dynamics of the market."

Genachowski will have to tread carefully. He will enter the role of FCC chairman in a historic economic meltdown that has raised concerns over the survival of smaller competitors and has helped shut down numerous print and broadcast media outlets.

Obama has made the expansion of high-speed Internet, or broadband, to rural and underserved areas as a key component of a larger job-creation strategy.

"He's going to have to recognize that those companies, the carriers, play a role in future development," said Richard Wiley, a former Republican chairman of the FCC and head of Wiley Rein law firm. "With some industries hurting a great deal, don't know if [Genachowski] will want to have tough policies that may be counterproductive or favor one agenda or industry. I'd be surprised if he did that. He's too smart to do that."

Diller sits on the board of The Washington Post Co., and last year the company sponsored a mobile technology competition with LaunchBox for $50,000. The former chief executive of Washingtonpost.Newsweek Interactive, Caroline Little, has served as an adviser to LaunchBox.

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