Hundt: Nothing but Net

Former FCC chairman predicts Web will 'suck the content out of the old media'
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Reed Hundt never did see eye-to-eye with the broadcasting industry during his days as chairman of the FCC.

He still doesn't. Now a venture capitalist, consultant and Internet guru, Hundt dismisses broadcasting as a medium whose time has passed and which, by the way, is still engaging in deceptive lobbying tactics.

AOL's acquisition of Time Warner flows from the pro-Internet, pro-data policies of the Clinton-Gore administration that he helped implement at the FCC, Hundt says. "Like it or not, it is the kind of result we thought might happen. The conquest by the Internet of the old media is really what we were rooting for."

What does Hundt foresee for the Internet? "I have no idea if the stock market valuations will last. They certainly are pretty high. I do think the Internet is here to stay. Within five years, the Internet will be one of the primary ways of delivering video and voice. It's basically going to suck the content out of the old media,''he predicts.

The ex-chairman also says that the "hardest fights" facing any FCC chairman, whether Democrat or Republican, are with the broadcasters. Hundt says the industry's playing of "fraudulent tape recordings of fake interference [from low-power FM] on Capitol Hill" reminds him of the "tricks they used to pull about free time or the arguments they made against educational TV."

So what does Hundt think about the current FCC. "They're doing a darn good job," he says. However, he adds, "It's noteworthy that the Republicans often vote against Bill [Chairman William Kennard], I think they give him a very hard time. In that respect, they're more difficult than my problem voters when I was at the FCC. On all the hard questions, Commissioners Quello [James Quello] and Chong [Rachelle Chong] eventually went along. Bill has not obtained that kind of support from Commissioners [Harold] Furchtgott-Roth and [Michael] Powell. They ought to be standing up and helping Bill on the low-power issue instead of letting their silence constitute opposition."

That's not to say that Hundt got along with his fellow commissioners when he was at the helm between 1993 and 1996. In his book, You Say You Want a Revolution, he criticizes former Commissioners Quello and Chong for what he considers their disloyalty to the Clinton administration. He is particularly harsh on Quello, labeling him a "pseudo Democrat" and "quasi Republican."

When advance copies of the book circulated in Washington, Quello issued a statement defending his Democratic credentials mostly by listing Democratic supporters on Capitol Hill. But Hundt is unpersuaded. He points out that Quello was a close ally of former Senate Commerce Committee Chairman Republican Larry Pressler and of John McCain (R-Ariz.), the current head of the Senate Commerce Committee. "Isn't the former top aide to Commissioner Quello now the top aide to Senator McCain?" says Hundt, referring to Pete Belvin.

When Hundt joined the FCC, he was an antitrust litigator at Latham & Watkins. But he has eschewed the law-and lobbying, a likely course for an ex public official-in his FCC afterlife. "I loved my legal career, but I wanted to try something different."

That "something different" has proved lucrative. According to a December 1999 accounting by The Wall Street Journal, Hundt has earned $20 million-at least on paper-from the options he gets for sitting on the boards of various telecommunications companies. Hundt won't talk specifics on money. "It's a boom time. Anybody who has invested in an Internet company on Wall Street or Main Street has done well," he says.

Hundt's principal job is dishing out telecommunications advice at McKinsey & Co. in Washington. And these days, the former regulator shares his expertise as a public speaker. He has about five to 10 speaking engagements a year.

Hundt is a venture partner at Benchmark Capital, which invests in high-tech firms. He sits on the board of directors for three Benchmark portfolio companies: CoreExpress, which operates an Internet data- exchange system; SigmaNetworks, a provider of broadband network services on the Internet; and NorthPoint Communications Inc., which offers high-speed Internet services. NorthPoint is the only one of the three that is publicly traded.

He also serves as a director for four other telecommunications companies: Phone.com Inc., a wireless data software company; Novell Inc., a software company; Allegiance Telecom Inc., a competitive local exchange carrier; and Global Connect Partners Inc., which provides international telecom services. "There are 10 million people in America building the Internet," he says, "and I am glad to be one of them."

The former regulator also serves on advisory boards for several Internet start-ups, including EqualFooting.com, which assists small companies purchasing industrial supplies; eYak Inc., an Internet voice conferencing company; Turnstone Systems, a DSL player; and IPnetwork.com, a company that leases trademarks on the Internet.

As a "hobby," Hundt says, he's campaigning for his old friend Vice President Al Gore. Hundt's not on the campaign staff, nor is he conducting any fund-raising in any "official sense." "I've written papers for him. I've campaigned in New Hampshire with my family, knocked on doors, made phone calls. I pretty much ask everybody I meet to support Al Gore."

Will there be a role for Hundt in a Gore administration? "I don't think so. I wouldn't expect it; I wouldn't ask for it."

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