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Obama's likely FCC choice has a heart for start-ups

Genachowski's venture-capital experience could signal shift away from industry consolidation

January 13, 2009 12:00 PM ET

Computerworld - Julius Genachowski, who is expected to be President-elect Barack Obama's choice to head the Federal Communications Commission, has a Washington insider's resume and a Silicon Valley attitude.

Genachowski was chief counsel to former FCC Chairman Reed Hundt in the mid-1990s, during the period when Congress approved the Telecommunications Act of 1996, which deregulated that industry. The legislation helped produce an era of telecom and big-media consolidation, leading to a legal backlash from some smaller companies that claimed they were squeezed out of the market. In addition, Obama criticized the outgoing Bush administration during the presidential election campaign for allowing too much consolidation in the industry.

The selection of Genachowski to head the FCC has yet to be officially announced. But his nomination wouldn't be a surprise. Obama and Genachowski were classmates at Harvard Law School, and more recently Genachowski served as the Obama campaign's technology adviser.

Nonetheless, if Genachowski's work at the FCC was the highlight of his resume, he likely would seem an odd choice to shepherd Obama's goal of promoting communications diversity, given the commission's track record of approving big telecom mergers.

In the years since he worked at the FCC, though, Genachowski has fostered the development of various start-ups through the Washington-based investment firms Rock Creek Ventures and LaunchBox Digital, both of which he co-founded. The two firms have helped fund businesses such as Socialmedian Inc., Heekya Inc. and the online travel site Away.com.

Peter Dailey, a program manager at Frost & Sullivan Ltd.'s Stratecast telecommunications forecasting division, said Genachowski's experience with start-ups "may mean a shift in focus from incumbent carriers to emerging companies" at the FCC. But if Genachowski is nominated and confirmed as FCC chairman, his policy vision ultimately would be determined by Obama, according to Dailey.

Dailey thinks Congress didn't fully understood what the outcome of the Telecommunications Act would be. The intent of the bill was to spawn more competition. But, he said, "it actually in many ways resulted in consolidation in the industry."

Pantelis Michaelopolous, a telecommunications law and regulation attorney at Steptoe & Johnson LLP in Washington, called Genachowski's selection "a brilliant choice" because of his combination of industry and regulatory experience. Moreover, "he has proximity, by all accounts, to the president," Michaelopolous said.

He added that Genachowski's experience with start-ups should make him "sympathetic to the plight of new entrants and their efforts to compete on a level playing field" in the market.

The first issue that Genachowski likely would face as FCC chairman is whether to proceed as planned with the transition to digital television, which is due to take effect on Feb. 17. There have been some calls to delay the shift away from analog signals because of concerns that many people in the U.S. remain unprepared for the change.

Read more about Government IT in Computerworld's Government IT Topic Center.



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