Clyburn's Role on T-Mobile/Sprint Could Grow in Importance if FCC Requires Concessions

No individual will make or break the combination of the nation’s third and fourth largest wireless carriers valuing Sprint at about $59 billion. The hiring rekindled long-standing concerns about the revolving door between regulators and the industries they oversee.

Industry officials said Clyburn can do little to help on what's likely the stickiest issues for regulators -- weighing data that suggests prices could rise versus T-Mobile/Sprint arguments that the deal will mean a strong 5G competitor to AT&T and Verizon. Clyburn and T-Mobile didn’t comment Friday.

Clyburn “can play a very useful role if the DOJ believes that the deal isn’t competitive, but there are certain markets, particularly pre-paid and MVNO, where the FCC has to have some conditions to improve the competitiveness in those markets,” said New Street’s Blair Levin: She can help by "communicating to all sides.”

“Ultimately, this merger will be judged on its merits, not on who the parties hire to consult with them,” said Georgetown Law Institute for Technology Law & Policy Fellow Gigi Sohn. “As respected and well-liked as Mignon Clyburn is, she can’t save a merger that’s bad for consumers and competition.”

Revolving Door

Clyburn's move to work with T-Mobile shows the revolving door continues to turn in Washington.

Agency, executive branch and legislative officials' taking this kind of work despite being inside a lobbyist “cooling-off period” is somewhat common, said Daniel Auble, senior researcher at the Center for Responsive Politics. Though he said such rules are important, they don’t prevent former officials like Clyburn from lending their knowledge of the people and processes inside their ex-agencies to the private sector.

Clyburn's role also points up shortcomings in ethics rules under various administrations, some said. Even senior government officials can advise industry and other stakeholders on issues they worked on. “It’s one of the greatest weaknesses of our revolving door policy,” said Public Citizen Government Affairs Lobbyist Craig Holman. “They can consult, they can organize the entire lobbying campaign, as long as they just have someone else pick up the phone at the end.”

“Any merger between two large companies is going to have many forces pushing in favor of approval and other forces working against,” said Jeff Hauser, executive director of the Revolving Door Project. “Hiring Clyburn was a sharp move by T-Mobile, and I am sure her expertise, network and credibility have been real assets to them. Yet it is entirely possible that even if her hiring helped T-Mobile's chances, it will ultimately prove inadequate to overcome the obvious intuition that two companies which compete so directly should not be allowed to merge.” In general, “smart revolving door hiring can increase a company's odds in securing favorable regulatory outcomes, but rarely will it guarantee a win when an issue is as public as merger review for two multibillion dollar corporations,” Hauser said.

Clyburn a Plus

Clyburn’s addition to the team has been “tremendously constructive,” said Robert McDowell, another former FCC member working for the deal. “Consistent with her principled record of advocating for the disadvantaged, she has examined the merger and has concluded that it will help all consumers by strengthening a maverick that will still be No. 3, accelerating and broadening a nationwide 5G buildout with far more capacity, all of which will produce lower prices and greater innovation for all segments of society, especially marginalized communities. Having her unique voice, insight and imprimatur carries great weight,” McDowell said.

Clyburn's taking a stance toward the deal that differs from the public interest groups she has been seen as traditionally aligned with isn't that unusual, said Common Cause Vice President for Policy and Litigation Paul Ryan. Common Cause sometimes works on one issue with groups that it opposes on another matter, he said. Clyburn and Common Cause are both pursuing increased connectivity for underserved populations but disagree on whether a T-Mobile/Sprint would further that goal, he said. Common Cause said the combination would lead to price increases that would displace low-income users. Clyburn's siding with T-Mobile “is not a big shock or a surprise,” he said.

That not being able to lobby isn’t a hindrance to former officials like Clyburn finding work as consultants shows the value of the services they provide, Auble said. “They provide guidance in how to navigate the system, what buttons to push.” Many officials in Clyburn’s position go on to register as lobbyists once their cooling-off period is complete, Auble said. The value of an ex-government official is part of the inequity of the revolving door, Holman said. Public interest groups and the public are unlikely to be able to afford their services, but large private companies can, he noted.

That Clyburn's a Democrat isn’t a hindrance to her efforts even though Republicans control the FCC, Auble said. She’s the most recent commissioner to leave the agency, so her knowledge is the freshest, he said. There’s a very limited number of ex-commissioners to hire, he said.

Having a former commissioner attached can add weight to a lobbying effort, said ex-Chairman Richard Wiley, chairman emeritus of the Wiley Rein law firm. “Not many of us go into the private sector.” Clyburn is well-liked at the FCC and she would be an asset to companies going before the agency, he said.

Economic Arguments

"Free Press is very concerned about the revolving door and influence,” emailed General Counsel Matt Wood. “We've also shown in our filings that this merger would disproportionately harm low-income wireless users, people of color, and pre-paid customers across the board. That said, I don't think any of T-Mobile's many impressive hires -- of former FCC officials from both parties, and congressional antitrust staffers -- has moved the needle or helped the companies in selling this bad deal."

Dish Network, the Rural Wireless Association and Communications Workers of America, meanwhile, separately countered T-Mobile and Sprint’s most recent economic models in support of the deal. On March 7, the FCC paused the informal 180-day shot clock on its review and asked for additional comment on new data submitted by the companies on Feb. 21 and March 6 (see 1903070045). The clock is expected to restart Thursday. Responses were posted Friday in docket 18-197.

Dish questioned promises in the Feb. 21 filing that consumers will see benefits as early as this year. “Eight months after first making their public interest case, they now claim that ‘consumers begin benefitting from network improvements immediately in the first year following the merger close,’” Dish said: “The reason for the sudden discovery of these benefits: the Commission asked about their absence. Indeed, the Applicants had given so little credence to the possibility of such short and medium-term benefits that they had not even developed a plan to capture them.”

The Rural Wireless Association took on T-Mobile’s March 6 filing promising nationwide wireless in-home broadband if the deal is completed. T-Mobile has made clear the offering won’t be available in all the markets it serves, RWA said: “A quick comparison of T-Mobile’s own prospective coverage maps visually confirms that the vast majority of those households that would be excluded from its in-home broadband offering are in rural America.”

The two “continue to fall far short of demonstrating that the proposed merger of T-Mobile and Sprint, as currently structured, is in the public interest,” Communications Workers of America said. “The harms of the proposed transaction are demonstrable and real, while the alleged benefits are speculative and uncertain.”