We pointed out yesterday that FCC Chairman Kevin Martin would only be able to deliver telcos half of their Christmas present this week, since the deadlock on the AT&T-BellSouth merger remains unbroken. There are five FCC commissioners: three Republicans, including Martin, and two Democrats. One of the Republicans, Robert McDowell, has thus far refused to vote on the issue because of his past work for a group that lobbied on behalf of small telephone companies -- living up to a pledge to recuse himself from votes where there's a conflict of interest. A few weeks ago, the FCC's general counsel, cleared McDowell to vote, saying it wouldn't be unethical. But that rather wishy-washy memo wasn't good enough for McDowell, who now says he still won't vote on the merger. With refreshing candor, he said of the general counsel's ruling: "While I expected the legal equivalent of body armor, I was handed Swiss cheese," explaining in a statement that even though he'd been cleared to vote by the FCC lawyer, he still had other ethical questions and responsibilities the counsel apparently failed to consider. There are a few interesting angles here, beyond the obvious one of an apparently ethical politician. It appears that FCC Chairman Martin was pushing for McDowell to vote with the expectation that he'd follow party lines and approve the merger with minimal conditions -- but would that have really been the case? The conflict of interest was because McDowell lobbied for small telcos, and the group he used to head is opposed to the AT&T-BellSouth merger. In addition, in his confirmation hearings, he made the right noises about being an advocate of consumers and competition (though, of course, if he was nominated with Martin's blessing, you have to wonder about his true colors). It seems like the easiest path here, were McDowell in favor of the merger, to say ethical questions be damned, and go ahead and vote to approve with his fellow Republicans. However, by refusing to get involved, it appears that he's shifted the balance of power back towards the Democratic commissioners and put more pressure on the companies to make deeper concessions. The deal will still eventually get approved, the question is just over what conditions will be attached, and how long it will take -- which could increase speculation that AT&T might give up on the deal.
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