USTelecom Looks to Narrow Search, Decide on New CEO in About 2 Months

USTelecom is on track to pick a new chief in a couple of months, a spokeswoman confirmed, after informed sources described how the search is playing out so far. President-CEO Walter McCormick, who announced his planned departure a year ago (see 1509110042), is still scheduled to remain through the end of 2016, she said. She also confirmed the telco group hired the executive-search firm Korn Ferry.

Korn Ferry apparently produced a "wide list" of possible candidates, said a telecom industry representative, who was among the parties we contacted about the search. USTelecom is planning to interview prospective replacements for McCormick in coming weeks, said an industry official. The executive-search firm didn't comment.

Some telco officials voiced confidence USTelecom would coalesce around a new leader despite some industry tensions. "I think there'll be a consensus candidate," said one. There are also questions about USTelecom's future in an evolving communications sector. "They need somebody with a strategic vision, given the shifting industry dynamics," said Wireless Infrastructure Association CEO Jonathan Adelstein, a former FCC commissioner.

Wiley Rein's Robert McDowell, another ex-commissioner, was the most frequently cited potential candidate, but that doesn't necessarily mean he's the front-runner, informed people said. Others said to be either in the mix or at least worthy of serious consideration included Verizon Senior Vice President Peter Davidson, Jot Carpenter, formerly CTIA's top lobbyist (see 1606160067) and now an individual consultant, and Commissioner Ajit Pai. None of them commented. Various other people -- former FCC officials and lawmakers, telecom industry executives and attorneys -- also were mentioned. Several sources questioned the value of the speculation and rumors at this point. "Downtown chatter is notoriously bad," said an industry consultant.

There are complications if USTelecom wants to pursue any current commissioners, various parties said. First, some commissioners might have interest in succeeding Chairman Tom Wheeler, or at least knowing whether they will be in the majority or minority next year -- which will be determined by the Nov. 8 election -- before considering leaving the agency. And commissioners would have to recuse themselves from pending regulatory matters if they're approached by USTelecom and don't decline, said a former designated ethics officer at the commission. "Even 'maybe' means you're possibly interested" and grounds for recusal, the ex-DEO said. "I'd be surprised if they even considered a sitting commissioner because it raises the revolving-door issue," said a telecom industry representative.

The election adds another potential wrinkle for USTelecom: Some current lawmakers or other political candidates who lose their races could suddenly become available for the job. Regardless, most we talked to believed USTelecom, will at least winnow its list down so it could move quickly if it waits until after the election to make a final decision.

Executive search firms typically give trade groups a diverse list of options, said ex-NAB CEO David Rehr, who has done research with some headhunters but wasn't privy to the USTelecom process. Rehr, an associate dean and professor at George Mason University law school, said the list will include people with different strengths: "good manager, good lobbyist and face of the organization, good in the regulatory sphere," maybe a "couple CEOs" or a "big name" with gravitas. An association's search committee will cull the list and make a recommendation, which its board of directors usually adopts, he said. USTelecom's board has 19 members.

AT&T and Verizon have the most say as the largest members by far, said several industry representatives. There are some tensions due to Verizon's joint business data proposals with Incompas, which reflect the company's rural system sales and increasing wireless and CLEC orientation. A few suggested AT&T and midsize wireline telcos could roll Verizon on the CEO decision, but others saw such a schism as unlikely. There's no disconnect between the major ILECs over USTelecom, said an informed source, acknowledging differences of opinion within the association but adding "there are more commonalities than not." In addition, both Verizon and AT&T effectively have veto power over fundamental USTelecom decisions, militating toward compromise if there's a disagreement, some said.

Views also vary on the importance of party affiliation in the USTelecom search for a new chief. Some said USTelecom likely would be mindful of the political winds with the election approaching. Others said partisan politics was less important than the new chief executive's abilities. "Good trade association heads have a number of skills and access to leadership in a specific political party is probably not in the top five," said Blair Levin, a Brookings Institute fellow and former senior FCC official. USTelecom should get "the best available athlete" for the long term, regardless of party affiliation, agreed an industry consultant, noting McCormick has headed the group for 15 years, through Republican and Democratic administrations and Congresses.