Last week, President-elect Barack Obama's call for a delay in the Digital TV transition, long scheduled for February, sent tech and telecom firms into a tizzy. Both Verizon and the Consumer Electronics Association have been pushing back hard against any postponement of the move from analog to digital broadcasting, while AT&T has joined the Consumers Union and several prominent Democratic legislators in supporting the call to give the troubled transition more time. Among those with a vested interest in the debate over a DTV delay is Clearwire, which has been racing to deploy its 4G WiMAX networks ahead of competitors wedded to the LTE standard. And Ars has learned that Clearwire Executive Vice President R. Gerard Salemme has quietly joined the Obama transition team as a key advisor on DTV issues.

The main rationale advanced for pushing back the drop-dead date for analog broadcast is that the coupon program established to subsidize digital converter boxes for those who rely on over-the-air analog signals has run out of money. Households seeking the $40 vouchers are now being placed on a burgeoning waiting list, and consumer advocates fear that without a delay, millions of older analog sets will go dark in February. Opponents of a delay have argued that changing the date would be "disruptive," upsetting longstanding plans and signaling that companies and consumers need not heed government deadlines.

A wireless battleground: LTE vs. WiMAX

But the transition will also free up huge swaths of spectrum in the 700MHz band currently in use by analog broadcasters, which the Federal Communications Commission auctioned off last year. As FCC commissioner Robert McDowell noted on a panel at the Consumer Electronics Show in Las Vegas this weekend, "there are companies paying hundreds of billion of dollars to use this spectrum, and they expect the goods to be delivered."

One of those companies is Verizon, which ponied up nearly $9.4 billion for spectrum it plans to use for its 4G Long-Term Evolution wireless broadband network. In a letter to top members of the House and Senate commerce committees Monday, Verizon CEO Ivan Seidenberg urged members of Congress to resist any delay of the transition, warning that it could impede the company's plans. "Verizon Wireless intends to begin field testing and deployment of LTE this year," wrote Seidenberg. "Deployment of LTE, however, can only be done if we have access to the 700MHz frequencies. Delaying the DTV transition will delay our ability to upgrade those frequencies to 4G broadband for American consumers and have a negative impact on our nation's international competitiveness."

That viewpoint has put Verizon at odds with AT&T, which has signaled its support for a delay in order to ensure a smooth transition—and, coincidentally, is not planning to use its own winnings from the 700Mhz block for LTE.

It's not clear whether Verizon would really be able to make good on its plans to begin deploying its LTE network by the end of 2009. Most analysts believe that a relatively short postponement, on the order of three months, would have little effect on 4G deployment—provided it did not set the stage for further delays, as Verizon clearly fears it might. Such a delay might also avoid a spate of homeowners sliding off icy rooftops as they struggle to install new antennas.

But a longer, more disruptive delay might provide some breathing room for Verizon competitor Clearwire. That company is seeking to build market share for its own WiMAX network, a joint venture with Sprint, before LTE is ready for prime time. Clearwire has boasted that it remains years ahead of the competition, but while WiMAX networks in Portland and Baltimore are already up and running, scheduled expansions to other cities have been delayed until late 2009, even as Verizon has bumped up its own schedule. The company's stock has now been in free-fall for months, and several major backers recently announced they would take major write-downs on their investments in Clearwire. (The roster of large investors in Clearwire includes Obama-ally Google.) A toxic negative feedback loop in investor confidence could leave it unable to finance its promised buildouts for 2009. With any transition delay certain to push the spectrum handover into the next quarter of the fiscal year, if not further, the attendant uncertainty could also factor into investment decisions as Wall Street—and equipment makers—decide which standard to back.

A conflict of interest?

Enter Gerry Salemme. A telecom industry veteran; former lobbyist; and Clearwire executive vice president for strategy, policy, and external affairs, Salemme has also been a generous Obama supporter. Early in the primary season, Salemme gave the maximum $2,300 to Obama for America, and then in August threw in another $10,000 to the Obama Victory Fund, a joint fundraising committee that accepts large contributions and carves them up between the party and candidate. (An apparent typo in the OVF's FEC filing credits this donation to "R. Gerard Salemine." OpenSecrets shows the cash as split into $5,400 for the Democratic National Committee's Services Corporation and two contributions of $2,300 to Barack Obama, which on face would seem to exceed Salemme's cap for the primary and general combined.) Once the race to the White House was won, Salemme scrounged another $5,000 for the transition effort.





Salemme is not listed on Change.gov

As of this writing, Salemme is not mentioned anywhere on the Change.gov site—which lists members of the Obama transition's staff, policy working groups, and agency review teams—nor has there been any public announcement of his involvement with the presidential transition. A spokesman for his company says that Salemme "remains in his position as Executive VP at Clearwire." But Ars has learned that Salemme has been on leave using accrued vacation and joined the Obama transition team as a key adviser on DTV issues.

Last week, Salemme met with Sen. Jay Rockefeller (D-WV) and Tom Wheeler, who is heading Obama's science and technology working group, to discuss a DTV delay, Rockefeller's office confirms. Rockefeller is among the prominent Democratic legislators supporting Obama's call for a DTV changeover postponement. So is Rep. Ed Markey (D-MA), whom Salemme once served as chief of staff. Both have previously expressed concern about the uneven progress of the transition. Salemme's pivotal role on the Obama team, however, suggests that his judgment would have weighed heavily in the decision to bite the bullet and call for a delay—as well as the subsequent effort to rally support for that decision.

Salemme is widely praised for his expertise, both in the tech industry and on Capitol Hill. It's no surprise his résumé made him attractive to a transition effort noted for prizing technocratic competence—especially as it became apparent how massive were the remaining challenges for DTV a mere month or so from the February deadline. And it is an unfortunate fact of life that people with serious expertise in the tech industry also tend to have strong ties to the tech industry. But Salemme's high position with a primary competitor of Verizon—the company most vocally protesting that it would be adversely affected by a delay—creates an unavoidable appearance of conflict of interest. [Update: Make that the appearance of multiple conflicts of interest.]



Wheeler, meanwhile, arguably has his own stake in the outcome of the 4G wars, albeit a more tenuous one. He's currently on leave from Core Capital Partners, whose portfolio includes a $10 million investment in BridgeWave, a company that provides the high-speed wireless backhaul services demanded by 4G networks. Companies like Verizon, flush with fiber, have less need for such services, as a BridgeWave white paper explains:

All things being equal, most operators will choose fiber optic cabling as their preferred backhaul solution. It is perceived as a well-proven technology (it's been deployed in core networks for decades) with nearly limitless capacity scalability. Unfortunately, most of the time operators do not already happen to own fiber running directly to a base station site, and are therefore faced with either paying to install a new fiber run or paying installation and recurring costs to another operator to provide fiber-based services to the site. [....] Leasing high-capacity data services from another operator is almost always unacceptable from a cost perspective.

Canadian firm DragonWave was the incumbent wireless backhaul provider for Sprint's WiMax network, and appears to have continued its relationship with the new Clearwire joint venture. Neither DragonWave nor BridgeWave, however, would comment on any future deployment plans either might have with the company.

Behind the need for speed



Opponents of a delay, such as the Consumer Electronics Association, may also have motives beyond a passion for sound policy. One Capitol Hill source complained that the electronics industry had championed a "bare-bones" converter box program in hopes that frustrated consumers would conclude it was simpler to buy newer television sets ready to receive digital signals. The cable industry, meanwhile, has remained publicly neutral, while asserting its readiness to help meet the current deadline by assisting in a recently assembled call-center effort. But cable, too, may stand to gain from a chaotic transition that drives consumers into its coaxial grasp.

Republicans, for their part, are loath to be blamed for a botched transition requiring a change of schedule. Panels at CES this weekend were rife with criticism of the FCC—and in particular of Chairman Kevin Martin, who opposes a delay—for dragging its feet in preparing for the inevitable flood of consumer questions, both before and after the transition. Any chaos that ensues when analog goes dark, however, will occur on Barack Obama's watch.

Whether Congress agrees to postpone the DTV changeover or decides to press ahead, the only certainty is that either decision will leave some powerful interests sorely displeased.