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Former telecom official takes leap into energy
By Kim Hart - 05/04/10 06:00 AM ET

Reed Hundt is best known as the man who helped shape today’s wireless
industry. Now he’s applying lessons he learned in the telecom world to his
latest mission: getting clean-energy technologies off the ground.
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Reed Hundt is best known as the man who helped shape today’s wireless
industry. Now he’s applying lessons he learned in the telecom world to his
latest mission: getting clean-energy technologies off the ground.

Hundt, who was chairman of the Federal Communications Commission under the
Clinton administration, is now CEO of the Coalition for Green Capital, a
nonprofit organization he hopes will provide low-interest loans and other
investments in clean-energy technologies.

Hundt’s law firm, Skadden Arps Slate Meagher, is providing pro bono help to
local governments and companies looking to upgrade utilities.

He has a reputation for being a serial policy entrepreneur with a knack for
spotting business opportunities in the regulatory process. After spending
two decades in the telecom industry as a federal official and private
businessman, he got involved in climate change discussions when his
childhood friend, Al Gore, asked him to join his Alliance for Climate
Change.

President Barack Obama then asked Hundt to lead the transition team
responsible for international trade and economics agencies, including the
Department of Energy. And his background in regulating the cable, phone and
Internet industries has played a crucial role in his clean-energy vision.

The fledgling clean-energy market, he says, is much like the wireless and
Internet markets a decade ago. The technology has huge potential, but
building the infrastructure requires billions of dollars of private-sector
investment.

“If you want green electricity, you have to replace the systems we have with
new, clean systems,” he said. “It’s the same thing we did when we replaced
copper phone lines with high-speed fiber for broadband. It gets us to a
sustainable, independent economy. … Without this we run the risk of falling
behind China, just as we’ve fallen behind other countries” with our
communications networks.

The time is right, he says, because many coal plants will need to be
repaired in the next five years anyway, so it makes sense to spend the money
replacing them with cleaner alternatives. Utilities and energy companies
should build new lines and facilities to set the stage for more efficient
systems — much like big telephone companies did to upgrade their networks in
the 1990s.

“AT&T and Verizon borrowed a ton of money in the ’90s to build their faster
networks and [cell phone] towers,” Hundt said, adding that Americans spend
$350 billion a year on electricity. “It would be possible for the private
sector to take a big chunk of that money to replace what they have now with
what they need for the future.”

The Coalition for Green Capital is composed of dozens of clean power
companies, municipalities and other businesses that are advocating for a
“Green Bank” program. The Green Bank would help finance the expensive
process of replacing old carbon-based electricity systems with clean-energy
sources, like wind and solar plants.

Providing cheaper capital to power companies and green tech innovators will
allow them to upgrade their systems more quickly and without as heavy a
financial burden.

The Green Bank idea, also known as Clean Energy Development and Deployment
(CEDA), was part of the Waxman-Markey climate bill that passed the House
last summer. It’s also part of the Bingaman-Murkowski energy bill that
passed the Senate Energy and Natural Resources Committee.

But both bills have little chance of hitting the Senate floor this year,
despite Hundt’s visits to close to 100 lawmaker offices and countless
speeches at clean tech conferences. Even if Congress does pass the measure,
it will take several years to work out the regulations and practices.

So Hundt is helping states set up their own green banks. He says he has
commitments from several governors and candidates, although he can’t yet
share details.

Hundt led the Federal Communications Commission (FCC) from 1993 to 1997,
setting up the first spectrum auction, which created a number of new
wireless firms. During his tenure, satellite TV companies became major
competitors to cable providers. Cable companies started providing telephone
and Internet service to compete with the big phone companies, triggering a
massive investment — $850 billion in 15 years — in the industry.

With the right policies in place, Hundt predicts it will cost about the same
amount to establish renewable-energy solutions.

“He actually witnessed how smart, pro-consumer policies that Congress
developed gave a signal to investors and entrepreneurs and innovators and
put the tools in place that changed the world in 10 years,” said Gerry
Waldron, a partner at Covington & Burling who most recently served as staff
director and chief counsel for the House Select Committee on Energy
Independence and Global Warming.

“He sees we have an opportunity to signal similar investment in the
clean-energy sector that could rival the transformative changes we witnessed
in the communications sector,” Waldron said.

Hundt has a history of finding a business niche in Washington. Leading up to
the most recent spectrum auction, Hundt co-founded Frontline Wireless, a
company that had once hoped to manage airwaves set aside for public safety
agencies. The firm ultimately didn’t succeed. Hundt also co-founded
communications company Sigma Networks during the height of the optical
networking bubble. He’s on the board of directors for Intel.

Blair Levin, who led the FCC task force that produced the National Broadband
Plan, said Hundt has a real “entrepreneurial sensibility” about policy.

“Back then he saw what I didn’t see — he saw what was about to happen to
wireless and the Internet,” said Levin, who served as Hundt’s chief of staff
at the FCC. “He sees patterns very clearly and recognizes what can unlock
value.”

Hundt says the energy sector needs a comprehensive strategy like the
National Broadband Plan. Levin, who spent a year developing the plan, says
Hundt may be more cut out for that job.

“He can simultaneously see the big picture and the details, which I find
very difficult,” Levin said. “He can talk to senators about the big macro
trends and at the same time talk about the details of financing as if he was
an associate at a big Wall Street investment bank.”
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Eric D. Schwerin
Rosemont Seneca Partners
(202) 333-1880
eschwerin@rosemontseneca.co