Interview Date: Wednesday July 26, 2000
Interview Location: Washington, DC
Interviewer: Tom Southwick
Collection: Hauser Collection
SOUTHWICK: I’m Tom Southwick and this is a project of the Cable Television Center and Museum in Denver, Colorado. We’re with Tom Wheeler here in Washington, DC in his offices of the National Cellular Telecommunications Industry Association.
WHEELER: CTIA, right.
SOUTHWICK: CTIA. We’re going to talk to Tom a little bit about his career. It is July 26, 2000. I’d like to start off, if I can, just asking a little bit about your childhood, where you grew up, what you parents did, siblings, and that kind of thing. If you’d tell me a little bit about that, I’d appreciate it.
WHEELER: I had a great childhood. I grew up in Columbus, Ohio. My father was an insurance agent, and my mother was a housewife. I became obviously a rabid Ohio State fan, went to Ohio State University, and then came over to Washington after graduating and doing a short stint in graduate school, doing a little work in some political campaigns, and then came to Washington.
SOUTHWICK: When exactly were you born?
WHEELER: April 5, 1946 in Redlands, California. My dad was in the Army so I was schlepped around the early years like so many baby boomers were from Army post to Army post.
SOUTHWICK: When did you move to Ohio?
WHEELER: I was probably about 2 when we moved back. Then he was called up again for the Korean War so we moved around again for that. I was in Michigan, Virginia, and then moved back to Columbus again where we settled and lived until I was 22.
SOUTHWICK: Other than football, what kind of interests did you have as a boy growing up?
WHEELER: I guess I was a young entrepreneur. I always had a whole series of little businesses that I was running, whether it was painting numbers on the curb or a coin dealer for awhile – buying and selling coins. That actually did a lot to help me earn money for college with doing that. I had a little advertising business that I ran when I was in college.
SOUTHWICK: What did you study in college?
WHEELER: Business administration.
SOUTHWICK: Were you interested in politics and government as a kid or did that come later?
WHEELER: I’ve always been interested in politics for as long as I can remember. I came over here to Washington in 1967 in the summer between my junior and senior year in college and was an intern. One of the things I did when I was at Ohio State was that I ran what was called the Distinguished Speaker Series. One of the speakers that we had out was the then Minority Leader of the House, Jerry Ford. I went to the airport to pick him up, and I decided between the airport and the speech I was going to hit him up for a job. I also had the good sense to invite to go with me to the airport the newly elected, but not yet sworn in member of Congress from that district, Chalmers Wiley. Being the brash young college student, I put the arm on the Minority Leader of the United States House of Representatives in the car. Being the good politician that he is, he turned to Chalmers Wiley and says, “Hey, why don’t you hire this guy? Why don’t you give him an internship this summer?” Since Chalmers Wiley was no fool, he had yet to be sworn in, and his leader was now saying, “Do something!” it happened right there in the car.
SOUTHWICK: Cool. Fantastic. Was your love of politics something you felt on your own or was that inspired somebody else, inherited from family maybe?
WHEELER: I think we always talked about it at the dinner table, but I was just naturally attracted to it and had Potomac fever long before I left Columbus.
SOUTHWICK: Were you interested in the issues or in the process or both?
WHEELER: Both. I’ve always been fascinated with the concept of leadership. So the coming together of the political process on the retail level, campaigns and this sort of thing, the issues, “wonking the issues” as we say today at least, and the process of how you build coalitions and get things done has always been something that interested me.
SOUTHWICK: Was there a politician or a campaign that particularly captured your interest or imagination as you were growing up?
WHEELER: Yes. That’s a really good question. Let me go back to my story about Jerry Ford. I came over and I was an intern in the Republican Intern Program.
SOUTHWICK: This was in what year now?
WHEELER: 1967. Internships have tended to decline in some of the things you can accomplish. But we didn’t know any better. Congressman Wiley didn’t know any better at that point in time. I really got some great experiences. One of those experiences was that it made me a Democrat. I was working for a Republican member of Congress. It was during the time of the Vietnam War, and I was not a supporter of the war at a time when most Republicans were. It was during some of the Great Society programs, and I found myself working issues or writing issue papers or whatever on things that I felt made sense and my boss was opposing. So when I went back to Columbus to finish my senior year, I then began to get involved in other political activities, Democratic political activities. I then went to Graduate School immediately after graduation and was Assistant Alumni Director during that period of time and also was volunteering for Jack Gilligan’s Senate campaign. Jack was one of the co-authors of the Minority Peace Plank of the Democratic Convention. It was a time that was formative.
So I would guess, to answer your question whether people were key movers and shakers, yes. My experience as an intern helped me frame some of my political beliefs that then Jack Gilligan and his campaign and the people in his campaign gave me a chance to act upon and grow and get some experience. It was a fascinating campaign. The manager of the campaign was Mark Shields who had just left … This was shortly after Robert Kennedy was assassinated and Mark Shields had run the Kennedy Presidential Primary in Oregon. Then he went to California and was assassinated. So Mark came in and took over the Gilligan campaign.
The director of field operations who was my boss was this young guy who had come from Lew Harris pollsters because he wanted some field experience in really what it was like and what he was polling. His name was Peter Hart. So two major names in particularly Democratic politics, Peter now being one of the country’s great pollsters and Mark being a columnist and TV commentator, were my bosses in that ’68 campaign.
SOUTHWICK: How did you do?
WHEELER: We lost.
SOUTHWICK: And what was your next step after that?
WHEELER: I had been fortunate enough to be mentored in the process by a guy in Columbus by the name of Jack Davis. He was the one who had opened the doors to the Gilligan camp, the Gilligan campaign for me. He had been a great mentor. So after the campaign was over, because I was certain that I would be coming back to Washington as a staffer for the newly elected United States Senator from Ohio, it was clear that wasn’t going to be happening. It was also very clear that I was going to Graduate School. I was not distinguishing myself. I was not enjoying myself. And there was no reason to hang around.
SOUTHWICK: Academics was not it for you.
WHEELER: This was not my long suit. And so Jack Davis called George Koch (pronounced “Cook”). George was, at that point in time, the President of the Grocers Manufacturers of America. Jack had known him for years, and Jack Gilligan knew him. He said, “Hey, George, here’s a guy who was working for Jack Gilligan. You ought to take a look at him.” George Koch ended up hiring me so I came over to Washington. I remember …
SOUTHWICK: This was the trade organization?
WHEELER: This was the trade organization for the manufacturers of brand name grocery store products – everybody from Pepsi to General Mills to DuraFlame logs – anything that was sold in the grocery store. I remember holding out in my negotiations with George Koch for $10,000.
SOUTHWICK: A year.
WHEELER: A year! He finally met my inflated number, and I came to Washington and was incredibly fortunate because George Koch is an amazing individual. George Koch was running one of the best trade association shops in town at that point in time. We were representing about 14% of the GNP. George Koch was, and is to this day, an extremely principled, straight arrow, demanding, and excellence-is-the-only-place-to-be kind of guy. For a kid from Ohio, wet behind the ears, that was my graduate school. I kind of moved through the ranks there. I was at GMA for seven years. I moved through the ranks and ended up running the Congressional relations and public relations activities of the organization.
Then one day, Mike DiSalle who had been the former Democratic Governor of Ohio, who I had also been very blessed with having as a mentor, calls me and says, “I just got a call from a friend of mine.” It was another guy who he had been mentoring over the years, Bob Schmidt. “Bob has just been hired as the President of the National Cable Television Association, and he needs a number two who knows Congress and specifically knows the Commerce Committees of both Houses. I told him that he ought to talk to you.” That was how I got into cable television business.
SOUTHWICK: Before we get away from groceries, you said it was one of the best trade organizations in Washington. Why? What qualities did it have that made it the best and how do you define the best?
WHEELER: This is a funny thing coming from a guy who now has run two trade associations, but I think the danger of trade associations is that they – most of them – are the greatest fraud ever perpetrated on management. A trade association can be, most normally is, a secretariat where the board is composed of people who are not the leaders of their company or the industry, and the job of the staff is to implement the whims of the board, if you will. As a result, you get policies that go like this, that are constantly changing. That situation existed at NCTA, before Bob Schmidt.
I remember there was one point in time before Bob Schmidt took over where NCTA switched its position on a copyright bill while it was on the floor of the United States Senate, and burned every bridge in town. It took us years to recover from that bad faith activity. They did it because the membership leadership wasn’t there or there wasn’t equivalent leadership at the association to stand up and say, “Excuse me. This is where we are going.”
So what George Koch taught me was that it is possible to be in a trade association role and be a leader, to view that operation much like a corporate executive would view one of his division heads. The job is to get the train from A to B. Your job as the executive is to get to B. I’m not going to meddle in how you get there. If you don’t get to B, I’ll find somebody who can get me to B. Most trade associations don’t work that way. Most trade associations have a very meddling micromanagement and don’t empower their executive leadership to deliver on what their job is. That was not the case at NCTA, post Bob Schmidt and that was clearly not the case at GMA.
The other thing that I would say about what set George Koch on a high pedestal is that – think back to that time. This is the time when there are all kinds of young people like me coming to Washington. Some of them were named John Dean, Jonathan Rose, Jeb Magruder. They had as a mentor people like John Mitchell who said, “Aw, come on. The rules are here for bending or skirting” or whatever the case may be. When you’re wet behind the ears, you say, “Well, okay. This is the way this must go. This is the way life is. This is the way the big boss says it is.” And Koch was never that way. Koch was, “Understand – There’s right and there’s wrong. There’s nothing in between.” That was a great lesson for me at that kind of formative stage.
SOUTHWICK: So Mike DiSalle called and introduced you to Bob Schmidt. What was your reaction as you began to look at the cable industry and the NCTA?
WHEELER: Everybody told me not to do it.
SOUTHWICK: Really. Why?
WHEELER: I’ll never forget – one guy whose opinion I valued greatly, said, “Why do you want to go with those dognappers for?” I thought I was being cool and politically sophisticated, so I went to see the Chairman of the House Telecommunications Subcommittee, Lionel vanDeerlin, who I knew because I had been working with him on other issues in the Commerce committee. I said to him, “Van, I’ve been offered this job to go be Executive Vice President of the National Cable Television Association. What do you think about it?” He said, “Tom, you’re working for an absolutely great organization with a terrific reputation right now. Why in the world would you ever want to leave to go to work for them?”
WHEELER: I said, “Because I’ve been impressed with this guy Schmidt. I think this guy is going to change the way things are done.” And indeed he did.
SOUTHWICK: What impressed you about Schmidt? Why was he impressive?
WHEELER: I think there are two things that have always impressed me about Bob Schmidt. He is a stand-up, decisive guy. He is deliberative and decisive and knows what he believes and is not afraid to stand for that. The other thing is – one of the things that I really learned from Bob Schmidt is that Bob Schmidt was a master at putting the bread on the water and watching it come back 10-fold. Bob Schmidt used “doing the right thing” for causes, for issues. In the process, he built relationships that were different from the normal lobbyist relationship with individuals.
It seems to me that one of the things that everybody struggles to do in this town is to differentiate yourself from the hoards of other petitioners that are up there saying, “Give me this favor”, “give me that favor”, whatever the case may be. One of the things that Bob did was that he would say to members of Congress, “Here’s something that we ought to believe in. It’s totally unrelated to any of the issues that you have responsibility for, that I have responsibility for. But here’s something we ought to believe in, and let’s work together to go after that.”
In the process, he started the little Lombardi Golf and Tennis Tournament, which became an institution here. Speaker O’Neill and Dan Rostenkowski and so many of the leaders of the House and the Senate were regular supporters of this effort to build the Lombardi Cancer Research Center at Georgetown University. I watched a whole different relationship develop which Bob was an absolute master at. He was the class example of how, in Washington, they will rule about ‘you can do good and do well at the same time’. It works.
SOUTHWICK: Did you know much about the cable industry before you …
WHEELER: I couldn’t spell cable! I didn’t know whether it was “cabel” or “cable” before I came.
SOUTHWICK: You hadn’t had it in Ohio?
WHEELER: That’s a really interesting question. When I was Assistant Alumni Director at Ohio State, I used to have to travel the state and do various alumni clubs. I remember going to a little town outside of Cambridge, Ohio. The BIG news was that they had just gotten their community antenna. That was the sum total of my exposure to cable television.
SOUTHWICK: Let me ask you one other question. Did you have any desire to run for office yourself or did you kind of like being in Washington? Did it ever occur to you to go back to Ohio and run for Congress?
WHEELER: I think everybody who comes to Washington and plays in this milieu thinks about that. I think my reality is twofold. Nobody really appreciates how much these men and women have to sacrifice to do that. I think it became, then, a real question of was I ready to make that kind of sacrifice about family and personal life and this sort of thing. The second was my politics weren’t fitted very well with the district.
SOUTHWICK: You had become more of a Democrat and it was a Republican district?
SOUTHWICK: When you went to the NCTA, your job was Executive Vice President. What were the issues? First of all, what were the responsibilities you had? How did it divide up between you and Bob?
WHEELER: Schmidt was the Chief Executive Officer, and I kind of had everybody else reporting to me. At the same time, I was the Director of Government Relations. Make no mistake about it, this was Bob Schmidt’s party, and Bob Schmidt was leading the team. He was calling the signals. He was an old quarterback at USC. He was calling the signals. I was just happy when he’d pass the ball off to me and say, “Go left.”
SOUTHWICK: What were some of the first things you did? What were the issues that were on the table when you walked in?
WHEELER: The first issues that we dealt with were probably three. One was the ever-present copyright law, (the basic under-pinning of the government’s efforts, successful efforts, to restrict what cable operators could offer by limiting the distant signals they could bring in, by limiting the programs they could show on those signals) that we didn’t pay copyright, we were “pirates”, we were stealing the signals – despite the fact that there had been two Supreme Court decisions saying that the Copyright Act did not apply to cable retransmission. The Hollywood interests and the broadcast interests formed an incredible alliance and a very powerful alliance that worked these issues real well; as the reason why, in lieu of the absence of this liability – since they are stealing the signal – you can’t let them be full-fledged citizens.
Bob and some of the key leaders of the industry recognized that if we were ever to get anywhere, that boil had to be lanced.
SOUTHWICK: What year did you actually come to NCTA?
WHEELER: 1976. But that meant holy war because there was a very loquacious, vociferous group of some of the pioneers in the industry who were “over my dead body will I pay copyright”. Then there were some of the other more corporate types looking to build these assets and expand the services. They were recognizing that they had this challenge that they had to deal with. It became a holy war.
SOUTHWICK: Between the two factions.
WHEELER: Between the two factions. Eventually one faction split off entirely and formed CATA, Community Antenna Television Association. They opposed copyright. NCTA moved forward and ended up brokering a deal amongst the broadcasters and the Motion Picture Association representing Hollywood that ended up in the passage of a copyright act with a specified royalty contribution schedule and a copyright royalty tribunal to divvy out those fees. That was the seminal policy event in the development of the cable industry because from there, all the intellectual rationale for the restrictions that had been put on, lost their footing. This is not to mean they all went away immediately because there was still plenty of political clout behind it. But there just wasn’t the intellectual substance to sustain that political clout., so then it became an issue of wearing it down.
SOUTHWICK: Who were some of the industry people that you met at that time? Board members, I assume and others who were involved in these discussions and helping set the policy.
WHEELER: Russell Karp at TelePrompTer was probably the strongest individual on this issue and the strongest leader on this issue; Amos Hostetter, then ‘Bud’, at Continental; there was a guy running a company called Telecorp, an old Navy captain, by the name of Rex Bradley who was the Chairman of NCTA at that point in time; Ralph Baruch at Viacom (Vee-a-com not Vie-a-com). Those are the ones – the players who come to mind.
SOUTHWICK: Tell me a little bit about the reputation that the cable industry had in Washington, particularly on the Hill and at the FCC…
WHEELER: Not good.
SOUTHWICK: … at the time you went to NCTA.
WHEELER: Not good.
SOUTHWICK: Why not?
WHEELER: As I mentioned before, they had had that problem with what Senator Pastore, the chairman of the committee in the Senate, termed double-crossing on …
SOUTHWICK: Senator Pastore
WHEELER: … Senator Pastore on the floor of the Senate. They also had a reputation of not being very substantive. That was on the Hill.
I think they had a better reputation at the FCC because NCTA had some really able lawyers, in-house, at that time – John Kenny, Chuck Walsh, Stewart Feldstein – who were quite able. The difficulty was that what you do at the FCC doesn’t translate to what you do at the Hill. They may be the same issues, but the manner in which they’re presented, sold in, isn’t.
I remember, for instance, one of the first things I did when I got there was … I knew nothing about the issues so I would insist on reading every pleading that we filed. I would go through and make them take out all the lawyerly phrases like “in the instant case” and ask them to rewrite things in terms of the impact on the consumer rather than the impact on the industry…
SOUTHWICK: That’s an important point.
WHEELER: … because we had to take those same arguments to this other body, who frankly was less concerned about the impact on the industry and more concerned about the impact on the constituents. So how can you take the issues that you want and talk about them in the consumer point of view? I think having come from a consumer products background at the grocery manufacturers, that was quite a natural thing for me. But folks who had been living in telecommunications law, it was a different kind of mind-set.
SOUTHWICK: As you went around to visit with members of Congress and fulfill your role as congressional relations person, what kind of things did you see that needed to be done in terms of restoring the cable industry’s relationships?
WHEELER: We had a great, grassroots operation that we didn’t use. We were operating in almost everybody’s district. We were talking to their constituents daily and send them a bill once a month. How could we harness that power to communicate (again) what consumers want, not what the industry wants but what consumers want? That’s what the politicians care about. So we began to spend a lot of time building grassroots.
SOUTHWICK: What does that mean as a practical matter? How does one build grassroots?
WHEELER: You go out into the community. You start with the obvious choices of who are the people that are in your business who have an ability to communicate with the elected official.
SOUTHWICK: You’re looking for somebody in a cable system who might be able to talk to a congressman or a mayor?
WHEELER: Exactly, exactly. And then, who they know or do business with – who do they buy their trucks from? Does that truck person have a relationship? Then you organize them all together, and you have a meeting and ask the congressman to come out and meet with his constituents and talk about this issue.
In order to avoid making a fool of himself at that meeting, the congressman has to learn the issues and he’s got to particularly learn the issue from their point of view. Or else he has to be able to rebut their point of view with some pretty good arguments. So in that way, you’re able to break through the clutter of the 25,000 other pieces of legislation this poor person has to be worrying about and be saying, “I’ve got a concern back home.”
I think that the reason why we were ultimately able to, on a rather regular basis beat the much more glittery, much more powerful Hollywood interests in Washington led by the immortal and the one-and-only Jack Valenti, the platinum standard if there ever was one. The only reason we were able to beat him is because we had grassroots and they didn’t. They represented, in essence, one congressional district – Hollywood. We had 435 congressional districts that we could get to speak. That’s what the business is all about. So it was a question of how you organize, how to you explain, how do you tell your story, and then build from there.
SOUTHWICK: There was a visit that you and Bob Schmidt paid Wirth at work that had some impact on you as well. Can you tell me about that?
WHEELER: There was a new freshman member of Congress named Tim Wirth, a very sharp guy. He had been a White House Fellow, a very prestigious selection. He had been Robert Finch’s White House Fellow at the Department of HEW so he worked in the Secretary’s office. He was a Ph.D., very sharp guy. He went back and ran for Congress and was elected from Colorado, from Denver. My goodness, there sits the headquarters of the cable industry – in Denver. This guy gets elected, he gets sent to the Congress, and he gets put on the Telecommunications Subcommittee.
Bob and I went to see him one day. I’ll never forget. Tim turned to us and in essence said, “You know, I’d like to be helpful to you all. After all, you’re a major constituency of mine. But you guys couldn’t lobby your way out of a paper bag. You guys are so awful. Your reputation up here is so terrible.”
We just kind of sat there dumb-founded, and said, “Well, Congressman, we’re going to change that.” Tim left the room and Bob and I sat there and took a little vow. The next thing you know, I was flying to Denver, and we just talked about how you organize grassroots. I was organizing grassroots on Tim Wirth. We were going to let Tim Wirth know that we knew how to organize his constituency. And if we knew how to organize his constituency, we knew how to organize anybody’s constituency, and we were going to make a watch. We were going to say to him, “Okay, now, we can do this elsewhere as well. Let’s play ball together.”
It was the beginning of a wonderful relationship, personally as well as professionally. It doesn’t mean that Wirth always agreed with us, but it was a relationship that grew into a relationship, I think on both sides, of respect. I remember one point in time Wirth’s first campaign. Your toughest election is always your second election. You’re going for re-election.
SOUTHWICK: In a close district.
WHEELER: In a close district because when you have the highest mortality when you’re able to knock off the incumbent before he really has established his base. So we decided that we were going to make ourselves very visible in that race. It was touch and go. It was really touch and go. I remember one night showing up at a senior center where Congressman Wirth was meeting with the seniors. In the back of the room, prepared to discuss why seniors could care about cable television was this guy Wheeler. It kind of blew him away. After the evening was over …. I’ll never forget it – he and I both joke about it to this day – we went out to some Mexican restaurant, and we closed down the restaurant. And that was part of the message that “You’re a player, we’re a player. Let’s go do something together”.
SOUTHWICK: How did the Copyright Act come about? Did this come about as a compromise between the industries which went through Congress or was it a head-to-head battle?
WHEELER: It was a compromise. John McClelland was the chairman of the Judiciary Committee in the Senate. So any copyright legislation had to pass through him. He had some strong interests in his state that were in the cable business. He wasn’t of a mind to let something happen that was going to be bad to the cable industry. But at the same point in time, he had all kinds of political pressure building up.
SOUTHWICK: From other members of Congress who did want something done?
WHEELER: Exactly. So the word went out that it was time that you guys sit down, let’s understand what’ going on. You’re just arguing over the booty. So come on, you pirates, sit down and figure out how you’re going to divvy it up.
Congress would much rather enact something like that, which is only dividing up the booty. It’s not a question of universal health care or minimum wage or something that is a cosmic kind of issue that raises itself to a matter of national preeminence.
SOUTHWICK: Or ideology state.
WHEELER: Right. This is just an issue of a bunch of for-profit guys gaming the system.
SOUTHWICK: Who gets how much.
WHEELER: Exactly. So it was a shot-gun wedding. Sit down and work it out you guys. Or else suffer the penalties because we are going to work this out, and somebody’s not going to be happy – probably all of you aren’t going to be happy.
SOUTHWICK: So was it your job, then, to come back to the cable industry and say, “Look, we have to sit down with the Motion Picture Association of America and figure this out”? Did you have to deliver that message then to the cable industry?
SOUTHWICK: Some were responsive, and some were …
WHEELER: Yes. Let’s be careful about the pronouns here. It was NCTA’s job. It was Bob Schmidt’s job. Bob Schmidt distinguished himself as a leader in this whole exercise because there were people who didn’t want to hear this at all. There were people who required a sales job to get him convinced that Bob was reading the tea leaves correctly. There were people you had to take in to see various key folks so they could determine, themselves, that Schmidt was giving them the straight scoop. That was one of Bob’s great leadership moments.
SOUTHWICK: So the job then really is not only to educate Congress about the industry, but to educate the industry about Congress as well.
WHEELER: A person in that role, a trade association role or a Washington representative role but more trade association role, trade association executives spend 80% of their time building a coalition so they will have something to advocate the other 20% of the time. You spend the vast, vast majority of your time figuring out, inside the industry, what makes sense before you ever take it out. It’s frankly a much harder job.
SOUTHWICK: Bob was willing to suffer the loss of the people who went to CATA and say, “Well, that’s their view. We’ll live with it”
SOUTHWICK: And the Copyright Act passed. The other key issues were pole attachments …
WHEELER: Pole attachments was one and pay cable was probably the other. Pole attachments …
SOUTHWICK: That was kind of dividing up the money, too, wasn’t it?
WHEELER: No. It was a much bigger issue than that. Pole attachment was the question of the ability of cable operators to string their cable on utility poles owned by somebody else.
SOUTHWICK: Right – phone companies, …
WHEELER: Phone companies, electric companies, whatever. There were a couple of problems here. Number one is the city wouldn’t give you the franchise and then allow you to go build more poles. There’s already a picket fence running along side the highway. They didn’t want another one. So you go to the telephone company who was the principal owner of the poles. You say to them, “We’d like to put, on your pole, a cable that today it’s only offering this wonderful thing called television, but it has this broadband capacity so that tomorrow it could deliver voice and data at some time down in the future.” The phone companies would go …
SOUTHWICK: … “Give us access so we can compete with you some day.”
WHEELER: That’s right. The phone companies dealt with it in two ways. They would say, “That’s terrific. Here’s the bill.” It was something that was a monumental cost, that there was no way in hell that you could afford, but you had no choice but to pay. It was extortion. Or they would say, “That’s fine. That’s terrific. Here’s our contract.” The contract was what the lawyers call a contract of adhesion, which is basically ‘take my terms or hit the road.’ Those terms were, in essence, ‘we will determine what you put over this cable and the minute we don’t like what you’re putting over, you’re in violation and you’re out of there.’
We couldn’t grow as an industry in that kind of a situation with those kind of contracts. Second to labor, the biggest expense in a cable operation was the pole attachment fees. Something had to be done to bring those expenses under control. So we started moving a pole attachment bill. Now bear in mind that Congress, at that point in time, had never passed any piece of legislation that had the words ‘cable television’ in it – never.
That bill started moving. But there was a real problem that the rural telephone companies had a real stranglehold on some key people in particularly the House Telecommunications Subcommittee. One of those was a young, I believe freshman, Congressman by the name of Albert Gore, Jr. Al Gore, knowing that he was a freshman, he was vulnerable, he was from a rural area where phone and electricity was only delivered because of these coops that existed with government subsidies, etc., etc., was not too anxious to cross them.
SOUTHWICK: Upset them.
WHEELER: Then the Lord smiled on us because a rural coop somewhere – I think it may have been Tennessee, but I’m not sure – but a rural coop somewhere ripped the cable down off the poles. If that weren’t enough, they chopped it up in one-foot lengths.
WHEELER: And we got a bunch of those. And we started delivering those one-foot lengths around Congress and saying, “This is what we’re talking about here. Do you believe in competition? Do you believe in people’s right to have this new information that’s coming over the cable?” We were also going to Nashville for some of those grassroots meetings that we were talking about – with Congressman Gore. Long story short – the bill got passed, the President signed it. It was a great moment. We had made up, for all the principal sponsors of the bill, a piece of telephone pole. We got a telephone pole. Bob Johnson, who was working with us at that point in time, had a buddy at C&P Telephone Company, and he got us an old, beat up telephone pole. I had a buddy who was a woodworker. He took the phone pole and he sliced it into these round pieces about yea thick. Then we mounted little brass plaques on them that said, “The first piece of cable television legislation ever enacted by the Congress – Pole Attachment Law ___ (whatever it was) and the date.” If you go down the hall in my office, you’ll find it sitting on the bookshelf.
SOUTHWICK: You sent one to each member of Congress?
WHEELER: Sent one to each member of Congress that was involved, that played a principle role, including Al Gore. At the beginning of the Clinton Administration – Vice President Gore… he was doing something someplace, he turns around and he says, “You know what this guy sent me a bunch of years ago? I still have it. It’s a piece of a telephone pole!!” So it’s kind of become a running joke over the years – a piece of telephone pole. But the pole attachment law was an important statement for the industry that we could organize, and we could something done. It was an important, again example, of leadership of key people like Amos Hostetter and Bob Schmidt. It was the ‘coming out’ of the cable industry in Washington.
SOUTHWICK: And you beat a big, powerful lobby.
WHEELER: We beat the telephone companies and the power companies.
SOUTHWICK: And the third issue you confronted was the pay cable. And that really grew because of HBO and HBO going on satellite which made it a threat, I suppose.
WHEELER: It made it a threat to the broadcasters. So the broadcasters went and did the same thing that they had been so successful with before. They went to the FCC and said, “We need pay cable rules. We’ve got to have this regulated because it will be the end of free TV.” Don’t forget that the first pay cable system was started by Pat Weaver, the guy who founded the Today Show I believe. He was put out of business in California in a referendum that was financed by the broadcasters and the movie theaters. “This will be the end of free TV. You’ll never be able to see these wonderful things. The next thing you know, the World Series – you’ll have to pay to see the World Series!” End of mankind as we know it! The FCC stepped up, and they couldn’t say, “You can’t do it.” So in this incredibly arcane …
The mind of the regulators, particularly at that point in time, they came up with what they called the 2-10 Rule which said that you could show any program on pay cable so long as it was less than 2 years old or more than 10 years old. Now more than 10 years old … “Excuse me, Mr. Southwick. Would you like to send me $10 a month so you could watch some really old movies?” I don’t think so. Right. So they dilute the product up there. And then at the other end, the less than two years old, the movie studios wouldn’t sell it to HBO and the pay cable operators because they’re still selling in the theaters, particularly in the rural communities where cable was strong. So you were left with nothing. Anything between two years old and ten years old, you couldn’t show.
SOUTHWICK: And this was an FCC ruling.
WHEELER: It was an FCC rule.
SOUTHWICK: How did you guys ….?
WHEELER: Finally HBO took it to court and in the HBO decision of the Supreme Court, won and had that overturned. Some great leadership that Jerry Levin, in particular, was showing at that point in time, as he has throughout his career. But at HBO, when you stop and think about … I mean, Jerry was taking on,…There were others. Ralph Baruch at Viacom was the Chairman of the Pay Cable Committee at NCTA. Ralph was the evangelist for pay cable. If you would prick Ralph, he would bleed blood that said ‘pay cable’. He was really a believer. HBO was the largest pay cable operator at that point in time and tended to be the place where all the attention got focused.
Jerry Levin, at the very time when he was trying to get on the satellite – because you had to go to the FCC and get permission to use a satellite and to broadcast up to a satellite – something you don’t have to do anymore, do it with a post card registration anymore. At the very same time that he was going in saying, “Will you please let me do this because it’s probably the future of my business.” He was suing them. It was really a gutsy move, and he prevailed on both counts. Interestingly enough, fascinating thing is that he prevailed in the Supreme Court. In so far as his application for permission to provide pay cable service on the satellite for some bizarre, strange reason, Hollywood and the broadcasters missed it.
SOUTHWICK: Yes. He told me that. He said …
WHEELER: They never filed against him so the commission had no choice but to rubber stamp it and pass it through. They were so myopic in terms of their vision for where this business was going. Satellites! Give me a break!
SOUTHWICK: Isn’t it incredible!
WHEELER: So that was how the pay cable went. But the Vice President of Pay Cable at NCTA was somebody who Bob Schmidt had identified and recruited off the Hill was Bob Johnson who shortly thereafter left, and formed a small, sterling outfit called Black Entertainment Television.
WHEELER: And now owns the world.
SOUTHWICK: Got a check from John Malone.
WHEELER: That’s right.
SOUTHWICK: When did you become President at NCTA? How did that occur?
WHEELER: 1979. Bob told me that he was going to be resigning – it was at the convention in Las Vegas in 1979. It was the first time we had professionally produced a convention, and this was my responsibility to do this, to pull it off. We brought in President Carter by satellite. We had professional staging and lights and video and all kinds of fancy stuff. Bob had told me before the convention that at the Board meeting following the convention he would be tendering his resignation. It was a fascinating thing because I knew that everybody knew that this break-out in the show was on my shoulders. So the show was my audition for the job that I knew was going to become available immediately after the show. If it didn’t work, I was toast.
To produce this, we hired this young, upstart group of guys by the name of Williams Gerard Productions, who had literally just spun off from another company and were three guys in a garage. But they had heart. They had vision. They were good guys. The day before the show is to start, Bud Melto, who was one of the principals and still does the NCTA show today and the CTIA show today, came to me with a terribly long face and said, “Tom, we’ve lost all modules.” Their office was in Chicago. They loaded them on cases, took them to TWA, loaded them on a TWA plane, and TWA lost them.
SOUTHWICK: Oh, my gosh.
WHEELER: “The show starts TOMORROW!” We chartered a jet and went … I didn’t physically, but Bud did. I said, “Get out there. Charter a jet and go to every single TWA warehouse between here and Chicago.”
SOUTHWICK: Find them.
WHEELER: They did. They found them, and they made it in under the wire the next day, and nobody was any the wiser for it.
SOUTHWICK: And the show was great.
WHEELER: Schmidt said to me the next day … I was of the school that you never bring a problem without a solution. So I didn’t tell Schmidt about this, and I didn’t tell him about chartering a jet, pledging the full faith and credit of NCTA. “How did you pay for this, Tom? You just chartered a jet. How did you pay for this?” I said, “Bob, I took everybody’s expense advance, went to the floor, put it on 17 black, and it came up.” He turned this ashy white and said, “You really didn’t do that, did you?” I said, “No, Bob, I bounced a check.”
SOUTHWICK: Great stuff.
WHEELER: It was terrific. There’s a whole other part of that where we ended up getting the hotel to cash the check after all after we reminded them that we had bought out the whole institution and they ought to give us a break.
But the other interesting thing that comes out of that is that Bob had told me that he was going to be resigning. I think Bob Hughes was the Chairman at that point in time. He had told Bob Hughes. So the day after the meeting, the Board meets. I wanted the job really badly. But the day before, Phil Lind from Rogers Communications, comes to me and says, “Tom, we’d like to hire you to run our US operations.”
WHEELER: I’m looking here. I can hopefully run NCTA or I can run Rogers Cable. The NCTA Board, bless their hearts, offered me the job so I had this choice to make. I chose that I wanted to stay with what Bob and I had been building at NCTA and not go out and do this. A couple of years ago I was up in Toronto, and Phil Lind and I were having breakfast. I said, “Phil, remember that story? Remember when that happened?” He said, “Sure do.” I said, “Well, I think of that often and how everything played out.” He said, “Well, Tom, I guess there’s one thing that we could agree on – that is that if you’d taken our job, you’d be a lot richer today.”
SOUTHWICK: Absolutely. You also made use of the media itself and your Ohio connections, as I recall, to kind of …
WHEELER: My goodness, there are no secrets that escape you, Mr. Southwick!
SOUTHWICK: Tell us about that.
WHEELER: I think I told you at the outset that I’m a rabid Buckeye and a serious Ohio State fan. At that point in time, Gus Hauser had built Qube in Columbus. There was a whole constituency of the Ohio delegation in Congress who were also crazy about Ohio State football and couldn’t see the games. So, bless his heart, every Saturday after a football game, Gus would have the Qube folks in Columbus Federal Express me the video tape of the football game. I’d get it on Sunday. On Monday night we would have a function. We rented a hall in Georgetown and we would have a party where the Ohio delegation would come and watch the Ohio State football game, brought to you on cable because “cable expands your choice.” This is the kind of things are possible in Columbus, Ohio because of cable. If you give cable a break, these are the same kinds of things that could be happening elsewhere.
SOUTHWICK: From a larger point of view, as cable got into the cities and began to offer channels such as C-SPAN and BET and CNN, how did that change the dynamic in Washington? All of a sudden …
SOUTHWICK: …instead of being a rural retransmission facility, it’s becoming a fairly important and powerful medium. What did that mean in terms of what you were doing at the NCTA? Were Congressmen more responsive? More interested in what was going on?
WHEELER: It meant two things. It meant that we were no longer the also-rans in telecommunications, that we were players with a seat at the table. It may have, at that point in time, still have been a junior seat at the table, but it was a seat at the table. It also meant that we were running in to city governments and a franchising frenzy. These major city governments weren’t hesitant in terms of what they could possibly extort in return for the franchise. It became very clear that we had to have a federal set of rules as to issues like programming content, what would a franchise fee be, etc. So that was what eventually became the Cable Act of 1984.
SOUTHWICK: As well as the rate issues.
WHEELER: As well as, ‘let us regulate your rates’.
SOUTHWICK: What was the genesis of that movement? Did it start with Congress? Did it start with California Association? Did it start with you? Did it start with the industry? How did it happen that it was decided that there ought to be some kind of effort to pass an act?
WHEELER: I think we can probably trace it back, again, to Ralph Baruch who was the Chairman of our Public Policy Committee, or whatever we called it. I believe it was in a meeting at the Breakers, in about 1980 – 1981. The decision was made to go for it. Literally it was, “Why not? Let’s go for it.” That was the beginning of the exercise that then became the Cable Act of 1984 – a long, arduous process. Then hearkening back to the discussion we had a little while ago about copyright, we would move the ball along, and the cities would come in and shut you down, because they would have the right Senator or the right Congressman, and just shut you down.
SOUTHWICK: In terms of getting a law passed?
WHEELER: Exactly – keeping the bill moving. So it was really John Dingel, the chairman of the House Commerce Committee, who did what John McClelland had done on the copyright bill. He said, “You guys have to sit down. You parties have to work this out.” We were willing to do that. The cities were a little less willing to do that. John Dingel, at one point in time, went to the National League of Cities Convention, figuratively shook his finger at them, and said, “You’re either going to work something out with these folks or I’ll work it out for you,” as only John Dingel could do.
So we had long, protracted negotiations with the cities. They put up a negotiating team, and we had a negotiating team that was Jim Mooney, Chuck Walsh, and myself. Chuck was the legal expert with the law firm Fleishman and Walsh in Washington. He just did a terrific job getting into the heart of all these issues. Jim Mooney was the great politician as well as somebody who loves to get into details of issues. I was along for comic relief. We had negotiating sessions all over the country. We would negotiate, try to come up with something, then take it back to our constituencies, and it would begin to fall apart. Then we’d come back together, then we’d go back and it would fall apart. It was during one of those sessions that Dingel did his exercise with the League of Cities at their convention.
But back to my earlier point – also that you spend 80% of your time in a job like this, building your own coalition. We had a deal with the cities. This thing had been going on for 18 months. In your research, I’m sure you have the dates, but it seemed interminable. It lasted forever. We were debating each other on the McNeill Lehrer Show on television. It was in all the newspapers. It had just become overwhelming.
SOUTHWICK: And there were hearings on the bill.
WHEELER: Oh, yes.
SOUTHWICK: Members taking stands.
WHEELER: It was totally consuming. We finally cut a deal. We decided that what we needed to do was to have three regional meetings for the MSOs to be able to come together and get briefed on what was going on, not just the NCTA Board, but get others involved. We went to the first meeting in New York, and Ralph Baruch chaired it. Again, I can remember sitting in that room and there were some grunts and groans, but we made it over that hurdle. We went to the second meeting, which was in L.A. and it was ugly. We got beaten up – Jim Mooney and I. We got beaten up.
SOUTHWICK: Because you had given too much …?
WHEELER: Because we had given away too much. They didn’t like the deal. I remember Jim and I going out that night afterwards. We had been busting our tails for months and months and months and months. We went out to some fancy French restaurant in Beverly Hills that Jim likes – I forget what it’s called. We sat there and proceeded to get ourselves totally schnockered. How would we ever be able to put Humpty Dumpty together again? But, as is the story of life, you wake up the next morning and have a couple of aspirin, and you figure out how to put it back together again. Indeed, it was several months later, but we finally did get something that most of the industry – not all of the industry – supported.
SOUTHWICK: Before we get much farther, I wanted to ask you a little bit about how you changed and shaped the industry, both when you were Executive Vice President and later as President of the association. It’s my impression that a lot of new people were brought in, lot of new functions that prior to Bob Schmidt certainly had been almost a very small operation with very limited objectives. How did that change?
WHEELER: We tried to professionalize the staff. When I was in graduate school, Assistant Alumni Director, one of my jobs was taking care of Woody Hayes, the legendary football coach, when he would travel to alumni club meetings and things like this. Woody used to say, “You win with people.” It’s a real simple philosophy. What we tried to do was to get first-rate people. Brenda Fox, who was our General Counsel, … I saw Brenda Fox one night on the McNeill Lehrer News program on PBS. She was, at that point in time, the Assistant General Counsel of the broadcasters, the National Association of Broadcasters. She did an outstanding job. I had never met her. I called a friend of mine who I knew knew her and asked him to introduce her because I want to hire her. I want her to be General Counsel over here. We were able to convince her to come over and become General Counsel, and she did a superb job.
Jim Mooney, who was …. Again, we go back to Tim Wirth. I said to Tim, “We need a really good legislative person.” He said, “The guy who’s running the Whip’s office right now in the House is a fellow named Jim Mooney. He’s first-rate.” So Jim joined us.
Ed Merlis, who I had worked with for years on the Commerce Committee, had run the Commerce Committee in the Senate for Senator Magnuson. Then he had gone over and done Appropriations for Magnuson when he was Chairman there. Then he’d gone over and been with you briefly in the Judiciary Committee with Kennedy. He was a very, very capable guy. Ed agreed to join us.
Barbara York – we convinced Barbara York. Golly what a great, what a great …. I remember Barbara York also was an alumna of the Grocery Manufacturers of America. One day I was at Wolf Trap, a performing arts center out here in Virginia. At intermission, I ran into George Koch, the man who had run the Grocery Manufacturers and my great mentor there. I said, “George, I need a really top-flight person who can be in charge of all administrative activities. Do you have any ideas?” He said, “I’ve already got the best one in the world – Barbara York. She is just absolutely fabulous.” I said, “Boy, I know.” Then I did the dastardly deed of hiring her away from him. Barbara York has changed the face of that organization in so many ways over the years.
Ed Burkowski who’s in charge of liaisoning with the operators and with their state associations had been at the Future Business Leaders of America or some group like that. I had heard about this guy with a great ability to move around in different groups and get folks organized, and convinced Ed he out to come. We had a terrific team. What I’m most proud of, in terms of what we accomplished at NCTA, is the people who were there because they’re the ones who accomplished it. I’m most proud of the way in which we were able to raise the level of professionalism. These people came because they saw the promise. They saw … my goodness. Anybody in their right mind, if you would sit down and describe to them, “Here’s what cable television really means, here is the future that you can have a hand in shaping, you can be here at this seminal moment.”
SOUTHWICK: As opposed to working for something that’s much more established.
WHEELER: As opposed to working for the brick and block manufacturer’s association. So we were able to attract the crème de la crème, really first-rate people.
SOUTHWICK: Did the budget go up astronomically?
WHEELER: Yes. But also we had other things that came along with it that helped us grow. We began to get into programming. At that point in time, independent programming, whether it be USA network, obviously HBO or Showtime, or C-SPAN or BET or whatever the case would be, all were beginning to blossom. So we started a programming conference. We realized that consumers bought programs. They didn’t buy that silly wire that came through the wall. They bought the programs that were delivered by the wire. So how could we build alliances between operators and programmers? Obviously they became very, very strong alliances.
We began to focus more and more on programming. Char Beales came in at that point. Oh, my goodness. I’ve forgotten a whole bunch of people I shouldn’t have. Char Beales, who actually came in and replaced Kathryn Creech. Kathryn and Bob Ross – when I first became President I set up two Senior Vice Presidencies. Bob Ross had all the public policy stuff reporting to him. Kathryn Creech had all the non-public policy things reporting to her. Kathryn had been at NCTA as the Research Vice President. She was just incredibly accomplished, great manager, bright, articulate individual. So I moved her up to be Senior Vice President.
Then Bob Ross, who we got from Southern Pacific Communications, had been at the White House Office of Telecommunications Policy, had been on the forefront of battling the telephone company. We saw the coming battle with the telephone company and needed somebody who had that kind of expertise. He also happens to be one of the most incredibly brilliant people, particularly on the ins and outs of the legal issues associated with policy.
Kathryn brought in Char Beales at that point in time. She was just going on to distinguish herself incredibly at CTAM in the job that she’s been doing running CTAM after she left. Char’s job was to build programming. Char was Ms. Programming. There had been nothing at that point in time. We took the Ace Awards and tried to build them up, put them on television, tried to build them up into something that would be the equivalent of the Emmy’s, so we could toot our own horn, showcase our own stuff.
Terribly exciting times. At the same time, we’re fighting this incredibly humongous battle with the cities and getting ready for another knock-down-drag-out with the telephone companies. Very exciting times.
SOUTHWICK: One of the things you did was to put together an effort to improve cable’s public image. How did that come about?
WHEELER: As we got into the big cities and as we grew, there comes a time in every industry where you move from that interesting little niche to a real player. I said before that we were at the table but we were sitting at a junior chair at the table. When we got into the “adult captain’s chair” at the table, a thing happens. That is that people begin to say, “How can I tell them how to do their job? How can I second guess the decisions they make? I don’t like this decision. They are so visible.” Before it was, “Forgive them this mistake or that mistake.” But now they’re a major force. In that kind of environment, you’ve got to paint your own picture before somebody else paints it for you.
So we conceived of the idea of what was called the Council on Cable Information, the CCI. Dan Ritchie, CEO of Westinghouse Broadcasting and Cable, agreed to be the Chairman of this industry operation. Kathryn Creech left NCTA and went to become the head of the Council on Cable Information headquartered in New York. Our goal was to have advertising programs that would explain to the world who we are, why they wanted us – on our terms rather than on the terms of the others who would eventually be coming to paint our picture. Unfortunately, the Council on Cable Information lasted only a couple of years and then died because of the fact that it fell into a squabble inside the corporations as to whether they should be spending money on image advertising or whether they should be spending money on acquiring subscribers. The acquiring subscriber’s school won.
SOUTHWICK: And that was TCI?
WHEELER: TCI was a major mover in it, but it wasn’t just TCI. So the CCI cratered. I’ve always thought it was at that point in time that the Cable Act of 1992 really began, because we gave up on painting our own pictures, and we began to let other folks define us. Things went downhill from there.
SOUTHWICK: Talk a little bit about TCI, if you will. You talked about Jerry Levin’s involvement, Bud Hostetter. Let me just throw something out. It seemed to me that TCI, in those days, was short-sighted in terms of relations of caution. Is that a fair assessment? John Malone allowed an image of himself as Darth Vader.
WHEELER: That was actually after I left.
WHEELER: We went through an interesting … The TCI relationship, when I first got to NCTA, TCI was another little company. Then this guy goes from Jerrold over to TCI to run it. John Malone starts getting on everybody’s screen. You then begin to recognize the brilliance that is John Malone. I used to sit in executive committee meetings, and I would watch these debates going back and forth. I would say to myself, “How am I ever going to make sense out of this?” Then John Malone would open his mouth and everything would fall in place.
WHEELER: This wasn’t occasionally. This was time and time again. During my tenure, the world really appreciated the great job that John did. One of the last things I did was to give John a President’s Award, (which was a series of awards that I had inaugurated which was how you can stand up and say to the rest of the industry, “Here’s somebody who’s really making a difference for you) because of this great ability that he had and because he was also looking to the next hill. It was really after I left that some of the other stuff happened. I only watched that as an observer.
SOUTHWICK: Talk a little bit about the end of your tenure as President of NCTA. A bunch of things happened. There was an agreement between the cities and the cable industry on legislation. You brought it your Board which approved it. At the same meeting, I think, you also now said that you would be leaving. At the same meeting, the same convention, Leonard Tow got a hold of that.
WHEELER: And sued us.
SOUTHWICK: Can you talk about that at all?
WHEELER: Very interesting times. The deal had come together and we had agreed …
SOUTHWICK: Between the cities
WHEELER: Between the cities. There were two directors who came to me and said that there was an opportunity here that might make some sense for you. John Saeman and Doug Dittrick were both on the board of company called NABU which was delivering high speed data over cable television lines, 1.5 meg T1 over cable lines. We were looking to the data future. It had to be out there. They were asking if I wanted to be CEO of this operation. So I went to the Board and said that this was an awkward time to be doing this, but I announced that it would be a significant period before I would actually leave. I was putting them on notice that here was what was going to be going. I had negotiated with NABU that we could have this extended period.
SOUTHWICK: What made you want to take that job? Phil Lind had offered you a job in the industry. What made you decide that it was time to move out of what you had been doing, which was Washington stuff?
WHEELER: Because it was time. I had been at NCTA for seven years. I had made no bones about the fact that I didn’t want to retire there. They had been absolutely wonderful to me. It had been an absolutely terrific experience. But it was time to move on and grow. I needed business experience. I needed to break out of the Washington mold. This terrific offer came along. The future … I kept saying, “We’re going to go build the HBO of data”. That was my line. I thought that we would be able to have this whole thing wrapped up by that point in time. Unfortunately, we didn’t. You mentioned the lawsuit Leonard Tow and some others sued us for violating the First Amendment rights as well as a RICO charge for raqueteering. That’s always an interesting experience to be sued for racketeering. Things began to bog down in the Congress. I believe that when I finally left, … I should know this. I think we had … I know the bill was out of committee. I think it maybe even passed the House and we were over in the Senate.
SOUTHWICK: Tell me a little bit, if you will, about the experience at NABU. This was the first time you had run a private, for-profit (hopefully) enterprise. John Saeman was the major backer, Chairman of Daniels Associates.
WHEELER: John Saeman, Doug Dittrick and Bob Schmidt were on the Board. The major backer was Robert Campeau who was a big Canadian real estate developer, publicly listed corporation. He was the guy who subsequently bought Federated Department Stores, Macy’s – major player – and then went bust. Some folks led by John Kelly, a Canadian, and Arthur Esh, had developed a technology using offset QPSK which I can still bandy around as though I know what it means. What it did was to use an unused channel on the (A-1 actually is the cable channel) that had to be kept free for aircraft interference and would blow down that channel, T-1 rate, high speed data. They had installed the system in Canada and were putting one in Alexandria here in Washington and delivering the first high speed data on cable.
SOUTHWICK: What would this do at the other end?
WHEELER: It would hook into a NABU computer, and it would do everything. It would do word processing, you could play games, you could balance your checkbook, you could keep data bases. It was all …
SOUTHWICK: This was all pre-Internet.
WHEELER: Way pre-Internet. 1985. The word broadband wasn’t in the vocabulary. We were doing pretty well. We had about 5% penetration in the Alexandria system. We had some great people. Barbara Ruger had come over to be head of marketing, Chickie Goodier had come over to be affiliate sales. We were doing pretty well. The technology was working, which is two-thirds of the battle. And the marketplace was accepting.
One day the phone rang and Campeau said that he no longer would be providing us the working capital. He said that he had become convinced that his stock on the Toronto exchange was being punished because instead of being a pure play real estate activity, he had dabbled in some of these high tech activities. Therefore he was going to be shutting things down. I had literally just gone there. We were just getting up and operating. So I tried to … I called John Malone. I called everybody in the industry and said, “Okay, guys, here’s your chance. I went to Japan. I tried it to sell it to the Japanese. I got a call in the middle of the night in Japan from Jim Mooney while the bill was on the Senate floor saying, “I got this problem with this particular person. Can you get on the phone from over there and talk to him?” But it didn’t work, so I was unemployed.
SOUTHWICK: Tell me a little, before we get past it, tell me, as a consumer, what did I pay for NABU, did I buy the equipment, did I rent it?
WHEELER: It was just like an HBO relationship that you would pay the cable operator and we would share the revenues with the cable operator.
SOUTHWICK: What did it cost?
WHEELER: You had to have … You know, that’s a fascinating question. I forget what it was. I bet it was about $10 a month because we were shamelessly ripping off the HBO idea. It was a fascinating experience to learn about …. You think about 1985, home computers didn’t exist. We had to build our own computer. We all were talking about the fact that we got to be designing a modem that would work to interface with this new IBM computer that was coming out. This was days of Commodore 64s and TI home computers, real primitive operations. What our sales people found, for instance, was the key to making a sale was to put the keyboard in the person’s lap, get them to touch it, because they were afraid to touch this computer. If you could get them to touch it and start playing with it, you were over the hurdle. It was funny. One of the things I had done when I had been in college to earn money was a Fuller Brush man. I had worked it out so that if I could get in the door and I could open my box full of brushes, the odds were pretty good I was going to get a sale. If I could get that box open. The same thing held true with NABU. If we could get them to touch the computer, the odds were awfully good we were going to make a sale. But that’s another story.
So all of that came to naught. We couldn’t sell it. We couldn’t refinance it. The whole thing cratered. So I was on the beach. Arthur Esh and I went out and started a company called NuMedia and we were going to consult. The concept was using my Rolodex and his technical expertise, we would rule the world. One of our first consulting operations that we took on was for British Telecom, the developer of videotext. Thinking how far back things are – videotext. The idea of information on your screen. They had developed a fifth generation of videotext called photo videotext. We did a consulting job with them on that. We decided this was pretty neat stuff, and we wanted to license it. So we licensed it and brought it over here and created a company that productized that. It was called the Cable Ad Channel System which was the ability for cable operators to run video classifieds. That was doing quite well. We ended up selling control in that company to a group of eleven MSOs. This was back in the days when the MSOs were getting together to buy new activities. We ended up selling it to eleven MSOs going on and operating it. It ended up cratering as well because of the fact that we hit the highly leveraged transaction period in the early 90’s and money just dried up something fierce.
Then along the way there were several other things. I had been involved with Jeffrey Reese in the starting up of Request Television. Those were some fun times. I was involved in the first competitive trans-Atlantic satellite. A company called Columbia Communications had leased the C-band capacity on the NASA TDTRS (Telemetry Data Tracking and Relay Satellite) which they used for the shuttles to communicate with each other. We would sell that in Europe. The problem was that we had to get landing rights. We had to fight Intelset, so it was like fighting the broadcasters again. Those were interesting challenges.
Also along the way, I had been part of a group that had been lucky enough to win a cellular license in the lottery for rural cellular licenses. So when this job came open at CTIA, here’s somebody who knows Washington, that has now had about 8 years of business experience, entrepreneuring, some of which worked, a lot of which didn’t. Let’s see if we can get him to come back and build CTIA. So that’s what I’ve been doing.
SOUTHWICK: That was in what year?
WHEELER: That was 1992. So I’ve been at CTIA now about the same length of time, a little longer but not much, than I was at NCTA.
SOUTHWICK: You just told me that the number of cellular telephones has now just passed the 100 million mark?
WHEELER: Today. We’re taping this on July 26, 2000. Today, somewhere in the United States, the 100,000,000th subscriber signed up.
SOUTHWICK: Wow. So that moves you from the kiddies chair back up once again.
WHEELER: We got the chairs with the arms again.
SOUTHWICK: As a final thought, tell me what it is that the ingredients that make a good trade organization, that make it work properly. You talked about some of the ingredients at the Grocer’s Association.
WHEELER: Run it like a business. Hire good people. Pay them the right kind of salary. Demand they deliver. Stay out of their way.
SOUTHWICK: That’s advice to the industry to leaders.
WHEELER: Make sure that the Board of Directors is composed of people who make decisions – CEOs. That is something we held to religiously at NCTA, and we do religiously here. You have to have chiefs making decisions. Indians don’t do a good job making decisions when they’re guessing what the chief’s going to do, looking over their shoulder at the chief.
SOUTHWICK: So too many of the Boards in Washington are composed of people who maybe the Vice President of Government Relations of the company or their Washington representative?
WHEELER: Exactly. That’s the wrong kind. You need people who can lead.
SOUTHWICK: And make the decisions. Thank you very much.
WHEELER: It’s been fun. Thank you, Tom. It’s been great to see you again and an honor to do this.