Aether Systems Inc., that wireless data wonder out of Owings Mills, Md., is on a roll. Baby, they’re hot! The rage of Wall Street. Aether stock, offered at $16 last October, continued its meteoric rise last week into the $180s. They’re cutting deals left and right, with wireless carriers, content providers, network vendors. And now they’re one of three white knights to Metrocall’s rescue.
We know what all this means for CTIA President Tom Wheeler, a founding Aether investor and board member. He also sits on the board of OmniSky Inc., another wireless data upstart that is a joint venture of Aether and 3Com Corp.
What does it mean for the wireless industry, today and for the future?
For now, it appears to mean very little to CTIA board members.
But conflict-of-interest issues-real, perceived and otherwise-that flow from Wheeler’s lucrative ties to Aether, OmniSky and now, Metrocall, could have long-term consequences that CTIA and the wireless industry would rather not consider in these halcyon days of soaring stocks, consolidation and deregulation.
The unorthodox arrangement Wheeler has with outside wireless firms begs closer scrutiny by CTIA’s board. Do Wheeler’s money and management ties to firms he advocates set a bad precedent? Could it diminish CTIA’s credibility as an organization?
And what about competitors to Aether, present and future? Will they be locked out? Are CTIA board members thinking beyond the horizon of deregulation and pondering these issues?
Questions of conflict of interest in nonprofit trade associations do not exist in the abstract. They are spoken to by state law, common law, federal tax law and even antitrust law. In 1982, the Supreme Court ruled in American Society of Mechanical Engineers vs. Hydrolevel Corp. that significant injury was caused when the head of the trade group’s standard-setting committee contrived to disadvantage a competitor.
Anything CTIA does from here on in affecting wireless data is now ripe for second-guessing by members and non-members alike. When he advocates before Congress, the FCC and other federal agencies, who does Wheeler represent? CTIA or Aether? Does it really matter?
What matters is a seed of uncertainty has been planted by this Wheeler-Aether thing. CTIA board members better hope this doesn’t snowball into a problem that ends up compromising everyday business and something even bigger: the future.
Nonprofit trade association legal expert Jeffrey Tenenbaum writes,”[O]fficers and directors cannot put personal interests above the interests of the association.”
