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AT&T Plays The Power Game
In telecommunications, it pays to have the right connections.
And in a pitched intra-industry battle over possible regulation of high-speed data access lines, AT&T's connections have given it the upper hand. With spending on lobbying that outstrips nearly all its largest rivals, and a chief Washington lobbyist in James Cicconi, a former top advisor to Dan Quayle, the giant company that once was regulated to pieces now has powerful lawmakers ensuring that the data carrying capacity of its new cable properties isn't forced open.
So far, powerful lawmakers, like Senate Commerce Committee Chairman John McCain, R-AZ, and House Telecommunications Subcommittee Chairman Billy Tauzin, R-LA, have been crafting legislation that addresses the broadband competition issue but doesn't touch AT&T's foray into cable through its purchases of TCI and MediaOne.
Only one bill, introduced by Internet Caucus co-chairs Bob Goodlatte, R-VA, and Rick Boucher, D-VA, aims to curb AT&T's roll-out of high-speed data through its cable hookups. Most experts don't give that bill much of a chance of going far in the legislative process.
"AT&T and the cable industry deserve an A+ for their lobbying. They have done an outstanding job of neutralizing this [issue] on Capitol Hill," said Scott Cleland, a telecom analyst for Legg Mason.
In 1998, AT&T spent a total of $3.8 million lobbying Congress, according to a Public Disclosure analysis of the company's spending. AT&T's expenditures were behind Bell Atlantic, which spent $11.7 million lobbying and Sprint, which spent $3.82 million, but was ahead of all other local and long distance phone and technology company lobbying.
AT&T's argument has been simple: "Don't regulate the Internet," because any new bill covering cable and the Internet would be tantamount to burdening the fastest growing segment of the economy. It resonates with lawmakers, who are eager to help the exploding high-tech and Internet industries, which are expanding in political importance on Capitol Hill.
"We should leave [AT&T] alone, because they have to have the incentive to build the infrastructure," said Rep. Adam Smith, D-WA, who is also a spokesman for the New Democrats, a coalition of more than 60 moderate House Democrats. (Smith stressed that his position on broadband was personal and did not necessarily reflect the position of the New Democrats.)
Meanwhile, AT&T's Internet competitors are fighting back on several fronts, one through a coalition of ISP's, local phone companies, and long distance companies, called OpenNET. That group argues that cable companies should offer the nation's 4,000 Internet Service Providers (ISPs) wholesale access to their lines, because cable is a monopoly in most parts of the country. With almost no competitive high-speed access available to residences, they fear that AT&T will strangle the local ISP market by forcing consumers to use a proprietary ISP for high-speed access, just as cable now decides what channels a consumer may have access to.
Arguing for OpenNET is Greg Simon, former chief domestic policy adviser to Vice President Al Gore, and America Online Chairman Steve Case, who say what they are asking Congress to do is not create new regulations on the Internet. Rather they want Congress and the Federal Communications Commission to apply current telephone regulations to cable when it comes to offering high-speed data services.
"First we want the FCC to stop AT&T's merger with MediaOne and condition it on open access to its cable and second we think the FCC and Congress ought to support a bill that competition in the cable" Internet market, Simon said.
As a result of OpenNET's work, broadband access has jumped up on the list of priorities for House and Senate members. The Senate Commerce Committee has held hearings on the cable Internet competition and plans to hold another, though no date has been set.
Simon acknowledges he is facing an uphill battle, he said the key is to educate members that high-speed data lines are a whole new market that are entirely separate from the telephone ownership battles of the past.
"AT&T is only ahead because... they have fooled people into looking backwards... seeing this in terms of yesterday's competition in the phone market... instead of looking forward," Simon said.
In addition, AT&T's archrivals, the Bells, are lobbying Congress that the best way to speed-up deployment of broadband is to eliminate the restrictions on Bells providing high-speed data outside their own local operating areas. But to do so would require Congress to go back and make changes to the 1996 Telecom Act, something Congress is loathe to do, just three years after its passage.
"When you mention the Telecom Act, it tends to make people nervous... because no one wants to re-regulate the industry, that would be throwing up their hands and admitting the Telecom Act was a failure," said Ken Johnson, communications director for Tauzin. Tauzin's working on a bill that would remove the regulations surround the Bells entrance into the high-speed market. The bill would "refine" the act, not reopen it to debate, Johnson said.
Meanwhile, all the lobbying has divided members and created a kind of gridlock not unlike the years before the passage of the Telecom Act. With no clear consensus yet on whether OpenNET or the Bell's are right and whether Congress needs to act, conventional wisdom is that there will be lots of noise in Congress, but no action this year.
"There are so many different interests at stake and when you combine the lobbying power of AT&T and the Bells, it is hard to push anything through that doesn't get bogged down," said Kevin Werbach, managing editor of Release 1.0.
That means that AT&T will be able to continue unrolling its cable high-speed service relatively unimpeded and the local Bells will have to work harder to meet the 14-point check list mandated by the Telecom Act. The companies may not offer services outside their local regions until the FCC judges they have met the checklist, which contains competition standards.
It also means that consumers will have to continue to wait for high-speed access.
On the sidelines are information technology companies which are supportive of any policy that would result in increased access to the Internet and are frustrated by the lack of consensus among lawmakers.
"It's kind of depressing because each side doesn't want the other to get anything. So each time you come out with something to help them deploy high speed access, then one or the other oppose it... it just seems like gridlock is going to be the way for awhile," said Fiona Branton, vice president of government relations at the Information Technology Industry Council, which represents a number of the nation's largest computer and equipment manufacturers.
—by Bara Vaida
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