AT&T, cable operators ratchet up campaigns

The following first appeared in Capitol Weekly On the air and in the Capitol, a battle is brewing between the giants of the cable and telecommunication industries. In the last quarter of 2005, AT&T spent a company record $1.6 million in lobbying fees. All the money they spent on lobbying the Legislature was tagged for "future legislation"--and it was all spent while state legislators were on vacation. Before detailed legislation even has been introduced, the multi-million dollar media and lobbying campaign to ease access for phone companies to California's burgeoning broadband market has begun. Last week, AT&T began airing advertisements in the Sacramento region, calling for the California Legislature to be a "catalyst" for increased competition in the cable market. But in a sign of the acrimonious debate to come, the ads only could be seen on broadcast networks because Comcast, the local cable operator, refused to sell advertisement to its would-be competitor. "As one would in battle, they first try to soften the territory with television and newspaper ads," said Dennis Mangers, president of the California Cable Television Association (CCTA), , citing the phone companies' efforts in other states that are considering opening their cable markets. The center of debate is a bill authored by Assembly Speaker Fabian Núñez and Assemblyman Lloyd Levine, D-Van Nuys that would allow phone companies to apply for a single state-issued cable franchise. Under current law, phone companies must negotiate separate cable-franchise agreements with each municipality into which they expand, a process that is both time-consuming and expensive. Núñez and Levine are expected to unveil the details of their measure in a press conference this Thursday. An AT&T spokesman said the bill was "absolutely" the company's top legislative priority this year. Same for the cable companies. "It is certainly our number one legislative priority at the national, state and local level," said Craig Watson, vice president of Charter Communications, a major cable operator. Since 2005, the CCTA has donated to 109 of the 119 sitting California legislators--contributing some $700,000 to political campaigns in the state. AT&T has donated to 85 sitting legislators, contributing more than $500,000 to various campaigns. The majority of legislators who did not receive donations are termed out of office in 2006. Just last week, AT&T gave $25,000 to the Democratic State Central Committee. California, which is home to the nation's largest cable market, would become the fourth state to create a state franchising system, and is one of a dozen considering similar reforms. And if the experiences of the other states are any guide, the California debate will be fierce, intense and expensive. Texas became the first state to deregulate its cable industry last September. In that state, SBC Communications, which is now part of AT&T, and Verizon hired a combined 161 lobbyists during a special legislative session. Phone-company lobbyists outnumbered the 150-member Texas House, according to a report by the watchdog group Texans for Public Justice. SBC spent up to $6.8 million and Verizon up to $1.8 million in lobbying fees, the report said. "There is a David and Goliath analogy here," said cable representative Mangers. "To put this in perspective, the new AT&T effort to buy BellSouth would make them larger than all of the country's cable companies combined." But an AT&T spokesman quickly dismissed that comparison. "[The cable operators] are the ones with 80 percent market share in the video-services market and we have zero, so to say that is just not true," said AT&T spokesman Gordon Diamond. "They want to do anything they can to delay our entrance into the marketplace." Last week, AT&T filed a scathing complaint with the Federal Communications Commission against the nation's cable operators. The letter lambasted what AT&T called cable's "heavy-handed attempts to skew the political debate" by refusing to run phone company television spots. "The notion that the cable industry should be free to prejudge whether Americans hear the facts about wireline video competition betrays the arrogance of power," reads the complaint. "The incumbent cable operators have reacted to this new competitive threat by seeking to strangle it in its infancy." The voice-over in the television ads, which are broadcast on networks, announces, "We are on the edge of a whole new era of choice in TV for consumers across California." The ad concludes by urging legislative action: "The California Legislature can be the catalyst." Despite the political overtones of the ad, the spot does not qualify as issue advocacy and the amount spent is not public record. AT&T also has purchased print advertising, including a full-page advertisement in the Sacramento Bee last week, according to Diamond. The company also has bought politically targeted Internet advertising on Rough & Tumble, a popular information clearinghouse for California news, and The Roundup, a morning e-mail created by the editors of Capitol Weekly. The cable operators said they have no intent of getting into a spending war with the phone companies--a war, they admit, they would be sure to lose. "Given the huge resources of our opponents, we don't have any fantasy that we can duplicate or match the quantity of lobbying potential that is marshaled by the phone companies," said Charter Communications spokesman Craig Watson. But, Mangers added, "I have been assured that I will have the resources to properly express the cable industry's views with the Legislature." Cable companies have been airing their own advertisements on cable networks promoting themselves. Three of the four biggest cable operators in the state also have bolstered their lobbying operations in recent months. Comcast, the state's largest cable provider, has hired two new contract lobbying firms this year, Norwood and Associates and Nielsen-Merksamer, according to records filed with the secretary of state. Charter hired the lobbying firm Public Policy Advocates on March 1. And Time Warner recently has dedicated a lobbyist to its cable division, according to Mangers, who himself is employed by a statewide association of cable companies. Meanwhile, AT&T, which merged with SBC Communications last year, has kept nearly all the in-house and contract lobbyists employed by the formerly separate companies. Only Sloat, Higgins, Jensen and Associates was let go, as the firm had a conflict of interest because it simultaneously represented Verizon, the second largest phone company in the state. That gives AT&T a permanent lobbying core of four full-time lobbyists, plus contracts with five leading lobbying firms: Platinum Advisors; KP Advocates; Aaron Read and Associates; GCG Rose Kindel; and Pillsbury, Winthrop, Shaw, and Pittman. "If you take a look at the California market, and how highly motivated the phone companies are … to get special breaks in legislation they are seeking, you can imagine what they might spend in this populous state," lamented Mangers.