Bells vs. AT&T

Introduction

Note to readers: This story has been reposted. Since the report was originally released, the Center for Public Integrity has changed the way it calculates lobbying expenditures to reflect a more stringent methodology for determining the total amounts. The change was made to correct the potential overstatement of totals. Figures or relevant text that have been changed are indicated with asterisks. (2/28/2006)

The four former “Baby Bell” local phone companies and their rivals have spent more than $450 million* on lobbying, contributions and Congressional junkets since 1998 in an effort to influence federal telecommunications policy, according to a new Center for Public Integrity investigation.

Led by Verizon Communications Inc. at more than $77 million*, the former Bells collectively have far outspent chief rival AT&T in an attempt to win favor with Congress, the Federal Communications Commission and other government agencies.

Combined, telecommunications companies have spent more than $398 million* lobbying since Jan. 1, 1998, making the industry among the most prolific spenders in Washington, D.C.

In addition, phone companies have contributed some $60.5 million to federal campaigns and political parties since 1998 and paid for $276,072 worth of travel for members and staff of Congress, bringing total spending to affect policy and politics to well over $450 million.*

“They make huge contributions and they pay for both sides,” Mark Cooper, research director of Consumer Federation of America, said in response to the Center’s findings. “They hire these lobbyists and they [the lobbyists] live in the halls of the FCC.”

Second behind Verizon in lobby spending is SBC Communications Inc.* with more than $56 million*. Despite experiencing tough economic times over the period, phone giant AT&T Corp. nevertheless spent more than $48 million* on lobbying from January 1998 through June 2004, while Sprint Corp. spent more than $46 million.*

The lobbyists hired to represent these and other telecommunications heavyweights were some of the most politically well-connected in D.C.

The top hired gun for the telephone industry, with $7.1 million in fees, was Akin Gump Strauss Hauer & Feld. (Akin Gump was also the number two lobbyist for the overall communications industry, with $9.6 million in fees.) The firm is home to such Capitol Hill veterans as former Sen. Lauch Faircloth (R-N.C.) and former Rep. Bill Paxon (R-N.Y.).

Second-place honors went to Quinn Gillespie & Associates, whose principals include current Republican National Committee Chairman Ed Gillespie and Jack Quinn, President Bill Clinton’s White House counsel from late 1995 to early 1997.

Third place went to the Dutko Group, whose roster of high-profile lobbyists includes former officials from the administrations of George H.W. Bush, Clinton and President George W. Bush.

As for contributions, telephone companies prefer Republicans to Democrats. Since 1998, telecommunications companies gave 58.8 percent of contributions to Republican parties and candidates and 40.9 percent to Democrats.

The three companies that led the pack in lobbying also topped the list of campaign contributors: Verizon shelled out $10.7 million, while SBC spent $10.5 million and AT&T spent $7.8 million.

The top recipient of telecommunications industry campaign contributions is President Bush with $801,000; Sen. John McCain (R-Ariz.), chairman of the Committee on Commerce, Science & Transportation, is second at $475,000; and Rep. Dennis Hastert (R-Ill.), the speaker of the House, is third at $436,000. Democratic presidential candidate John Kerry was eighth overall with $306,000.

Since 1998 Bush has outraised Kerry in phone contributions 5 to 2. Bush’s top four phone supporters were the four Bell companies: SBC ($178,000), Verizon ($129,000), BellSouth ($122,000) and Qwest ($64,000). Together the Bells gave Bush 62 percent of the money he received from telephone interests and favored him over Kerry almost 3 to 1.

Kerry’s top four phone contributors are: Verizon ($116,000), AT&T ($31,000), SBC ($29,000) and MCI ($23,000). Together the Bells gave Kerry a bit more than half of the money he has received from phone interests.

The telephone industry is also a frequent sponsor of trips for members, family and staff of the two congressional committees that regulate the industry – the Senate Committee on Science, Commerce and Transportation and the House Committee on Energy and Commerce.

The telephone industry as a whole paid for 195 trips by congressmen, senators and congressional staffers from the House and Senate commerce committees between 2000 and early 2004, valued at $276,071, according to documents.

The congressional office of Rep. Billy Tauzin (R-La.), former chairman of the House Committee on Energy and Commerce, racked up the most miles at industry expense by a large margin. Tauzin or members of his staff went on 23 trips at a cost of $36,568.

Tauzin personally took trips home to New Orleans and to a number of California locales, including San Diego and Palm Springs, at a cost of $6,894 to the industry. Tauzin’s wife Cecile accompanied him on the California outings, while son Michael went along on one of the trips to New Orleans.

Another indication of the coziness between the industry and federal regulators is the large number of former government workers who become lobbyists. Indeed, at least 58 current and former FCC, congressional and executive branch officials have worked for the phone industry. At least 23 have worked for the Bells or their trade association, the United States Telecom Association. Many others have been hired as outside consultants and contract lobbyists on the industry’s behalf.

For example, FCC Commissioner Kathleen Abernathy, who once worked for Baby Bell U S West, Inc. (since acquired by Qwest), is on her second pass through the revolving door between the FCC and the phone companies. In the 1990s, she was a lobbyist for private companies with business before the FCC after having served in senior staff roles at the FCC.

Lyndon K. Boozer, BellSouth’s vice president of federal relations, previously worked as a special assistant in the FCC’s Office of Legislative and Intergovernmental Affairs.

Peter Davidson, Verizon’s senior vice president for federal government relations, has also passed twice through the revolving door. After serving as general counsel and policy director to then-House Majority Leader Dick Armey (R-Texas), Davidson worked for Qwest, then with the U.S. Trade Representative in the Bush administration. He joined Verizon in April 2003.

The companies that enlisted the help of these commission veterans have reaped a substantial return on investment. In particular, the Bell companies have scored a series of victories at the FCC since former FCC Chairmen Reed Hundt, who openly favored new competitors at their expense, left the commission. His successor, William Kennard, another Clinton appointee, hewed closer to the Bells while Chairman Michael Powell, a Bush appointee, went even further by favoring the Bells on most key decisions.

The industry’s political largesse means that no matter which party wins control of the House and Senate this year, the Bells will likely have allies on the powerful House and Senate panels poised to undertake a wholesale realignment of the telecommunications laws.

Last summer, when a federal judge threw out rules opposed by the Bells, the administration chose not to appeal—a decision that left Bell competitors to face price hikes until new rules are written.

This study is part of the Center’s ongoing examination of the companies that control the nation’s airwaves, telephone and cable lines and the hundreds of millions of dollars they spend to influence policies that affect how electronic communications are regulated in the United States. The survey took roughly eight months and involved the work of as many as a dozen researchers.