Kerry carries water for top donor

Introduction

Sen. John F. Kerry, D-Mass., whose largest campaign contributor lobbies on behalf of telecommunication interests, pushed the legislative priorities of its clients in the wireless industry on several occasions, a Center for Public Integrity analysis of campaign, lobbying and congressional records has found. That analysis is part of the Center’s research for The Buying of the President 2004 (to be published by HarperCollins), which tracks the financial backers and interests of the major candidates for the White House.

Kerry, who is seeking the Democratic presidential nomination, has sponsored or co-sponsored a number of bills favorable to the industry and has written letters to government agencies on behalf of the clientele of his largest donor.

Boston-based Mintz, Levin, Cohn, Ferris, Glovsky and Popeo P.C. has been the biggest financial backer of the Massachusetts Democrat’s two decades-long political career in elected office, with its employees contributing nearly $187,000 to various Kerry races, including his current presidential campaign.

Letters Cited
	October 2002 letter to FCC from Kerry et al
	May 2002 letter to FCC from Kerry and Ensign
	April 2002 letter to FCC from CTIA
	Kerry Statement to The Center for Public Integrity

Kerry’s ties to the firm go beyond campaign contributions. His brother Cameron F. Kerry is an attorney at the firm’s Boston office, and David Leiter, who was the Senator’s chief of staff for six years, is a lobbyist for ML Strategies LLC, a Mintz, Levin affiliate that provides consulting and lobbying services.

Mintz, Levin advertises communications law among its areas of expertise and lobbies on behalf of wireless industry clients such as AT&T Wireless Service, XO Communications Inc. and the Cellular Telecommunications & Internet Association. CTIA is the trade association of the wireless industry; its more than 320 members include carriers, manufacturers and wireless Internet providers. CTIA-affiliated companies and their employees have contributed at least $152,000 to Kerry. The amount includes contributions made to his presidential campaign and his previous election efforts, his political action committees and the 527 group that Kerry formed. Verizon employees donated close to a third of that amount ($45,400).

Kerry and his wife Teresa Heinz Kerry have substantial holdings in telecommunications companies; between $17.6 million and $47.1 million of their combined fortune is held in companies with a stake in the industry, the Center’s analysis of his financial disclosure form revealed. That falls in a range of roughly 7 percent to 11 percent of the couple’s combined $165 million to $626 million in assets. Most of the fortune, and the stocks, belong to Heinz Kerry.

Some $3.9 million to $13.9 million of those holdings are in companies which are members of CTIA.

(Personal financial disclosure forms, which members of Congress must file annually, require that appointees value their assets in certain broad ranges: from 0 to $1,000; from $1,001 to $15,000; $15,001 to $50,000; $50,001 to $100,000, and so on. The two figures represent the lowest and highest estimate of the assets’ worth.)

Since 1999, Kerry has taken positions that closely reflect the legislative agenda of CTIA. Between January 1999 and December 2002, he sponsored two bills for which CTIA lobbied and co-sponsored six more, the Center found. He also sponsored amendments and made floor statements that were favorable to CTIA’s interests.

Whacking a piñata

Kerry intervened on the wireless industry’s behalf over the auction of the spectrum, the range of electromagnetic radio frequencies used in the transmission of voice, data and video. Telecommunications firms see the availability of adequate amounts of the spectrum, or airwaves, as the key to its future. CTIA and its member companies have lobbied heavily over how and when portions of the spectrum—owned by the public and sold to companies for commercial use — would be auctioned off.

The proceeds of those auctions are federal revenue—like income taxes, they fund social programs, defense spending, and even deficit reduction. The Federal Communications Commission, the federal agency that regulates broadcast and communications companies, started auctioning spectrum licenses in 1994. So far 44 auctions have been completed, selling more than 22,300 licenses. Those auctions have raised about $23.5 billion so far, of which $14.4 billion has already been paid into the federal treasury.

The Federal Communications Commission scheduled two auctions of the upper and lower 700 MHz bands for June 19, 2002. Those bands are currently held by television broadcasters, which are expected to complete the bulk of their switch to digital signals by 2006, leaving the 700 MHz band free for other uses. However, the deadline for the transition is not final, meaning the broadcasters could hold on to the airwaves beyond 2006. As of May 1, 2002, the most recent period for which statistics are available, fewer than 25 percent of the broadcasters had even begun the change.

CTIA wanted the auctions delayed indefinitely. For the industry, investing billions of dollars in such “encumbered” airwaves didn’t make any business sense, especially at a time when its stocks were on a downward skid on Wall Street.

Some public interests groups, including Consumers Union and New America Foundation, also favored the delay because part of the money from the auction would have been used to compensate broadcasters for vacating the 700 MHz band of the spectrum. The FCC saw the arrangement as an incentive for the broadcasters to expedite the shift to the digital spectrum, which they were awarded in 1997. Broadcasters were not required to pay for the rights to the spectrum, which some analysts valued at up to $70 billion.

“The Commission is asking bidders to swing blindly at a spectrum piñata, not knowing the contents,” CTIA president and CEO Thomas E. Wheeler wrote FCC Commissioner Michael Powell in a letter dated April 3, 2002. “While a June auction might be called an ‘auction,’ in reality it would be the U.S. government opening a casino and collecting the ante for a much bigger private auction to enrich broadcasters at the expense of rational spectrum policy and the welfare of American taxpayers.”

Wheeler pointed out that the Bush administration was also in favor of delaying the auction. The 2003 White House budget proposal had suggested shifting the statutory deadlines for the auctions to 2004 and 2006.

The FCC, which had already postponed the auctions twice, rejected the industry’s request, saying that it did not have the power to delay any further.

Kerry and Sen. John Ensign, R-Nev., also wrote to Powell, urging him to postpone the auctions. Their letter, dated May 2, 2002, promised legislative action.

They introduced a bill the same day. “To proceed with the auction at this time would be a terrible example of budget politics taking precedence over sound spectrum management,” Kerry said at the time. “I hope that the Congress will act soon to enact this bill and protect the interests of consumers of wireless services and the American taxpayer.”

On June 18, 2002, the Senate passed a compromise bill to delay auctioning of the upper 700 MHz bands. Bowing to Congress’ mandate, the FCC delayed the auction in the Upper 700 MHz category (777-792 MHz bands) until January 14, 2003, then postponed the auction again in July. Auctions of the lower 700 bands went ahead as scheduled.

The industry was pleased by what Powell would later refer to as “a late-inning legislative drive.”

“We are extremely grateful to Senators Ensign and Kerry for defending the precious national resource of spectrum, serving American consumers, public safety and our global competitiveness,” Wheeler said when the Senate bill was introduced. “Actions on both the House and Senate sides were bold and promising steps in the right direction.”

In a statement, Sen. Kerry’s office said, “On all issues, including issues important to the wireless industry, Senator Kerry makes his decisions based on what is sound policy and what is best for the people he represents.”

Commerce and communications

Kerry, who sits on the Commerce, Science and Transportation Committee, which oversees the FCC, was not alone in taking positions the wireless industry advocated. Some 58 senators (led by Kerry) co-sponsored a bill that provided relief to firms that had bought spectrum licenses at an FCC auction that had belonged to NextWave, a nationwide, mobile wireless data network operator that filed for Chapter 11 bankruptcy reorganization in 1999. A lower court ruled that the licenses remained the property of NextWave, leaving those companies that had won the auction owing billions to the FCC and unable to use the licenses until the Supreme Court ruled in the matter (it ultimately decided in favor of NextWave). The FCC granted the relief Kerry and his colleagues had sought.

On July 2, 2001, Kerry joined five other senators in urging the Bush administration to expedite making portions of the spectrum then used by the federal government, including the U.S. military, available for a “third generation” wireless system—which would allow users to send not just voice but also data at high speed through the airwaves. Reallocation of the government’s share of the spectrum has been a top CTIA priority in Washington in recent years.

In June 2000, Kerry introduced a bill, along with Senators Ernest Hollings (D-S.C.), Daniel Inouye (D-Hawaii), Jay Rockefeller (D-W. Va.), and Byron Dorgan (D-N.D.), to prevent firms that have more than 25 percent foreign government-ownership from buying U.S. telecommunications companies. CTIA had lobbied on that bill as well.

Over the years, Kerry has played a role in telecommunications legislative and oversight matters, some of which affect his younger brother’s clients. According to the firm’s Web site, Cameron Kerry “has represented cable industry and other communications clients before the [FCC], federal and state courts, state regulatory bodies, and municipalities in litigation under the Federal Communications Act and other laws; rate regulation proceedings; franchising and renewal proceedings; FCC rulemakings and licensing; regulatory aspects of mergers and acquisitions; counseling regarding regulatory and legal developments; and state common carrier proceedings.”

Cameron Kerry has been with Mintz, Levin since 1983. Attorneys at the firm have been opening their checkbooks for John Kerry’s campaigns ever since.

According to state records reviewed by the Center, Mintz lawyers donated more than $2,000 to Kerry’s campaign in December 1983, only months after Kerry’s brother was hired by the firm. Those contributions came after Kerry won election as lieutenant governor of Massachusetts, but before he announced his 1984 campaign to succeed Paul Tsongas in the U.S. Senate.

Cameron Kerry said his partnership at Mintz, Levin factored in the donations from the firm’s employees. “Apart from my being here and having been involved in his campaigns over the years, he’s got a number of other friends here,” he told the Center.

Kerry’s office echoed that line: “Senator Kerry has friends and family who work at Mintz Levin, ranging from his brother to former classmates who work in this Boston-based firm. In addition to having been elected to the Senate four times, John Kerry has been Lt. Governor and run for Congress in Massachusetts, so a lot of these folks go way back with him. It should come as no surprise that they would be supportive of his campaign for president and any effort to make anything more of it is sorely misguided.”

Center database editor Aron Pilhofer, writer / data specialist Derek Willis, and researcher Daniel Lathrop contributed to this report.