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Where There's Smoke ... Part II One State Example

This post continues from my previous post, which laid the groundwork for how our government and telecommunication companies work together. Click here to read that post. Perhaps it will help to look a little closer at one state example - consider then, the situation in my own state, Texas.

State Legislatures and Regulatory Commissions operate in a climate of intense pressure from telecom lobbyists to craft policies, enact laws, and make regulations that more often than not, overwhelmingly favor big telecom.

As you can see from this August 2006 document produced by the group Texans for Public Justice, entitled "Austin's Oldest Profession: Texas Top Lobby Clients and Those Who Service Them," the facts are dramatic. This well prepared document quoted extensively in this post shows how large telecommunications corporations (i.e., ATT, now including SBC, and Verizon) leave no stone unturned and are very thorough in their work, from the local level all the way up to the State Capitol.

It's a pretty clubby atmosphere among lobbyists and legislators and their staffs, as well as among the regulatory community. I spent eight years as an administrative employee of the Texas Senate (Texas Senate Research Center), two years doing regulatory interface work (lobbying) for a large regulated investor-owned electric utility, one legislative session as a registered lobbyist for a telecommunications startup owned by that same electric utility and finally, I worked the hallways during a critical month period at the end of the 2005 session when it looked like they might ban municipally-owned broadband networks, when I represented a manufacturer of wireless equipment.

I can tell you that in each instance, there were terribly long hours spent just waiting around - whether in conference rooms or hallways, there was plenty of time to get to know everyone as we waited for elected officials and state agency officials to meet, both in public meetings and while they were behind closed doors. And while the paid interface folks hang around and wait, they get to know each other. And then there is the official and unofficial time they spend visiting with legislative and regulatory staff and elected and appointed government leaders.

Lobbying is a classic insider's game, a very well paid job for a few, as this report details, and often quite a grind for the rest. It's a sales job where what you sell are ideas, information, and proximity, where everyone watches each other and gossip flies fast and thick. There are lunches and dinners at restaurants where everyone knows everyone else and keeps track of who's meeting with whom. There are endless fund raiser cocktail receptions where staff mingle for the free drinks and buffet and the professionals show up to make an appearance or drop off a check for a client. It's all quite above board much of the time and generally very pleasant, but also a tremendous amount happens behind the scenes, and after a while, it's not at all as glamorous as it might look from the outside looking in. It can also be very intense and frustrating, and very exciting, but also tremendously dull. But year in and year out, folks get to know and respect each other, and from my perspective, I often felt as if on the outside looking in, because there was always a set of lobbyists who had far better connections and access than I did, and I'd put the telecom folks in that group.

It's these connections that come to be valuable over time, that and the institutional knowledge about how things get done. The money goes to these insiders who have access to private conversations, to the golf outings and the lunches and the late night work sessions where bills get written.

Texas Lobbying Goes Up.png

This table and graph above show Texas' Escalating Lobby Spending, (1995-2005). Note the dramatic increase in lobby expenditures over the course of a decade, in just this one state, where the contract amount nearly doubles, with number of contracts and clients up 50% over the ten-year period, while the number of lobbyists stays about the same. Granted, Texas is at the peak, right up there with California for most active lobbying state (see below).

State Lobbying.png

And who is at the top of the heap when it comes to lobbying in Texas? Oil and Gas, Health Care, and Communications. But among individual corporate efforts, AT&T (incl SBC) and Verizon tradtionally come in at or near the top.

Million Dollar Clients.png

Sixteen clients spent more than $1 million apiece by the end of the 2005 legislative session on 517 lobby contracts. As it has done each year for at least a decade, SBC Corp. (now AT&T) flexed Texas' largest lobby muscle, spending up to $7 million on 129 paid contracts. In addition, several dozen SBC employees reported that they lobbied for their employer without compensation. One of these pro bono lobbyists was SBC Senior Vice President John Montford, a former state senator.

SBC now has merged with AT&T, which spent another $1.1 million lobbying in Texas in 2005. Phone giant Verizon also spent more than $2 million. Boasting more lobbyists than Texas has lawmakers, these phone companies sought to deregulate what they can charge for the local phone monopoly that they control across much of the state. At the same time they demanded entry into television markets - without paying the local franchise taxes paid by the cable industry. This gambit floundered in the regular session, partly due to opposition from cable companies and municipal governments (three municipal interests surpassed $1 million in lobby spending). Yet the phone giants pushed their legislation through in one of the special sessions that Governor Rick Perry ostensibly convened in 2005 to tackle Texas' school-funding crisis. Austin's Oldest Profession, II. Lobby Clients, C. Million Dollar Clients

Lucky for my motley consumer interest group back in 2005, the telecom firms decided that passing the statewide franchise issue was far more important to them than banning the right of a municipality to own its own broadband facilities, or else we most likely would have seen the state legislature enact the ban. Despite our best efforts, our passion, our rational approach, not to mention the justice of our cause, there would have been little we could have done to stop this lobbying juggernaut if they had been serious. They're used to getting their way in this environment, even more so than in Washington, DC, where they have relatively less influence, given all that is going on at the national level.

In Texas, every legislator is quite aware that AT&T is headquartered in San Antonio, that they are a top campaign and lobby spender with a history of winning, and that their lobbying prowess is not worth going up against, as there are very real consequences from being on the wrong side of powerful interests. There's just too much to lose from most perspectives, so these guys win more often than not, sometimes even before they begin the fight.

Posted on October 21, 2007 at 08:03 PM