Exasperated consumers fed up with a two party system feasting on big corporate campaign contributions buying legislative favors from Washington have a point.  With a Supreme Court decision ripping the limits off the corporate ATMs installed in the halls of Congress, corporate interests will now spend more than ever to keep their agendas front and center among lawmakers.

Some consumers demand an end to the money-influence machine in Washington with public financing of campaigns, an allotment of free advertising, and strict ethics laws to prohibit corporations from buying favors from elected officials.  Others have joined a “tea party” movement that believes a wholesale slashing of the size of the federal government will help accomplish the goal of keeping government out of our lives.

The demand for real change is sincere, even if the proposed solutions differ. The debate comes after years of watching common-sense, pro-consumer public policy get watered down or blown out of the water after lobbyists descend on the Capitol like locusts swarming a field of wheat.

It’s unfortunate that those swarms don’t just wreak havoc on lawmakers — they’ve also quietly infested the “tea party” movement that advocates reform.

It’s akin to the Boston Tea Party being sponsored and organized by the East India Company.

After this weekend’s “tea party” convention in Nashville, it’s more apparent than ever that teabags come with corporate strings attached.

Perhaps that shouldn’t be surprising, considering the modern reincarnation of the “tea party” was channeled by a business news network. About a year ago, CNBC reporter Rick Santelli ranted on air about the federal government bailing out Americans underwater on their mortgages after the housing market collapsed.

“We’re thinking of having a Chicago tea party in July,” Santelli offered.

For Stop the Cap! readers, the names and groups affiliated with the “tea party” movement are already familiar.  FreedomWorks’ Dick Armey (R-TX), the former House majority leader in Congress openly considers himself a leader in the movement.  But his day job involves creating fake “grassroots” campaigns for corporate interests, including Verizon and AT&T.  Phil Kerpen from Americans for Prosperity promptly registered “taxpayerteaparty.com” and joined the movement while continuing to represent the broadband industry against Net Neutrality and against municipal broadband network competition.

Kerpen’s group should be called “Americans for the Prosperity of Big Telecom.” They oppose Net Neutrality to the degree Kerpen appeared twice on Glenn Beck’s Fox News show, mostly as an enabler of Beck’s paranoid rantings about Net Neutrality.  After two sessions of Beck’s chalkboard conspiracy theater, the host had Kerpen nodding in agreement to the proposition that Net Neutrality was Maoist.  The group also harassed North Carolina residents with robocalls opposing municipal broadband service that would bring fiber optic connectivity to residents.

Americans for Prosperty's Phil Kerpen on Glenn Beck's show opposing Net Neutrality

Wherever common-sense pro-consumer public policy threatens to become law, the corporate-backed lobbying groups take the anti-consumer view and hoodwink consumers into supporting the corporate agenda.  Trying to convince Americans they are better off taking the anti-consumer position takes a lot of money.  You can’t argue your position beneath your corporate banner.  That’s too transparent.  It’s much more effective to spend tens of millions on creating fake “grassroots” groups with no visible ties to their corporate benefactor.  You need to fund so-called “independent” research groups to cook up phony reports that prove pre-conceived corporate positions.  Writing big fat checks to elected officials can’t hurt either.

Billions in profits are at stake.  In 2008 it was the oil industry and the ridiculous spike in energy prices.  Millions were spent to keep oil and gas interests free from meddlesome Washington and their pesky investigations.  In 2009, the health care industry spend tens of millions of dollars to fight health care reform, while Wall Street bankers tried to keep up with tens of millions of their own to preserve the special favors they earned from being “too big to fail.”

Right after big oil, health care, and banks comes the telecommunications industry.

Last Friday, Verizon had the dubious distinction of appearing on USA Today’s top-20 big spenders.  The only good news is the company only spent $17,820,000 in 2009 on their lobbying efforts.  That’s down from 2008, when Verizon spent $18,020,000.

Not to be too outdone, the cable television industry handed over part of your rate increase to their own lobbying machine.  In 2008, the National Cable and Telecommunications Association spent $14,500,000.  But your rates went up in 2009, and so did their total spending on an army of lobbyists — $15,980,000 worth.

That buys a lot of plastic grass.

Where does the money go?  Among Verizon’s benefactors and friends:

Consumers for Cable Choice: Common Cause notes Verizon spent $75,000 in just one year on this group, which fights for statewide cable franchises, mostly benefiting phone company cable TV from Verizon and AT&T.  While this short cut may bring consumers a choice in providers, it doesn’t bring them any savings.

FreedomWorks: Adamantly opposed to Net Neutrality, FreedomWorks also backs those statewide video franchises, thanks to generous fees paid by AT&T and Verizon to take those views.

The Progress and Freedom Foundation: They define “progress” much differently than consumers.  Opposed to a-la-carte pricing for cable television packages (letting you choose and pay only for the channels you want), P&F also hates Net Neutrality and the concept of government issuing franchises for cable and telco TV in the first place.  Let them dig up your streets and backyards without oversight!  The group receives so much corporate telecommunications money, it would be easier to list the companies that don’t cut them a check.

The American Legislative Exchange Council: They exchange Verizon’s money in return for strong opposition to Net Neutrality.  They are at the forefront of opposition to municipal broadband networks, with a staff of lawyers who “helpfully” draft legislation for state lawmakers to ban such networks.  Part of the broadband protectionist racket, ALEC makes sure even unprofitable, unserved areas stay that way.  ALEC believes Net Neutrality will harm states’ economies, which would be true if a state was defined as a corporate broadband provider.

New Millennium Research Council: They “develop workable, real-world solutions to the issues and challenges confronting policy makers, primarily in the fields of telecommunications and technology.”  This so-called “think tank” issues suspect reports mostly for the benefit of Congress, which some members use as cover when voting against their constituents and for the provider.  You’re certain to hear elected officials railing against pro-consumer policies quoting liberally from these industry-backed “think tanks,” which provide a patina of independent legitimacy to corporate-backed propaganda. Need to scare people with stories about an overburdened Internet that will crash and burn without “network management” that slows service and enriches providers?  No problem! (That the group has had Verizon employees working for them doesn’t hurt either.)

Broadband for America: This relatively new group is infested with Verizon and AT&T contributions from top to bottom.  In addition to direct contributions from big telecom interests, virtually every single public interest non-profit group on their roster has an AT&T or Verizon lobbyist on their board of directors, or accepts generous contributions from the telecom industry.

Frontier of Freedom: Another so-called “free market” group advocating deregulation, FF doesn’t disclose its donors and considers itself independent, but a familiar pattern belies that.  Frontier of Freedom advocates statewide video franchises and has even run advertising promoting telco-friendly legislation in states like Texas.  The cable industry was displeased because Frontier of Freedom used to represent their best interests but suddenly flipped sides in 2005.  Money talks.

MyWireless.org: “MyWireless.org is a national non-profit consumer advocacy organization” the site declares, without bothering to disclose it is really a sock puppet of the cell phone industry’s trade group CTIA – The Wireless Association.  Ostensibly interested in stripping taxes and government-mandated surcharges off of cell phone bills, the group also opposes Net Neutrality and consumer protection laws.  It’s a bit difficult to call yourself pro-consumer when you oppose a California and Minnesota consumer Bill of Rights that would have required a 30 day penalty-free trial of cell phone service, expanded a toll-free complaint hotline, set minimum service standards, and required easy-to-understand billing.

NetCompetition: Another front group bought and paid for by the industry it seeks to zealously protect.  Adamantly opposed to Net Neutrality, NetCompetition also spends its time Google-bashing and attacking Free Press, seen as one of the strongest advocates for Net Neutral policies and consumer protection from provider abuses.  Their member page explains everything.

The unfortunate part of all this is that many participants of the “tea party” movement seem blissfully unaware of the corporate manipulation of their movement, all happening barely beneath the surface.  Millions of dollars are flowing into the bank accounts of astroturf groups doing all they can to channel public anger against Washington into something they can use to benefit their corporate backers.  The end result may be the ultimate feedback loop — consumers already angered by Washington not listening to their needs and concerns compounded by providers picking their pockets.  That bitter tea may be easy to brew but impossible to swallow.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/Phoney Baloney Ad.flv[/flv]

Phoney Baloney: The National Cable & Telecommunications Association, the cable industry lobbying group, ran this hissyfit ad to combat Verizon and AT&T outmaneuvering the cable industry over statewide video franchising laws. (1 minute)

[flv]http://www.phillipdampier.com/video/Senate Judiciary Committee Hearing on Comcast-NBC Merger 2-4-10.flv[/flv]

Comcast Chair & CEO Brian Roberts and NBC Universal President & CEO Jeff Zucker today defended their proposal to merge the two companies at a hearing held by the Senate Judiciary committee. Senate members questioned the deal’s potential impact on the media marketplace, including program availability and consumer costs. (2 hours, 3 minutes)

House Committee Energy & Commerce | Communications, Technology, and the Internet

The subcommittee on Communications, Technology, and the Internet held a hearing today titled, “An Examination of the Proposed Combination of Comcast and NBC Universal.” The hearing explored the potential impact on the media marketplace of the proposed joint venture agreement between Comcast and NBC Universal. This portion contains committee members’ opening statements and no witness statements.

House Committee Energy & Commerce | Communications, Technology, and the Internet

Witnesses testified about the potential impact on the media marketplace of the proposed joint venture agreement between Comcast and NBC Universal. Among the issues they addressed were competition in the media marketplace, possible innovations which could result from the merger, the impact on local affiliates, and the affect on consumers.

A Kansas utility board overseeing telecommunications regulation in the state is embroiled in scandal after accusations surfaced that AT&T and the Kansas Corporation Commission, the state’s utility board, met secretly to negotiate a custom-written deregulation bill favoring the telephone company.  Senate Bill 384 would deregulate rural telephone exchanges, increase telephone rates for low income families and seniors, allow AT&T to discontinue printing phone directories, and eliminate price caps on basic residential phone service.

Hearings over the proposed legislation exploded when Steve Rarrick, an attorney with the consumer protection Citizens’ Utility Ratepayer Board (CURB), told committee members documents requested by the Board were withheld.  Rarrick also revealed extensive private discussions between AT&T and the KCC to work out the deregulation regulation — negotiations that were kept secret.

“It is disturbing that the KCC believes it is appropriate to meet and communicate in secret with a regulated utility about deregulation legislation the regulated utility is sponsoring,” Rarrick told the Topeka Capital-Journal.

Last week, a KCC board member with direct ties to AT&T resigned from the Commission “for personal reasons.”  In addition to his involvement in AT&T’s regulatory reform agenda, KCC commissioner Michael Moffet of Lawrence had the ultimate conflict of interest — an ongoing personal relationship with a female staff member at the Commission.  Staff members prepare recommendations for the Commission regarding matters coming before it.

Moffet worked for politically-connected Public Strategies, a notorious Texas-based astroturfer and corporate lobbying group hired by SBC Communications (now AT&T) back in 2004 when he was appointed to the Commission by then-governor Kathleen Sebelius.  He was reappointed for a second term by current governor Mark Parkinson, but a hold was placed on his Senate confirmation of a second term.  His biography (since deleted from the Kansas government website – linked to Google cached version) softens his former employer considerably, calling Public Strategies “a Texas public affairs consulting company.”

Moffet

Senate Bill 384 is just the latest in a series of AT&T-sponsored initiatives towards deregulating its operations.  The bill’s provisions would gut decades of regulations covering everything from rates to mandates for Internet access.

AT&T Kansas president Dan Jacobsen defended the 15-page bill, claiming it comes in response to increased competition and a 35 percent loss in landlines.  Jacobsen said AT&T cannot competitively respond tied down with years of “obsolete” regulations.  Jacobsen also proposed expanding what constitutes “effective competition,” a provision that can reduce regulatory oversight once achieved.

Jacobsen claims rural residents will receive the same prices that competition generates in urban areas. Unfortunately for rural residents, urban customers traditionally pay higher phone bills because of extended local calling areas.  Most rural residents pay considerably less because their local calling area is generally much smaller, sometimes only covering a handful of nearby communities.

Jacobsen

Jacobsen also said customers will not be forced into bundled service packages, promising that customers seeking a traditional voice landline will always be able to obtain one from AT&T.

The disposition of Senate Bill 384 is itself creating a number of questions.  Despite clear recommendations in an internal KCC staff report recommending new price caps on the state’s phone companies, the Commission took the direct opposite position, seeming to advocate AT&T’s legislation which would dramatically deregulate providers.  The KCC staff found that competition was more rhetoric than reality, and the lack of it has kept Kansans paying higher phone bills in areas that were previously deemed “competitive” and subject to fewer regulations.

Rarrick warned that supporting AT&T’s custom-written bill would result in much higher bills for state residents.  Rarrick pointed to a similar experience in California, where AT&T pushed through a regulatory scheme that tied prices to an inflation index.  The result was massive rate hikes for residential customers — 23 percent last year and another 22 percent this year.  Since 2006, deregulation has cost Californians plenty — a 226 percent increase in the price of directory assistance calls, 85 percent for call waiting and 345 percent to keep your number unlisted in the phone directory.

“Do we want to move with complete price deregulation when you’re seeing some red flags?” he said.

The Capital-Journal reports consumer groups are also opposed to AT&T’s proposal.

“AARP opposes Senate Bill 384 because it will allow telephone companies to raise rates for service for which there is little competition and eliminate necessary consumer protections and fail to provide a positive benefit for consumers,” said Dave Wilson, state president of AARP Kansas.

This isn’t the first time Moffet has openly supported AT&T’s agenda.

At a 2007 hearing about increasing consumer protections and lowering rates for consumers, Moffet turned the hearing upside down when he asked witnesses to testify about the implications of eliminating state regulatory powers over AT&T.  That’s an AT&T legislative favorite – the elimination of state telecommunications regulations in favor of federal regulations and guidelines widely seen as lacking consumer protections and oversight powers.

The proposal would have made it easier for AT&T to cut off past due customers and raise customer rates.

Back then, Rarrick told the Joplin Globe, “If they go through with that, consumers are going to lose protection they’ve had for 24 years. If I were a telephone company and didn’t want to comply with state rules, I’d be thrilled.”

Our Take — An Editorial

Dampier

This latest in a series of controversies continues to shine a spotlight on the perennial problem of the legislative-private sector revolving door.  It should come as little surprise that a paid lobbyist representing the interests of AT&T/SBC would appear amenable to his former employer’s positions on legislative matters coming up for Commission review.  That then-governor Sibelius would appoint such a industry-connected person to the KCC is political malpractice against her fellow Kansans.  It will also come as no surprise if Moffet finds future employment at AT&T or another telecommunications provider or affiliated consultants group.

Consumers must insist those appointed to oversee the state’s regulated businesses not come from those businesses (or their lobbyists or consultants), or at the very least must be required to recuse themselves from anything involving their former employer.  Also demanding rules that forbid an exiting Commissioner from simply flipping hats to become a lobbyist or paid employee at a business he or she formerly oversaw would dramatically slow the spinning of that revolving door.

An intimate relationship with a staff member and Commissioner is extremely serious, and represents more bad judgment.

As for AT&T’s proposed legislation, it belongs in the shredder.  Even disregarding the controversy coming from the upheaval on the Commission, and the accusations of secret negotiations and withheld documents, ordinary consumers can readily identify sections of the bill that will harm their interests and finances.  Here is just a sampling:

• A provision to strip price caps from any telephone company exchange serving 75,000 or more customers;
• A provision that deregulates phone companies exposed to at least two “competitors,” which in this case are defined as one mobile phone company and one unaffiliated telecommunications provider, regardless of whether it offers equivalent levels of service or even reaches your home, such as the case with cable operators who refuse to wire outlying areas, or cell phone companies that deliver no bars to your neighborhood.
• Permission to jack rural customer rates up $1 a month each year starting back in 1997 (an illustration of how long AT&T has been trying to get away with this) until such time as rates are equalized with the average price charged rural customers across Kansas.  If you’re in a high priced service area, there is no provision to roll back your rates, however.  But if your phone company charges considerably less, it can now charge considerably more until it achieves parity with a statewide average cost for rural phone service.
• AT&T’s idea of a give-back to consumers is a provision requiring free touch tone service for residential customers, like you didn’t have that already in nearly every area.
• Any bundled service packages are automatically price-deregulated;
• The California Trick: “On and after July 1, 2008, the local exchange carrier shall be authorized to adjust such rates without commission approval by not more than the percentage increase in the consumer price index for all urban consumers, as officially reported by the bureau of labor statistics of the United States Department of Labor, or its successor index.”
• The definition of what constitutes a “broadband network” in the eyes of AT&T is any connection that exceeds 200kbps.
• No audit is permitted of the company’s requested initial rates, to determine whether that initial pricing is fair and reasonable.
• Starting in 2012, phone companies no longer have to submit pricing and service information (a tariff) to the KCC for services it sells to residential or business customers.  The KCC would no longer be able to easily red flag problematic pricing.
• Beginning July 1st, phone companies can opt out of state regulations as a “local exchange carrier” and instead receive far easier regulatory treatment under “telecommunications carrier” provisions.
• AT&T is relieved of being the “carrier of last resort,” a provision that guarantees every American access to basic telephone service.  When delivered unprofitably, the Universal Service Fund kicks in a payment to ensure phone companies don’t lose money on very rural, difficult-to-reach customers.  Although AT&T claims it will continue to offer voice service to every customer in “its service area,” what defines a service area could eventually exclude exceptionally rural customers.  AT&T also reserves the right to provide voice service “using any technology” which could convert unprofitable wired customers into being served by a basic wireless radio-based system, which could indefinitely keep those customers from receiving high quality phone service, much less obtaining any broadband service.
• Relieve AT&T of the state requirement to provide at least basic, reasonably-priced “dial-up” Internet access.
• AT&T can quit publishing phone directories any time it chooses.

AT&T couldn’t have done better writing Senate Bill 384 themselves.  Oh wait… they did!

Since utility boards in some states seem to have an inherent inability to read and measure the impact of these company-friendly proposals that do absolutely nothing for consumers but enrich providers and free them from pesky oversight and regulatory requirements, consumers must remain forever vigilant and suspicious of these industry-sponsored giveaways, letting their elected state representatives know they recognize funny business when they see it.  If an ordinary consumer can bullet point more than a dozen bad ideas after less than an hour skimming the bill, why can’t those who purport to serve our interests do likewise?

The subcommittee on Communications, Technology, and the Internet is holding a hearing titled, “An Examination of the Proposed Combination of Comcast and NBC Universal.”

The hearing explores the potential impact on the media marketplace of the proposed joint venture agreement between Comcast and NBC Universal.  It begins at 9:30am EST and is expected to run for several hours.

Participants:

• Brian L. Roberts, Chairman and CEO, Comcast Corporation
• Jeff Zucker, President and CEO, NBC Universal
• Colleen Abdoulah, President and CEO
• WOW! Internet, Cable, and Phone
• Mark Cooper, Ph.D., Director of Research, Consumer Federation of America
• Michael J. Fiorile, President and Chief Operating Officer, The Dispatch Printing Company, Chair of the NBC Affiliates Board
• Adam D. Thierer, President, Progress and Freedom Foundation

To watch, click the C-SPAN logo below.  A video player will pop up in a separate window.  Be sure to disable any pop-up blockers in your browser.  If the player does not appear, or you are unsure how to disable your pop-up blocker, you can launch the C-SPAN 3 stream using Flash, Windows Media, or RealVideo format from this direct link.

If you miss any part of the hearing, we anticipate having an archived edition up later today.

Click logo to launch player

[Update 10:23am — The members of the Subcommittee are still making opening statements.  Generally, Democratic members are expressing concerns about the transaction, Republicans are either neutral or favorable towards the merger.  The ranking member, Rep. Stearns (R) from Florida read a statement that could have been drafted by Comcast and NBC.  Net Neutrality and copyright enforcement issues are also coming up.  Members from California, the home base for a lot in the entertainment industry, are the ones usually mentioning copyright.  Republicans who have brought up Net Neutrality are universally hostile to the policy, one warning the Committee the very concept may be overturned by the DC Court of Appeals.  Democrats are in favor.  Both Reps. Markey and Eshoo are on the panel — they co-introduced the Net Neutrality bill in Congress.

Based on the opening statements, it appears the question and answer session will likely bring hardball questions from most of the Democrats, softball questions from most of the Republicans.  But expect a handful of members to occasionally break the trend.  There will also be the usual grandstanding on both sides of the aisle from time to time.]