California’s Public Utilities Commission (CPUC) couldn’t get cozier with AT&T if they moved regulators into the phone company’s plush executive suites.

In a 3-2 decision, the CPUC has given California phone companies that cannot manage to keep their wireline networks in good order an early Christmas, allowing the companies to effectively fine themselves for bad performance and keep the money.

Although the CPUC adopted a series of “automatic fines” for companies with chronic service problems (AT&T is by far the largest offender), it completely negated any sting by allowing companies to skip the fine by demonstrating they’ve invested at least twice the amount of the penalty in their networks. That is an expense AT&T’s bookkeepers can manage to document in minutes just by highlighting AT&T’s investments in other parts of the state. AT&T can argue investments in gigabit fiber in southern California or wiring fiber to business parks and cell sites improves service reliability for at least some customers.

CPUC president Michael Picker isn’t in any hurry either, helpfully offering AT&T and other phone companies two years to complete the investments that will cancel their fines:

In support of a request to suspend the fine, carriers may propose, in their annual fine filing, to invest no less than twice the amount of their annual fine in a project (s) which improves service quality in a measurable way within 2 years. The proposal must demonstrate that 1) twice the amount of the fine is being spent, 2) the project (s) is an incremental expenditure with supporting financials (e.g. expenditure is in excess of the existing construction budget and/or staffing base), 3) the project (s) is designed to address a service quality deficiency and, 4) upon the project (s) completion, the carrier shall demonstrate the results for the purpose proposed. Carriers are encouraged to review their service quality results to find appropriate target projects to invest funds.

Consumer advocates have accused AT&T of underinvesting in their wireline facilities for years. Because the CPUC does not require the investment be specifically targeted to correcting problems that prompted the fine, phone companies can continue to allow high cost/low profit rural infrastructure to deteriorate while targeting service-improving investments in more profitable or competitive service areas.

Steve Blum from Tellus Venture Associates, who has closely tracked telecom public policy matters in California for years, called it the most cynical decision he’s ever seen from the CPUC:

Fines, it seems, are just another cost of doing business for telecoms companies and don’t matter anyway. So why not let them keep the money?

Boiled down, that’s CPUC president Michael Picker’s rationale for establishing new telephone voice service level requirements backed up by a swinging schedule of penalties and then saying but we’ll let you keep the money if you invest it in infrastructure or pay staff. Or something. Anything.

Picker

Commissioner Mike Florio called the Picker’s proposal “unenforceable.”

The CPUC’s own staff has documented the troubling condition of landline service in the state. A staff report published in September 2014 showed the largest phone companies in the state — AT&T and Verizon (later sold to Frontier Communications) — that control 88% of landlines in California never met the CPUC’s minimum standard of repairing 90% of “out of service” trouble tickets within 24 hours during 2010-2013.

In 2010 and 2011, AT&T and Verizon needed an average of 110 hours to repair 90% of outages. That is 4.5 days. In 2012 and 2013, repair time marginally improved to an average of 72 hours (3 days). That is three days without any phone service or the ability to call 911, something the CPUC staff said compromised public safety.

AT&T and Verizon have papered the CPUC’s walls with “corrective action reports” over the years explaining why they failed to meet CPUC standards and what actions they planned to take to improve compliance. The staff report found those reports never resulted in improved compliance.

Commissioner Catherine Sandoval submitted an alternative plan of simple fines and a reporting system that gives equal weight to outages occurring in areas served by independent phone companies like Citizens Telecommunications Company of California (d/b/a Frontier) and SureWest Telephone (d/b/a Consolidated Telephone). Picker didn’t bother to hold a vote on Sandoval’s proposal, instead bringing his own proposal to the commission that approved it on a 3-2 voice vote. Florio and Sandoval voted no.

Despite the easy out, the state’s phone companies are still complaining the fine system was unnecessary because the free market was best equipped to manage service outages. If customers don’t like their provider, they can switch, assuming there is another provider available in the large rural and mountainous parts of the state.

AT&T has gone over the top donating at least $70,000 to back Republican House Speaker Paul Ryan, more than the company has ever donated to anyone else.

It isn’t by coincidence.

According to Communications Daily (subscription req’d), one of Ryan’s top priorities for 2017 is a possible complete rewrite of the Telecommunications Act — the nation’s most important federal law governing telecommunications regulation and the operations of the Federal Communications Commission. Ryan and many of his fellow Republicans have been critical of the FCC’s growing interest in consumer protection and industry oversight.

Ryan’s efforts to push for further deregulation and policies that could lead to further industry consolidation could generate a windfall in the billions for AT&T. Past revisions of the Act have radically transformed the telecom landscape in the United States. President Bill Clinton’s signature on the 1996 Telecommunications Act opened the door to a tsunami of cross-media ownership and radio/TV station consolidation. Provisions in the ’96 Act were promoted as bolstering competition, but critics argued consolidation was favored over competition.

Howard Zinn summarized the effects of the ’96 law in his book A People’s History of the United States: “[it] enabled the handful of corporations dominating the airwaves to expand their power further. Mergers enabled tighter control of information.” Adding to the criticism, Latin American writer Eduardo Galeano echoed: “Never have so many been held incommunicado by so few.”

In 2000 Consumers Union blasted the ’96 Act as legislative bait and switch.

Ryan

“It is evident that the Telecommunications Act of 1996 has failed to produce the consumer benefits policy makers promised because competition has failed to take hold across the communications industry,” the group said. “The fundamental problem is that the huge companies that dominate the telephone and cable TV industries prefer mergers and acquisitions to competition.”

AT&T is reportedly interested in access to lawmakers to lobby for telecom reforms that will allow it to switch off its legacy copper wire phone network in rural America, force certain consumers to wireless-only landline service, get rid of Net Neutrality, allow more wireless industry consolidation, ban municipal broadband, have a louder voice on privacy and cybersecurity regulation, access to wireless spectrum, and preferably a de-fanged FCC.

Public Citizen government affairs lobbyist Craig Holman told Communications Daily AT&T’s contributions are a “fundamental way of gaining access and influence to policymakers,” as part of Washington’s “pay-to-play system.”

The only entity giving Ryan more money than AT&T was the deregulation-obsessed Koch Industries, which gave $75,000.

Ryan’s current chief of staff is a close friend to Big Telecom. David Hoppe lobbied for AT&T, USTelecom and Verizon before being hired by Ryan. Hoppe’s influence appears to be significant after Ryan introduced “A Better Way,” the GOP’s platform for what they will do if they keep control of Congress and win the White House. The plan makes it clear there is unhappiness with the FCC under the leadership of chairman Thomas Wheeler, opposition to Title II reclassification of broadband — a change that opened the door to enforcing Net Neutrality, and a belief the FCC lacks transparency and is living in the regulatory past.

Holman worries that lobbyist spending in Washington, already a problem, has become insane after Citizens United eliminated limits on campaign contributions.

“The lids have been blown off… it’s breathtaking,” Holman told the newsletter.

Tillis was honored in 2011 as ALEC’s “Legislator of the Year” and received an undisclosed cash reward.

Back when we first became aware of Republican member of the North Carolina legislature Thom Tillis around 2010, he was hard at work building his political future just as Republicans were poised to take control of the state legislature for the first time since the days of Reconstruction. Despite running unopposed in 2010, Tillis raised more money from cable and phone companies than any other lawmaker in the state, depositing $37,000 before knowing he would be the next Speaker of the North Carolina House of Representatives in January 2011. To celebrate, AT&T, Time Warner Cable, and Verizon each gave Tillis $1,000 just a few weeks before the swearing-in ceremony. It was money well spent, if you were a cable or phone company doing business in North Carolina.

Tillis left the legislature in 2015 to become the junior U.S. Senator from North Carolina. The telecom industry made sure to keep the campaign contributions flowing, if only to give their thanks for Tillis’ unwavering support for their agenda. Tillis doesn’t care much for his rural constituents still waiting for something better than dial-up internet access and as long as his campaign coffers remain bulging with corporate contributions, he doesn’t think he has much to fear from the state’s voters either. After all, he survived accusations from a resigning House Finance chairman that he had a secret business relationship with Time Warner Cable.

Raleigh’s The News & Observer felt it was their duty to mention Tillis in their editorial pages anyway, taking him to task for “cheering a loss for North Carolina consumers last week after a federal appeals court upheld a cable company protection law that he supported as state House speaker in 2011.”

The newspaper is talking about North Carolina’s infamous anti-public broadband bill that was literally constructed by lobbyists working for Time Warner Cable. The law effectively made it impossible for community broadband providers to bring their much-needed service to adjacent communities that have waited more than a decade for companies like Time Warner Cable, AT&T, CenturyLink and others to offer internet access in rural and underserved parts of the state.

Tillis personally helped shepherd the corporate protection bill, designed to shield incumbent cable and phone companies from community competition, through the state legislature, supporting it every step of the way. It would become law in 2011 and rural broadband in North Carolina hasn’t gotten any better since. In fact, it’s almost stagnant. But Tillis cannot say the same thing about his campaign bank accounts, which continue to bulge with corporate donations now in excess of $11 million.

An effort by the Federal Communications Commission to pre-empt the state law failed in a federal appeals court, much to the delight of Thom Tillis, something the newspaper calls an “insult” to North Carolinians looking for a better deal.

“Today’s ruling affirms the fact that unelected bureaucrats at the FCC completely overstepped their authority by attempting to deny states like North Carolina from setting their own laws to protect hard-working taxpayers and maintain the fairness of the free market,” Tillis said in a statement. Cough, cough.

The newspaper’s response:

Translation: Time Warner and other companies, thank goodness, will retain control of the market without having to worry about towns competing with them and thus will be able to charge people whatever the market will bear.

For Tillis to say the court ruling, which should be appealed, is a triumph for taxpayers is preposterous. It’s a setback. The “free market” he backs is one free of competition from municipal broadband services that offer a better product at a lower price.

Cicconi

Jim Cicconi, AT&T’s well-known top lobbyist, has announced he intends to retire at the end of September, after 18 years of service to the phone company.

Cicconi’s role at AT&T began as general counsel and the executive vice president of law and government affairs at AT&T. Cicconi assumed his current role at a super-sized AT&T in 2005, after SBC (formerly Southwestern Bell) acquired AT&T and kept its name intact.

Few corporate entities spend as much on campaign contributions and other lobbying-related activities, including a starring role at the American Legislative Exchange Council (ALEC), than AT&T.

His replacement will be Bob Quinn, currently the senior vice president of federal regulatory at AT&T Services. Quinn will stay in Washington and report directly to AT&T CEO Randall Stephenson.

“Jim is one of the best and brightest around when it comes to politics and public policy. He is respected by everyone, regardless of political party or viewpoint, as a big thinker, a master strategist and someone able to bridge divides to get things done,” Stephenson said, in a statement. “I greatly appreciate his leadership, wise counsel and countless contributions to AT&T over the years. He’s a great friend and we’ll miss him. I want to wish Jim and his wife, Trisha, all my best as they begin a new chapter in their lives.”

Where Cicconi heads next is anyone’s guess, but Beltway watchers note Cicconi endorsed Hillary Clinton for president. The Wall Street Journal reported Cicconi has joined several other Republican corporate executives signing up for Team Hillary this election cycle. Cicconi is voting Democratic this year, despite supporting every Republican presidential candidate since President Gerald Ford’s run against Jimmy Carter in 1976.

Could there be a role for Jim Cicconi in the Hillary Clinton administration? It would not be unprecedented. Cicconi served in the White House as deputy to the chief of staff for President George H. W. Bush for two years, and four years as special assistant to President Ronald Reagan.

Sock Puppets: Ostensibly “independent” people quietly on the payroll of Big Telecom companies and advocating their positions.

“Net Neutrality would not improve consumer welfare or protect the public interest,” came the considered view of one Jeffrey A. Eisenach, testifying before the Senate Judiciary Committee in September 2014. “The potential costs of Net Neutrality regulation are both sweeping and severe. It is best understood as an effort by one set of private interests to enrich itself by using the power of the state.”

Mr. Eisenach was introduced on the printed formal agenda as a “visiting scholar at the American Enterprise Institute.” If one looked at a transcript of his written testimony, they would find he also co-served as “co-chair of NERA Economic Consulting’s Communications, Media and Internet Practice.” But his views could have effectively represented all the above and more.

The New York Times this week published a two-part article examining the thin lines between public policy scholars, lobbyists, researchers, advocates, corporations, and private citizens. It is an important piece that details the shady world of bought and paid for research, academia, corporate lawyers and lobbyists, and Washington lawmakers that too often accept what they are told without following the money.

On that September day back in 2014 Eisenach wanted his views to be attributed only to him.

Eisenach

“While I am here in my capacity as a visiting scholar at the American Enterprise Institute, the views I express are my own, should not be attributed to A.E.I. or to any of the organizations with which I am affiliated,” Eisenach told the Senate committee.

What was considerably less clear is the name of the client (or an affiliated trade organization) that has underwritten almost every one of a dozen studies he has published on internet-related issues from 2007-2016 — Verizon, the same company that shares his hostile views towards Net Neutrality.

Over the years, it has become difficult to tell whether Eisenach’s views, articles, and study findings are his own, those of his study sponsor, and/or those of his employer. Just tracking Eisenach’s ever-changing employment record was no easy task. In the fall of 2013, Eisenach was the director of the American Enterprise Institute’s new “Center on Media and Internet Policy.” Just a few months later, he joined NERA, one of the country’s oldest economic consultancy firms, as a senior vice president in its telecommunications practice.

From each of these positions, Eisenach can pen the views of some of America’s largest telecommunications companies under the guise of an “independent” study, an invaluable cover tool for a member of Congress confronted with voting on behalf of corporate friends at the cost of consumers in the district.

“A report authored by an academic is going to have more credibility in the eyes of the regulator who is reading it,” Michael J. Copps, a former FCC commissioner who is now a special adviser for the Media and Democracy Reform Initiative at Common Cause, told the newspaper. “They are seeking to build credibility where none exists.”

A former Verizon employee who still does some consulting of his told the Times how the game is played.

“Let’s say you’re in legal and you want to have a paper that says what you want it to say,” said ex-Verizon economist Dennis Weller. “You could have a bunch of economists in house and ask them if they agree with you. How much easier would it be to go to an outside economist and say, ‘How about if I pay you $100,000 to write this?’”

With appropriate disclosure that a company like Verizon paid $100,000 for a report that exactly matches Verizon’s public policy agenda might raise questions on Capitol Hill as to its veracity and independence. If that disclosure goes missing or is hidden under a third-party like a trade association, a lawmaker might assume the report was produced independently and the strong corroboration of Verizon’s views is just a coincidence. That kind of credibility can be worth millions to any company confronting a debate over regulatory policy.

“[Eisenach] is good at linking big theoretical ideas to policy, and he’s been good at making money doing that,” added Weller. “He’s been good at moving from think tank to think tank and company to company, and I don’t think he’s ever lost money doing it.”

The New York Times investigation found while Eisenach testified before Congress ostensibly as a private citizen, he was also filing formal comments to the FCC as a “scholar” with the American Enterprise Institute, was meeting privately with FCC commissioners, organized public briefings that featured powerful senators like John Thune (R-S.D.), who happens to be the chairman of the Senate Commerce Committee. That committee also has direct oversight over the FCC and has spent the last three years scrutinizing FCC chairman Thomas Wheeler. Eisenach even briefed the two Republican FCC commissioners about what AEI’s general counsel had to say about Wheeler’s efforts to get Net Neutrality in place at the FCC. Eisenach offered both commissioners speaking time at AEI events, urging at least one of them to attack Net Neutrality.

“Net Neutrality is obviously top of mind,” he said in an email to that commissioner, Michael O’Rielly. “I’d be delighted if you would use the opportunity to lay out the case against.”

The Times reported Eisenach was hardly alone opposing Net Neutrality. Just weeks after becoming chairman, Wheeler received a letter signed by more than a dozen prominent economists and scholars affiliated with various Washington think tanks or academic institutions. They wanted Wheeler to reject Net Neutrality regulations. The letter attempted to distance the signers from any corporate agenda, noting in a footnote that nobody was compensated for their signature on the letter.

On the other hand, of the dozen studies that were included or referenced in their letter as “evidence,” more than half were entirely funded by giant telecom companies that oppose Net Neutrality. Mr. Wheeler would need a magnifying glass and plenty of free time to ferret out the industry funding disclosures in those attached studies, which were buried in footnotes.

When the industry took the FCC to court over broadband regulation or Net Neutrality, it was more of the same. Verizon was successful opposing an earlier FCC rule on Net Neutrality by trotting out almost two dozen studies and declarations that opposed regulatory oversight — more than half sponsored entirely by the telecommunications companies or trade associations that despise Net Neutrality. Many other studies were written by think tanks and scholars that also had direct financial ties to the companies.

Litan

Another key factor in the debate about Net Neutrality was the cost of implementing it. Again, the incestuous ties between the telecom industry, think tanks, and academia would serve up the “right answers” for Big Telecom’s case against Neutrality when two economists issued a controversial “policy brief” that claimed Net Neutrality would cost $15 billion in new fees and retard broadband expansion and upgrades. (The $15 billion figure came under immediate ridicule by consumer groups that effectively suggested the study authors ‘made it up,’ a case that may have been proven to some degree when the authors suddenly revised it down to $11 billion.)

Robert Litan, then a senior fellow at Brookings and Hal Singer, who used to work at the Progressive Policy Institute, would quickly come under greater scrutiny than Eisenach, probably because their report became central to the industry’s battle against Net Neutrality. The National Cable and Telecommunications Association (NCTA) even built an advertising campaign against Net Neutrality around their study. Politicians opposed to Net Neutrality also regularly quoted from Litan and Singer’s findings to explain their strong opposition to the net policy.

Lost in the debate is who paid Mr. Litan and Mr. Singer for their work. Their employer, Economists Inc., yet another inside-the-Beltway consulting firm, didn’t exactly publicize their “select clients” included AT&T and Verizon — two of the largest opponents of Net Neutrality.

Using think tanks to bolster corporate lobbying has become so common, it has attracted the attention of some members of Congress.

Litan collided with one of the Senate’s fiercest consumer advocates and watchdogs — Sen. Elizabeth Warren (D-Mass.) in a September 2015 hearing about a rules change fiercely opposed by investment bankers that would require financial advisers recommending retirement-associated investments to put their clients’ interests ahead of their own personal gain. Warren has championed the cause of ending high bank and investment-related fees that eat away investor returns. Some of the worst offenders convinced financial advisers to recommend their funds by kicking back large bonus commissions, which enriched the adviser and the investment bank but left seniors hit hard by lost potential earnings.

Sen. Elizabeth Warren (D-Mass.)

Litan’s research questioned the potential benefits of upping ethical standards. He wrote the costs to the banking and investment community to implement the rules would far outweigh any benefits to investors. Litan casually mentioned his affiliation with Brookings, a think tank, to promote his research’s credibility. He didn’t call attention to the fact his 28-page study was produced for a client: Capital Group — a massive financial services company with $1.39 trillion in assets. It would be directly impacted by the imposition of the new rules, which it strongly opposed.

Capital Group paid Economists, Inc. $85,000 for the study. Litan’s cut of the action was $38,800 — or $1,386 per page.

Warren complained Litan was not exactly forthcoming in disclosing his personal gain and his ties to a major opponent of the new rules under consideration.

“These disclosures are problematic: they raise significant questions about the impartiality of the study and its conclusions, and about why a Brookings-affiliated expert is allowed to use that affiliation to lend credibility to work that is…editorially compromised,” Sen. Warren wrote in a letter to Brookings President Strobe Talbott.

The embarrassment to Brookings, which has increasingly relied on corporate-funded research to fund its work, led to rumors Litan was asked to leave, and he resigned shortly thereafter. Litan downplayed the event, calling it a “minor technical violation” of Brookings’ ethics policy, which prohibits those associated with the think tank from using their affiliation with Brookings in any research report or testimony.

The incident fueled consumer groups’ arguments that cozy arrangements between purportedly independent scholars and academics and corporate entities too often results in bought-and-paid-for- research not worth the paper it is printed on. A clear conflict of interest and the lack of prominent funding disclosures makes such reports suspect at best and worthless in many other cases, because no company paying for a report is going to make it public if it conflicts with their agenda.

Singer

Remarkably, other economists, many also engaged in producing reports for corporate clients, rushed to the defense of… Mr. Litan, calling his removal from Brookings the result of a witch hunt.

A letter signed by former Clinton economic advisers W. Bowman Cutter and Everett Ehrlich; Harvard University international trade and investment professor Robert Z. Lawrence; former Clinton chief budget economist Joseph Minarik; and former Clinton economic adviser Hal Singer, who co-authored the report that got Litan in hot water with Sen. Warren, claimed as a result of Litan’s forced resignation, critics of their reports could threaten the credibility of their work with an “ad hominem attack on any author who may be associated with an industry or interest whose views are contrary to [Sen. Warren].”

“Businesses sometimes finance policy research much as advocacy groups or other interests do,” the economists wrote. “A reader can question the source of the financing on all sides, but ultimately the quality of the work and the integrity of the author are paramount.”

Singer has since left the Progressive Policy Institute.

D.C.’s revolving door has also provided lucrative work for those out of government jobs and now working in the private sector, often lobbying those still in government.

Rep. Greg Walden (R-Ore.) had no problem introducing a Wall Street Journal op-ed piece into the Congressional Record written by Robert McDowell, who wears several hats at the Hudson Institute. He’s a “scholar,” a “telecommunications industry lawyer” at a firm retained by AT&T to fight Net Neutrality, and a lobbyist. If his name is familiar to you, that might be because McDowell used to be a commissioner of the Federal Communications Commission from June 1, 2006 to May 17, 2013. Now he is paid to kill Net Neutrality for AT&T.

None of that seem to faze Walden or raise questions about the credibility of the opinion piece he sought to have added to the official record.

“Everyone’s got their point of view,” Walden said last year. “And some of them get paid to have that point of view.”