Many of the same civil rights groups that regularly advocate their support of giant corporate telecom mergers are back once again to show their support for the controversial T-Mobile/Sprint merger. But that support does not come for free.

A “Memorandum of Understanding” (MOU) that includes “philanthropy and community investment” that does not exclude direct financial contributions from the two wireless companies to these civil rights groups is a major part of a new “understanding” announced today between several organizations founded to represent minority interests and T-Mobile and Sprint that the wireless companies hope will deliver an imprimatur for the troubled merger deal with regulators and politicians.

The key items in the MOU:

1. Standing up a national diversity and inclusion council comprised of non-employees from diverse groups, including each of the multicultural leadership organizations that are party to the MOU, and other highly esteemed community leaders to facilitate open communication over the development, monitoring, and evaluation of diversity initiatives and to provide advice to the New T-Mobile senior executives.

2. With the help and input of the council, developing and implementing a Diversity Strategic Plan addressing each of the key elements of the MOU and reflecting best practices in the industry.

3. Increasing the diversity of its leadership and workforce at all levels including its Board governance, to reflect the diversity of the communities in which it operates.

4. Making a targeted effort to increase partnerships, business, and procurement activities with diverse business enterprises in a range of categories such as financial and banking services, advertising, legal services and asset sales. New T-Mobile aims to become a member of the Billion Dollar Roundtable by 2025.

5. Expanding wireless offerings to low-income citizens, underserved minority populations and insular and rural areas, and to organizations serving these underserved communities [including] a significant philanthropic investment for institutions serving disadvantaged or underrepresented communities to support tech entrepreneurship and to bridge the gap in literacy.

The groups, most familiar to Stop the Cap! readers that have followed civil rights groups engaged in pay for play advocacy, include:

• National Urban League: A notorious friend of big cable and phone companies, the Urban League is a regular supporter of telecom mergers and opposes net neutrality.
• The League of United Latin American Citizens (LULAC): Brazenly photographs its executive leadership accepting big checks from AT&T and other telecom companies.
• National Action Network: Rev. Al Sharpton’s group loves to support telecom mergers and acquisitions and lobbies to block consumer protection regulation.
• UnidosUS: Receives most of its funding from corporate interests.
• Asian Americans Advancing Justice | AAJC
• OCA – Asian Pacific American Advocates: One of Comcast’s special friends, OCA advocated against new consumer privacy rules two years ago claiming poor people want more intrusive ads.

In a joint statement, the groups urged the FCC to approve the T-Mobile/Sprint merger “so the combined New T-Mobile can definitively launch these enhanced diversity efforts and expansion of service to all communities included in the MOU.”

“T-Mobile is honored to partner with these visionary organizations to create an action plan of this magnitude that includes commitments to diversity and inclusion that are bolder than ever before,” John Legere, CEO of T-Mobile and CEO of New T-Mobile, said in a statement. “With this MOU, we have doubled down on ensuring we represent the communities we serve today and will serve as the New T-Mobile in the future. We are excited for the New T-Mobile to become a reality so we can get to work on delivering these commitments.”

Except in most cases, these kinds of arrangements serve mostly as window dressing, gussying up otherwise nakedly anti-consumer merger deals under the guise of serving minority or disadvantaged interests. Money often quietly flows between the corporate and the non-profit side, usually in the form of donations. Some groups may also offer token advisory board positions to executives, which usually cements an ongoing advocacy relationship.

Members of these civil rights organizations have a right to be puzzled why such groups are spending significant time and resources engaged in corporate advocacy. The interests of two major corporations cementing a multi-billion dollar merger deal and civil rights groups trying to fight discrimination and improve the lives of their constituents are often tangential, if not in direct opposition to each other. Apparently the money that usually comes with these arrangements matters much more.

A corporate-funded business advocacy group backed by the telecom industry and the Koch Brothers is pursuing a lawsuit asking the D.C. Court of Appeals to toss pro-consumer deal conditions imposed by the Federal Communications Commission in return for granting its 2016 approval of the acquisition of Time Warner Cable and Bright House Networks by Charter Communications.

The Competitive Enterprise Institute filed an initial petition with the FCC asking the agency to rescind its own deal conditions shortly after the merger was completed. CEI argued the agency imposed “harmful merger conditions on Charter that had nothing to do with the merger itself,” and that the FCC did not have the authority to put corporate merger deal conditions in place.

CEI specifically targeted its objections to the FCC’s seven-year ban on Charter Spectrum data caps and consumption billing, arguing the ban raised broadband pricing for all Spectrum customers and prevented the cable company from offering discounts to low usage customers. It also claimed that Charter had to increase pricing for all customers because the FCC required Spectrum to raise broadband speeds, introduce a discounted internet program for low-income customers, and expand service to at least two million new households not presently served by Spectrum.

The FCC ultimately rejected CEI’s petition in 2018, claiming the group had no standing to challenge the merger transaction or deal conditions. The group called the FCC’s decision wrong, claiming consumers will “have to foot the bill for an overreaching federal agency” and that “the FCC has no authority to micromanage the internet at the public’s expense.”

This week, it filed an opening brief appealing the FCC’s decision to the D.C. Court of Appeals, which oversees the legality of the FCC’s regulatory decisions.

The 101-page filing maintains the FCC overreached by imposing any deal conditions on the 2016 multi-billion dollar merger deal, especially those that might require the merged company to spend money to improve service to customers. CEI argued such conditions were “arbitrary and capricious” and had no place as part of approving a business merger transaction.

The group submitted evidence from four individuals who attested to their belief that the deal conditions “probably contributed” to price increases after customers abandoned their legacy Bright House and Time Warner Cable plans in favor of Spectrum plans and pricing. The customers reported rate hikes ranging from $4 a month to $20 a month “for the same services,” but did not attach copies of their bills allowing a court to ascertain whether those rate increases involved cable television or broadband service or both.

No evidence was provided to prove CEI’s assertion that rate increases were directly tied to merger conditions other than a declaration from Robert W. Crandall, an economist and nonresident senior fellow at the Technology Policy Institute in Washington, D.C. Crandall argued any deal conditions requiring a cable company to spend money to expand, improve, or discount services would likely impact subscriber rates.

No disclosure was made regarding any fees paid to Crandall to conduct research on behalf of CEI. The Technology Policy Institute is financially backed almost entirely by the Koch Brothers and corporate interests including AT&T, Charter Communications, Comcast, and Verizon.

CEI’s legal brief depends on assertions made by then-minority Republican members of the FCC, notably then-Commissioners Ajit Pai and Michael O’Rielly, who objected to the FCC’s merger conditions. CEI ignored the views of the then-Democratic majority on the Commission, who voted to approve the merger with deal conditions. Then Chairman Thomas Wheeler and Commissioners Mignon Clyburn and Jessica Rosenworcel were not mentioned anywhere in CEI’s brief. Today the Commission has a Republican majority, with Pai now serving as chairman.

The FCC in 2016 (from left to right): Commissioners Ajit Pai, Mignon Clyburn, Chairman Tom Wheeler, and Commissioners Jessica Rosenworcel and Michael O’Rielly

CEI’s argument follows a similar pattern to arguments made against net neutrality — namely, the FCC has no authority to regulate broadband services or the pricing and policies of the companies providing it, as companies offer different services including health therapy, if you want to offer this you could check this hypnotherapist certification online just for this. Charter Communications has occasionally argued the same point with the New York State Public Service Commission, which imposed deal conditions of its own in return for approval of the merger.

Charter has consistently reserved the right to object to deal conditions requiring it to build out service to rural areas, as well as any deal conditions that go beyond the authority of state regulators to oversee broadband service. In Charter’s view, state regulators have no such authority. In the state’s view, the PSC has the right to consider a myriad of factors because its regulatory mandate  requires approving or rejecting a merger based on the public interest. Its 2016 merger order found the transaction was not in the public interest unless the parties agreed to certain deal conditions, which closely resembled those required by the FCC. When Charter allegedly failed to meet the conditions it agreed to, the New York regulator could not directly compel Charter Spectrum into compliance, but it could and did decertify the merger itself.

Should the D.C. Court of Appeals find in favor of CEI, the deal conditions imposed by the FCC would be revoked, although Charter could continue to honor those conditions voluntarily. Separate legal cases would have to be brought in state courts to invalidate deal conditions imposed by state regulators.

President Donald Trump promised voters during last summer’s Republican National Convention that he would ‘not look the other way’ and ignore Washington politicians that have “sold out to some corporate lobbyist for cash.”

But newly released documents show that while Mr. Trump was delivering his remarks, top Republican officials and some of the nation’s biggest corporate lobbyists were enjoying a plush, corporate funded private hideaway where politicians could safely meet with corporate interests away from the public’s glare.

The Center for Public Integrity could not directly obtain information about the “cloakroom” — the informal name designated by the GOP for the space designed to look like a cross between an elite hotel lobby, a private club, and expensive office space — because the organizers sought to keep it a secret. But an unrelated lawsuit filed in a Ohio court made public important bank records which revealed just how much some of America’s top corporations were willing to quietly spend to keep the Republicans happy.

The top donor was Comcast Corp., which contributed $200,000. Microsoft, the Koch Brothers, and AT&T each donated $100,000. Those companies were joined by large banks, the oil, gas, and pharmaceutical industries, and curiously an $80,000 check from the Morongo Band of Mission Indians, among the top political donors in California. The group has spent more than a quarter-billion dollars on campaign contributions and lobbying to convince lawmakers to allow the Native Americans the right to spread slot machines around the state.

To keep the contributions a secret, Republicans created a limited liability corporation — “Friends of the House 2016 LLC,” according to bank records. This group was not obligated to disclose its funding sources, and fought hard in court to keep the names of its corporate donors from being revealed to the public.

Corporate interests were nervous about sponsoring the 2016 Republican convention that was widely expected to choose Mr. Trump as the Republican candidate. Corporate interests told the New York Times last year they were under pressure to scale back their contributions as the campaign grew divisive. AT&T told the newspaper it was limiting its contributions to convention activity “aimed at benefiting the democratic process.” The company had no comment about how their contribution to fund an exclusive, strictly off-limits to the public-“cloakroom” accomplished that.

Instead of foregoing contributions, the Republicans devised a way to quietly obtain corporate money while giving donors cover from public scrutiny.

“The immediate effect is it looks like it hid certain donors to the convention,” said Lawrence Noble, senior director and general counsel for the Campaign Legal Center, a nonpartisan nonprofit that advocates for campaign finance reform.

One of the designated perks of being a donor to the ‘Friends of the House’ was a free pass to enjoy the facilities for refreshment and relaxation.

“As a sponsor of the hospitality venue, we were invited to use it, as well,” said Jori Fine, a spokeswoman for Health Care Service Corp. The company paid Friends of the House 2016 LLC $100,000, according to bank records, a payment that Fine said “supported hospitality and other events during the 2016 GOP Convention in Cleveland.”

Should a donor’s lobbyist or corporate executive bump into top Republican lawmakers inside, such as House Speaker Paul Ryan, who was given his own private space in the “cloakroom,” that was ‘purely coincidental.’ Since donor companies were given access while non-donors were not, lawmakers using the “cloakroom” could easily deduce donors by the presence of their lobbyists or company officials.

Most of the companies who made contributions are still trying to keep it a secret. In addition to an effort to get a Ohio judge to seal the records before they were made public, 15 of the 20 donor companies refused to confirm they were donors and had no comment or did not respond when asked about it.

Marketing materials from the company that constructed the “cloakroom” give the public their only view of its elegance. Members of the public were not allowed inside.

“The convention is one big loophole to the limits of corrupting money on politics,” Paul S. Ryan, vice president for policy and litigation at Common Cause, a nonpartisan nonprofit that advocates for limits on money in politics told the Center. He is not related to House Speaker Paul Ryan.

The Center for Public Integrity also exposed how companies and individuals like the Koch Brothers claimed they were staying away from contributing to the GOP convention, while eagerly feeding secret contributions to the LLC that benefited it:

Friends of the House 2016 LLC appears to have provided companies an especially discreet opportunity to support the GOP convention.

For several of the companies that didn’t otherwise donate cash directly to the Cleveland 2016 Host Committee — a list that includes 12 of the entities listed in the bank records — there was little or no public evidence of their use of corporate dollars to support of the 2016 Republican convention.

For example, Comcast Corp., which wrote a $200,000 check to Friends of the House 2016 LLC, isn’t listed as a donor by the Cleveland 2016 Host Committee.

Neither is Koch Companies Public Sector, which wrote a $100,000 check to Friends of the House 2016 LLC. In fact, a Koch Industries spokesman in June said the billionaire brothers Charles and David Koch, well-known Republican megadonors, weren’t planning to contribute to the convention at all.

Neither firm responded to a request for comment about the payments to Friends of the House 2016 LLC.

The majestic space created for politicians and corporate interests to relax together in a familiar “cloakroom” setting was no small undertaking, according to Joe Mineo Creative, the company that transformed the Cleveland Cavaliers’ practice basketball court inside the Quicken Loans Arena in Cleveland into something that would fit comfortably in a high-end D.C. hotel or private offices for corporate executives. It was with some embarrassment to the Republicans that the company that did the work was sufficiently proud of it to boast about it in marketing materials, giving the public its only glimpse of how more than $1 million in corporate contributions was spent during the three-day convention. When it was over, the “cloakroom” was torn down to restore the basketball court.

It isn’t known if any campaign finance laws were broken as a result of these contributions.

‘I win’ — Pai wins a second 5-year term at the FCC.

Republicans in the U.S. Senate on Monday confirmed Federal Communications Commission Chairman Ajit Pai for a second five-year term at the regulatory agency at a time when he is in the process of dismantling the legacy left by the former Obama Administration, which introduced consumer telecommunications reforms and mandated Net Neutrality.

Pai won confirmation with unanimous Republican support, joined by four Democrats — Sens. Jon Tester (Mont.), Gary Peters (Mich.), Joe Manchin (W.V.), and Claire McCaskill (Mo.). Every other Democrat in attendance opposed his nomination, many raising serious doubts about his performance and regulator philosophy. Pai was a former lawyer for Verizon and has delivered policy speeches sponsored by large corporate interests, including Americans for Prosperity, which has close ties to the Koch Bros.

Although Pai promised in a statement after the vote he would continue to focus on “bridging the digital divide, promoting innovation, protecting consumers and public safety, and making the FCC more open and transparent,” his critics complain he has spent most of his time repealing Obama era rules and regulations to erase the legacy of his predecessor Thomas Wheeler.

Pai is widely expected to preside over the elimination of Net Neutrality/Open Internet protections, despite millions of objections from ordinary Americans who wrote the FCC in historic numbers. Most requested the agency preserve the rules that prevent internet providers from establishing paid fast lanes and speed throttles.

Pai “has established a clear record of favoring big corporations at the expense of consumers, innovators, and small businesses,” Senate Democratic Leader Chuck Schumer said.

Senate roll call vote on the nomination of Ajit Pai for another 5-year term.

The current FCC chairman has also received withering criticism from consumer and public interest groups for his apparent close ties to Sinclair Broadcast Group, which itself has ties to the Trump Administration. Critics accuse Pai of engineering FCC rule changes that closely coincide with the business agenda of Sinclair, the nation’s largest owner of local television stations. Sinclair is currently awaiting FCC approval of its acquisition of Tribune Media, which will include local stations serving major cities including New York, Chicago, and Los Angeles.

Sen. Elizabeth Warren (D-Mass.) was particularly critical of Pai’s performance, suggesting he was little more than a corporate tool:

“As powerful companies know, it is good to have friends on the inside and they have invested a lot of money in making friends. Giant corporations have spent unlimited amounts of money to elect politicians who will promote their views and to flood Congress with lobbyists who will work around the clock to destroy laws and rules that the industry doesn’t like and to reshape those laws to suit corporate interests.

“[…] Powerful corporations need weak agencies that won’t hold them accountable, so they work to fill those agencies with their allies — friends who can undo the rules that giant corporations don’t like. Friends who won’t go after those companies when they throw the rules out the window to make an extra buck. The FCC is one of the agencies that has been on their hit list for a long time, and now they see their opportunity to execute a corporate takeover of the FCC, and they started at the top with Ajit Pai, President Trump’s pick to chair the FCC. Since his appointment as chair of the FCC, Chairman Pai has worked at breakneck speed to transform the FCC from an agency that works in the public interest to a big business support group.”

Sen. Elizabeth Warren (D-Mass.) explains her reasons why she doesn’t support the nomination of FCC Chairman Ajit Pai for another five-year term. (8:43)

O’Rielly

Republican FCC Commissioner Mike O’Rielly wants the FCC to prohibit states from attempting an end run around the current majority’s broad-based deregulation of ISPs, likening it to a war of socialist forces vs. free market capitalism.

Speaking at the American Legislative Exchange Council’s Spring Task Force Summit Annual Summit in Charlotte, N.C. on May 5, O’Rielly made it clear he intends to stop states from writing broadband privacy rules to replace those killed by the Republican majority in Congress and also wants to restrict states from enacting new rules impacting Voice over IP and broadband. O’Rielly told the audience he had already spoken to Chairman Ajit Pai about his ideas, potentially giving his agenda a majority vote on the Commission. Currently, the FCC has just three commissioners – Ajit Pai, Mike O’Rielly, and Democrat Mignon Clyburn.

In earlier remarks, Pai rejected allowing states to make their own decisions about broadband privacy policies.

“It is both impractical and very harmful for each state to enact differing and conflicting privacy burdens on broadband providers, many of which serve multiple states, if not the entire country,” said Pai. “If necessary, the FCC should be willing to issue the requisite decision to clarify the jurisdictional aspects of this issue.”

FCC action could potentially pre-empt any state laws from at least 10 states that have either passed ISP privacy laws or are planning to.

O’Rielly declared he intends to move broadband regulation away from the agenda favored by the Obama Administration’s FCC chairman Thomas Wheeler and return to hands-off policies allowing cable and phone companies to manage their businesses without government interference. O’Rielly told a cheering audience at the corporate-funded conference that under Chairman Pai’s watch, the FCC will return to “its previous approach to broadband that enabled staggering innovation, creativity, competition, disruption and consumer benefit.”

O’Rielly characterized groups fighting for consumer legislation banning zero rating/data caps, rate regulation, oversight, and consumer protection laws as part of a nefarious “progressive agenda to vanquish capitalism and economic liberty.” Like ALEC, O’Rielly claimed, the FCC has been unfairly attacked by progressive groups that call out both Chairman Pai’s agenda at the FCC and ALEC itself for ghostwritten legislation actually written by large corporate interests and passed for their welfare.

“Like ALEC, the new commission is facing its share of unwarranted and inappropriate criticism,” O’Rielly complained.

O’Rielly’s speech declared war on three hot issues broadband companies and consumers are concerned with: Net Neutrality, community-owned broadband networks, and state regulators seen as meddling with the free market.

• Net Neutrality: “All of the propaganda in the world cannot paper over the fact that these new burdens were not in response to actual marketplace events but hypothetical concerns dreamed up by radical activists.”
• Regulation of Voice over IP Phone Service in Minnesota to assure quality of service: “Such inappropriate jurisdictional overreaches by states should be nipped in the bud.”
• Municipal Broadband: “It would be easy, as some have done, to blindly support any means necessary to get more and faster broadband to people they represent.”

O’Rielly sought a tighter partnership with ALEC to stop consumer groups from enacting new laws that protect an open internet:

“The members of ALEC can serve an important role as the new Commission seeks to restore free market principles to broadband offerings. Many of you know all too well of the pressure on us to buckle and acquiesce to the whims of the misinformed screaming for Net Neutrality. You likely face it at your respective statehouses as you debate the various matters before you. The ‘progressive agenda’ being pushed in so many settings is really an effort to use government as a means to redistribute hard earned assets from one group of people to favored interests. Do not let your voices go unheard as Net Neutrality advocates slowly, but surely, seek to drag the U.S. economy toward socialism.”

On municipal broadband, O’Rielly stretched his premise into a comparison of communities that want to have the ability to build their own networks with past offers of discounted heating oil from former Venezuelan dictator Hugo Chavez, suggesting good deeds on the surface may lead to unintended consequences later on.

Byron is on ALEC’s Communications and Technology Task Force

O’Rielly has also been infuriated with Minnesota’s Public Utilities Commission, which has been sparring with Charter Communications over its cable “digital phone” service in the U.S. District Court in St. Paul.

In March 2013, Charter Fiberlink Companies transferred 100,000 Minnesota customers to “an affiliate, Charter Advanced Services Companies, which provided VoIP phone service that was not certified” by the PUC, the Commerce Department said.

Better known as Spectrum Voice, Charter’s VoIP service had failed to collect any fees to support the state’s Telecommunications Access Minnesota program, which provides equipment for hearing-impaired and blind consumers who use the Minnesota Relay Service. Charter also refused to credit low-income consumers who would otherwise qualify for Lifeline phone service at discounted rates.

If the court determined VoIP was a “telecommunications service,” Minnesota regulators could force Charter to comply with state law. If determined to be an “information service,” federal rules exempting Charter would apply.

The week after O’Rielly delivered his speech a Minnesota federal charge ruled in favor of Charter and against the state regulator.

U.S. District Judge Susan Richard Nelson relied on arcane terminology that lets Charter avoid state regulation:

“The court agrees with Charter Advanced that Spectrum Voice engages in net protocol conversion, and that this feature renders it an ‘information service’ under applicable legal and administrative precedent,” according to the opinion. Although Judge Nelson agreed that “the frank purpose” behind Charter’s customer shuffling was to “limit the reach of state regulation, thereby enhancing Charter’s market competitiveness,” she said the service fit the qualifications of an information service.

“The touchstone of the information services inquiry is whether Spectrum Voice acts on the customer’s information — here a phone call — in such a way as to ‘transform’ that information,” the opinion said.

Regardless of the judge’s decision, O’Rielly wants to prevent a recurrence of state regulator interference in the cable industry’s phone business.

“The commission should have just declared VoIP to be an interstate information service,” O’Rielly told the audience. “Arguably, VoIP is just an application not even subject to FCC jurisdiction much less that of individual states.”