How exactly did America get stuck with a broadband monopoly in many areas, a duopoly in most others? It did not happen by accident. In this occasional series, “Historical Truths,” we will take you back to important moments in telecom public and regulatory policy that would later prove to be essential for the creation of today’s anti-competitive, overpriced marketplace for broadband internet service. By understanding the trickery and legislative shell games practiced by lobbyists and their elected partners in Congress, you will learn to recognize when the telecom industry and their friends are preparing to sell you another bill of goods. 

Vice President Al Gore watches President Bill Clinton digitally sign the 1996 Telecom Act into law on February 8, 1996.

By the end of the first term of the Clinton Administration, the president faced a major backlash from Republicans two years into the Gingrich Revolution. A well-funded chorus of voices in the business community, the Democratic Leadership Council — a business-friendly group of moderate Democrats, as well as commentators and pundits had the attention of the Beltway media, complaining in unison that the Democrats shifted too far to the left during the first term of the Clinton Administration, leaving it exposed in the forthcoming presidential election to another voter backlash like the one that installed the Gingrich revolutionaries in the House of Representatives and delivered a Republican takeover of the U.S. Senate in 1994.

With pressure over the growing lack of bipartisanship, and a presidential election ahead in the fall, the Clinton Administration was looking for ideas to prove it could work across the aisle and pass new laws that would deliver for ordinary Americans.

Revamping telecommunications policies would definitely touch every American with a phone line, computer, modem, and a television. Before 1996, America’s telecommunications regulation largely emanated from the Communications Act of 1934, which empowered the Federal Communications Commission to establish good order for the growing number of radio stations, telephone, and wire lines crisscrossing the country.

The 1934 Act’s legacy remains today, at least in part. It created the FCC, firmly established the concept of content regulation on the public airwaves, and established a single body to conduct federal oversight of the nation’s telephone monopoly controlled by AT&T.

Efforts to replace the 1934 Act began well before the Clinton Administration. In the early 1980s, Sen. Bob Packwood (R-Ore.) attempted to push for a legislative breakup of AT&T and a significant reduction in the oversight powers of the FCC. The bill met considerable opposition from AT&T, spending $2 million lobbying against the bill in 1981 and 1982. Alarm companies also heavily opposed the measure, terrified AT&T would enter their market and put them out of business. AT&T preferred a more orderly plan of divestiture being carefully negotiated in a settlement of a 1974 antitrust lawsuit by the Justice Department. A 1982 consent decree broke off AT&T’s control of local telephone lines by establishing seven Regional Bell Operating Companies independent of AT&T (NYNEX, Pacific Telesis, Ameritech, Bell Atlantic, Southwestern Bell Corporation, BellSouth, and US West). AT&T (technically an eighth Baby Bell) kept control of its nationwide long distance network.

Also in the 1980s, the cable television industry gained a much firmer foothold across the country, quickly gaining political power through well-financed lobbyists and close political ties to selected members of Congress (particularly Democrat Tim Wirth, who served in the House and later Senate representing the state of Colorado) that allowed them to push through a major amendment to the 1934 Act in 1984 deregulating the cable industry. The result was an early wave of industry consolidation as family owned cable companies were snapped up by a dozen or so growing operators. These buyouts were largely financed by dramatic rate increases passed on to consumers, resulting in cable bills tripling (or more) in some areas almost immediately. By the end of the 1980s, a major consumer backlash began, creating enormous energy for the eventual passage of the 1992 Cable Act, which re-regulated the industry and allowed the FCC to order immediate rate reductions.

The Progress and Freedom Foundation, with close ties to former House Speaker Newt Gingrich, closed its doors in 2010.

The biggest push for a near-complete revision of the 1934 Act came during the Gingrich Revolution. In 1995, the conservative Progress & Freedom Foundation — a group closely tied to then-Speaker Newt Gingrich (R-Ga.) floated a trial balloon calling for the elimination of an independent Federal Communications Commission, replaced by a stripped-down Office of Communications that would be run out of the White House and be controlled by the president. A small army of telecom industry-backed scholars also began proposing privatizing the public airwaves by selling off spectrum to companies to be owned as private property. The intense interest in the FCC by the group may have been the result of its veritable “who’s who” of telecom industry backers, including AT&T, BellSouth, Verizon, the National Cable & Telecommunications Association, cable companies like Comcast and Time Warner; cell phone companies like T-Mobile and Sprint; and broadcasters like Clear Channel Communications and Viacom.

The proposal outraged Democrats and liberal groups who called it a corporate-friendly sell-off and giveaway of the public airwaves. Then FCC Chairman Reed Hundt took the proposal very seriously, because at the time Gingrich lieutenant Tom DeLay’s (R-Tex.) secretive Project Relief group had 350 industry lobbyists, including some from BellSouth and Southwestern Bell literally drafting deregulation bills and a regulatory moratorium on behalf of the new Republican majority, coordinating campaign contributions for would-be supporters along the way. The proposal ultimately went nowhere, lost in a sea of the House Republicans’ constantly changing agendas, but did draw attention to the fact a wholesale revision of telecommunications policy would attract healthy campaign contributions from all corners of the industry — broadcasters, cable companies, phone companies, and the emerging wireless industry.

When it became known Congress was once again going to tackle telecommunications regulation, lobbyists immediately descended from their K Street perches in relentless waves, with checks in hand. There were two very important agendas in mind – deregulation, which would remove FCC rate regulation, service oversight, cross-competition prohibitions, and ownership caps, and ironically, protectionism. The cable and satellite companies had become increasingly fearful of the regional Baby Bells, which arrived in Congress in the early 1990s promoting the idea of entering the cable TV business. The cable industry feared phone companies would cross-subsidize the development of Telco TV by charging telephone ratepayers new fees to finance that entry. The cable industry had carefully developed a de facto monopoly over the prior decade of consolidation. Companies learned quickly direct head-to-head competition between two cable operators in the same market was bad for business.

The original premise of the 1996 Telecom Act was that it would eliminate regulations that discouraged competition. Promoters of the legislation asked why there should only be one phone or cable company in each city and why maintain regulations that kept cable and phone companies out of each others’ markets. Fears about market power and allowing domineering cable and phone companies to grow even larger were dismissed on the premise that a wide open marketplace, with regulations in place to protect consumers and competition would avoid creating telecom robber barons.

The checks handed out by industry lobbyists were bi-partisan. Democrats could crow the new rules would finally give consumers a new choice for cable TV or phone service, and help bring the “information superhighway” of the internet to schools, libraries, and other public institutions. Republicans proclaimed it a model example of free market deregulation, promoting competition, consumer choice, and lower prices.

At a high-brow bill signing ceremony held at the Library of Congress, both President Bill Clinton and Vice President Al Gore were on hand to “electronically sign” the bill into law. Both the president and vice-president emphasized the historical significance of the emerging internet, and its ability to connect information-have’s and have-not’s in an emerging digital divide. Missing from the discussion was an exploration of what industry lobbyists and their congressional allies were doing inserting specific language into the 1996 Telecom Act that would later haunt the bill’s legacy.

On hand to celebrate the bi-partisan bill’s signing were Speaker Gingrich, Sen. Larry Pressler (R-S.D.); Sen. Ernest F. Hollings (D-S.C.); Rep. Thomas J. Bliley Jr. (R-Va.); Rep. John Dingell (D-Mich.); and Ron Brown, the Secretary of Commerce. Pressler was among the soon-to-be-endangered moderate Republicans, Hollings was a holdout against the gradual wave of Republican takeovers in southern “red states,” and Dingell was a veteran lawmaker with close ties to the broadcasting industry.

Some of the bill’s industry backers were also there, some who would ironically see its signing as directly responsible for the eventual demise of their independent companies. John Hendricks of the Discovery Channel, Glenn Jones of Jones Intercable (acquired by Comcast in 1999), Jean Monty of Northern Telecom (later Nortel), Donald Newhouse of Advance Publications (eventual part owner of Bright House Networks and later Charter Communications), William O’Shea of Reuters Ltd. and Ray Smith of Bell Atlantic (today part of Verizon) were on hand. Also in the audience was Jack Valenti of the Motion Picture Association of America, representing Hollywood Studios.

Among the fatal flaws in the Telecom Act of 1996 were its various ‘competition tests,’ which were open to considerable interpretation and latitude at the FCC. The Republican supporters of the bill argued that the presence of an open and free marketplace would, by itself, induce competition among various entrants. They were generally unconcerned with the question of whether new competition would actually arrive. Their priority was lifting the protective levers of legacy regulation as soon as possible. Many Democrats assumed what appeared to be carefully drafted regulatory language would protect consumers by preventing the FCC from lifting protections too early in the competitive process. But lobbyists consistently outmaneuvered lawmakers, finding ways to insert loopholes and compromise language that introduced inconsistencies that could be dealt with and eliminated either by the FCC or the courts later.

For example, lawmakers insisted on unbundling telecommunications network elements, an arcane way of saying new competitors must be granted access to existing networks to be shared at wholesale rates. In practice, this meant if a phone company entered the internet service provider business, it must also make its network available for other ISPs as well. In some areas, competing local telephone companies also offered landline service over existing telephone lines, paying wholesale connection fees to the incumbent local phone company. As competition emerged, the incumbent company usually petitioned for a lifting of the regulations governing their business, claiming competition had arrived.

The first warning the 1996 Act was going awry came a year after the bill was signed into law. Phone companies started raising rates from $1.50-6 a month on average. AT&T was petitioning to hike rates $7 a month. Someone would have to pay to replace the scrapped subsidy system in a competitive market — subsidies that had been in place at the nation’s phone companies for decades. By charging higher rates for phone service in cities and for pricier long distance calls before the arrival of companies like MCI and Sprint, the phone companies used this revenue to subsidize their Universal Service obligations, keeping rural phone bills low and often below the real cost of providing service. To establish a truly competitive phone business, the subsidies had to be reformed or go, and that meant someone had to cover the difference.

“This game is called ‘shift and shaft,'” Sharon L. Nelson, the chairwoman of the Washington Utilities and Transportation Commission, said in 1997. “You shift the costs to the states and shaft the consumer.”

Sam Brownback (R-Kansas)

Gradually, consumers suddenly discovered their phone bill littered with a host of new charges, including the Subscriber Line Charge and various regulatory recovery fees and universal service cost recovery schemes. Phone companies also boosted rates on their unregulated Class phone features, like call waiting, caller ID, and three-way calling. The proceeds helped make up for the tens of billions in lost subsidies, but the end effect was that phone bills were still rising, despite promises of competitive, cheap phone service.

At a hearing of the Senate Commerce Committee later that year, several angry senators said they would never have voted in favor of the Telecommunications Act of 1996 if they had thought it would lead to higher rates. Sam Brownback, a Kansas Republican, was in the line of fire because of his rural constituents. Rates for those customers are subsidized more heavily than elsewhere because of the cost of extending service to them. Rates were threatening to skyrocket.

“We would be foolish to build up all these expectations about competition without saying to the American people, ‘We’re going to have to raise your phone bill,'” Brownback said.

But the rate hikes were just beginning. By the beginning of the George W. Bush administration, telecom lobbyists brought a thick agenda of action items to Michael Powell’s FCC. Despite promises of competition breaking out everywhere, that simply was not the case. Republicans quickly blamed the remaining regulatory protections still in place in noncompetitive markets for ‘deterring competition.’ But the companies knew the only thing better than deregulation was deregulation without competition.

Consolidation wave

The Republican-dominated FCC quickly began removing many of those protective regulations, claiming they were outdated and unnecessary. The very definition of competition was broadened, allowing the presence of virtually any company offering almost any service good enough to trip the deregulation levers. Later, even open access to networks by competitors was often limited to pre-existing networks, not the future next generation networks. Republicans argued those networks should be managed by their owners and not subject to “unbundling” requirements.

The weakened rules also sparked one of the country’s largest consolidation waves in history. Cable companies bought other cable companies and the Baby Bells gradually started putting themselves back together into what would eventually be AT&T, Verizon, and Qwest/CenturyLink. For good measure, phone companies even snapped up a handful of independent phone companies, most notably General Telephone and Electronics, better known as GTE by Verizon and Southern New England Telephone (SNET) by AT&T.

Prices rising as costs dropping.

The cable industry, under the premise it needed territories of scale to maximize potential ad insertion revenue from selling commercials on cable networks, gradually shrunk from at least a dozen well-known companies to two very large ones – Comcast and Charter, along with a few middle-sized powerhouses like Cox and Altice. Merger and acquisition deals faced little scrutiny during the Bush years of 2002-2009, usually approved with few conditions.

The result has been a rate-raising oligopoly for telecom services. In broadcasting, the consolidation wave started in radio, with entities like Clear Channel buying up hundreds of radio stations (and eventually putting the resulting giant iHeartMedia into bankruptcy) and Sinclair and similar companies acquiring masses of local television outlets. On many, local news and original programming was sacrificed, along with a significant number of employees at each station, in favor of inexpensive music, network or syndicated programming. Some stations that aired local news for 50 years ended that tradition or turned newsgathering over to a co-owned station in the same city.

Although telephone service eventually dropped in price with the advent of Voice over IP service, consumers’ cable TV and internet bills are skyrocketing at levels well in excess of inflation. Last year, the Washington Center for Equitable Growth demonstrated that the current consolidated, anti-competitive telecom marketplace results in rising prices for buyers and falling costs for providers.

Your oligopoly tax.

“In truly competitive markets, a significant part of cost reductions would be passed through to consumers,” the group wrote. “Based on a detailed analysis of profits—primarily EBITDA—we estimate that the resulting overcharges amount to more than $45 per month, or $540 per year, an aggregate of almost $60 billion, or about 25 percent of the total average consumer’s monthly bill.”

That is one expensive bill, paid by subscribers year after year with no relief in sight. Several Republicans are proposing to double down on deregulation even more after eliminating net neutrality, which could cause your internet bill to rise further. Several Republicans want to rewrite the 1996 Telecom Act once again, and lobbyists are already sharing their ideas to further curtail consumer protections, lift ownership caps, and promote additional consolidation.

In 2017, negotiations between the city of McAllen, Tex. and wireless companies over the cost of placing new wireless infrastructure neared agreement at $1,500 per network node, an amount not out of line with the kind of infrastructure fees being charged in other cities where utilities want to place their equipment in the public rights-of-way. But just before contracts were ready to sign, the wireless companies broke off negotiations with city officials and began lobbying for a new Texas state law that would set the terms and conditions for placing telecommunications infrastructure statewide regardless of the wishes of individual Texas towns and cities.

SB 1004 was the kind of bill companies like AT&T love. Drafted from talking points supplied by the telecom industry and introduced by a friendly legislator — Republican State Sen. Kelly Hancock, (dubbed “THE WORST” by Texas Monthly magazine) — AT&T and Hancock partnered up to push the legislation through the state legislature, with the help of more than 100 lobbyists working with a budget of $7.8 million, according to a Texas Monitor analysis.

AT&T counts Texas as its corporate home, and company spends lavishly to have its way. It has been the largest lobbying force in the state by far for at least two decades, with 108 registered lobbyists. In second place is TXU Energy Retail, which registered just 29 lobbyists. AT&T offers politicians in the states where it provides local phone service a continuous fountain of campaign contributions. Since 2007, AT&T has spent more than $2.2 million on Texas politicians alone. AT&T donated to 175 of the 181 members of the Texas House and Senate, and its legislative achievements are impressive, winning passage of 14 of the 28 bills the company supported or wrote. Hancock counts AT&T among his top corporate donors, along with the former Time Warner Cable and Comcast.

SB 1004 will cost Texas communities a substantial amount of local control over wireless infrastructure, along with millions of dollars in pole attachment and oversight fees. Hancock, who has no background in telecommunications, arbitrarily set fee caps on wireless facilities at $20 a year for locating equipment on an existing pole and $250 a year if a company attaches equipment on something else. To observers, it isn’t just a bargain for the wireless industry, it could also means some towns and cities could be forced to spend public tax dollars to manage and monitor wireless company infrastructure should something goes awry.

McAllen is among 31 cities in Texas fighting to overturn AT&T’s state law. The city is upset because SB 1004 strips its authority to manage public rights-of-way. By bending over backwards to the wireless industry, companies can put 5G small cells and other equipment just about anywhere with little recourse. In fact, the Texas law mandates companies use pre-existing street signs, traffic garages, and street/traffic lighting as antenna locations wherever possible, which is good news for AT&T but could cause visual pollution and potential safety issues for residents. With below-market attachment fees topping out at just $250, four major national wireless companies can sprout antennas all over town, whether they create eyesores or not.

Bennett Sandlin, executive director of the Texas Municipal League, called that an “unconstitutionally low amount of money.”

“It’s mandatory that when private companies want to make a profit using public land that they pay a reasonable rental fee for it,” Sandlin told the Texas Monitor. “Just like if AT&T wanted to run these facilities through our backyard, we wouldn’t let them do it for free.”

Sandlin adds the wireless industry wants to be given special privileges under the guise of expanding internet access in return for getting cheap access to public rights-of-way, but they don’t want to be regulated like a public utility.

If the new law stands, it is estimated that Texas cities will lose up to $800 million a year in revenue from fees — money that will probably be made up by increasing taxes or other fees.

In Tennessee, the state has gone all out to hurry the passage of a similar law in hopes of convincing wireless companies to make the state one of the first targets for 5G expansion.

Sen. Bill Ketron (R-Murfreesboro), believes clearing a path for rapid 5G deployment will attract billions of dollars of new investment in the state.

“It’s going to transform the world as we currently know it. We’re expecting speeds anywhere from 30 to 50 percent faster as far as connectivity is concerned,” Ketron told his colleagues in the Tennessee legislature. “It opens up that bandwidth for all the data, everything that we’re doing from texting to telemedicine to even autonomous vehicles.”

House Bill 2279 and its companion SB 2504 are written almost word for word on the recommendations of AT&T and other wireless lobbyists. Like a Christmas tree decorated with ornaments, all of AT&T’s legislative priorities can be found in both bills, and not by accident. The phone company’s lobbyists have worked hand in hand with other internet providers, lawmakers, and local governments and co-ops to push the bill for rapid passage. After four months, it is nearing the governor’s signature.

The handful of critics, mostly Democrats, have been reduced to offering concern about the bill’s impact on local self-governance. Sen. Lee Harris (D-Shelby County) told colleagues, “I’m inclined to support this bill, but it does give me pause that we would intervene in these negotiations and set a price,” referring to the bill’s capped application fee of $100 per small cell installation, with a $35 annual renewal fee.

Ketron has frequently defended the bill’s cap on fees, which most observers claim are substantially lower than what wireless companies expected to pay, by claiming he wanted to prevent cities and towns from “cashing in on poles because that would be passed on to all the users through their rate fees, and I know my bill is already high enough.”

Sen. Ketron moving HB 2279 forward in the Tennessee legislature on April 11, 2018.

The potential revenue hit to municipalities would normally be enough to rally opposition, but because of AT&T’s lobbying efforts, most cities and counties in Tennessee have remained neutral on the bill, signaling a virtual guarantee it will become law. The company has worked hard to try to reassure communities the new law will be revenue neutral and be sensitive to the aesthetic needs of local communities. The bill promises that in the event a small cell damages or brings down a pole, the owner of the equipment will be responsible to fix the damage or provide an identical replacement light or pole at the company’s expense.

But based on stories from other communities that have gotten small cell technology for existing 4G LTE networks, problems remain. The biggest issue for residents is visual clutter on poles in their front yards. Some companies also install “lawn refrigerator” cabinets that house backup batteries or other equipment to keep small cells operational in the event of a power outage. Residents frequently complain about these unsightly metal boxes that can appear overnight in the public right-of-way, sometimes right in front of their home, with no warning.

Some town engineers also question the safety of some installations, particularly if multiple carriers seek to place equipment on the same poles. Some have expressed concern about what impact the extra equipment might have in a vehicle collision that brings a pole down onto another vehicle. There are also broader implications once a town surrenders authority over its public rights-of-way to state officials.

Ketron’s personal knowledge of 5G technology and his credibility to deliver on the promises and claims he has made to his colleagues is also open to question. During a brief floor session to consider House Bill 2279, Ketron frequently became tongue-twisted explaining the merits of 5G networks, their functionality, and what benefits they will offer rural Tennessee consumers.

In rambling introductory remarks, Ketron claimed, “the connectivity speed through that bandwidth what 5G brings us […] all are going to be communicating through all that bandwidth of that data.” He also promised a colleague in rural Tennessee that 5G service had a real potential to solve the state’s rural broadband problems, despite the fact the technology would be very costly to deploy in rural areas because of required fiber backhaul and the limited range of each small cell.

The Tennessee Electric Cooperative believes 5G deployment will likely stop with the suburbs, unlikely to expand into rural areas because of its limited range.

“Because of this, we don’t anticipate it will ever see widespread use outside of densely populated areas,” Trent Scott, spokesman for the organization told the Memphis Daily News. “The economics of deploying current 5G technology in sparsely populated areas are going to be a challenge.”

But the idea of AT&T and other wireless companies spending billions on new wireless infrastructure in Tennessee attracts political support for the short-term jobs for installers. The future of 5G technology and its use with Tennessee’s smart grid and intelligent transportation projects of the future may explain why the bill has attracted 40 co-sponsors.

But on the local level in communities like McAllen, there is also recognition wireless companies stand to earn tens of billions from the next generation of wireless technology, and they will be able to earn that revenue at a relatively cheap cost if communities surrender their ability to leverage their publicly owned assets like rights of way. McAllen officials hoped to negotiate a new network of public hotspots to help bring internet access to those who cannot afford traditional internet subscriptions. If AT&T agreed, the city was willing to steeply discount their fees. But no companies showed any interest in the idea. With enthusiastic state legislators willing to introduce legislation tailor-made for those companies, they didn’t have to.

The Tennessee legislature debated passage of the state’s 5G-related legislation for just 15 minutes before passing it 32-1. But did members truly understand it? (14:44)

Blackburn

One of the telecom industry’s most notorious favorites – Rep. Marsha Blackburn (R-AT&T), is running for departing Sen. Bob Corker’s seat in the U.S. Senate, and she will enjoy extra support from Sinclair-owned television stations across the state of Tennessee, sometimes whether those stations want to support her candidacy or not.

Blackburn has a long history supporting the corporate agendas of AT&T and Comcast, pushing for deregulation, blocks on community-owned broadband networks, and opposition to net neutrality. She is the telecom industry’s most reliable member of Congress, willing to introduce new legislation custom-written by industry lobbyists. The Tennessee Tribune noted that Blackburn’s lackluster performance in Congress as little more than an “errand boy” was foreshadowed by Blackburn herself in each of her political races:

During political events when Blackburn first ran for Congress, she said she wanted the job so she could support George W. Bush’s agenda. Later it was to fight Barrack Obama. Now, as Blackburn spokesperson Andrea Bozek told the Associated Press, “We want to ensure President Trump has a reliable vote in the U.S. Senate.”

The AP’s Feb. 14 story confirms the congressman’s consistent posture displayed in person and other ways. She’s spoken of the “leadership” she’s followed. Blackburn’s also behaved like loyal party members by holding private, invited-guests-only sessions, usually for fundraising. In recent months, she excluded the press from a program on telecommunications.

Blackburn has boldly said she’s doing what the people tell her they want. Now, she wants to be a U.S. senator.

Polls in Tennessee show Blackburn trailing against moderate Democrat Phil Bredesen, a former Tennessee governor. That has her corporate allies worried, particularly in the telecommunications and broadcasting business.

Baltimore-area based Sinclair Broadcast Group, which owns or runs more than 200 television stations around the United States, has been under fire for quietly inserting conservative and pro-Trump stories into the local newscasts of the stations it programs, without disclosing those stories have a deliberate spin defending the Trump Administration or various conservative causes favored by Sinclair Broadcasting’s executives. In March, Deadspin produced a video showing uncomfortable local newscasters across the country forced to read a scripted Sinclair promotion attacking the media for “fake news” — a corporate campaign that quickly won praise from President Donald Trump and scorn by media watchdog groups and many viewers.

So funny to watch Fake News Networks, among the most dishonest groups of people I have ever dealt with, criticize Sinclair Broadcasting for being biased. Sinclair is far superior to CNN and even more Fake NBC, which is a total joke.

— Donald J. Trump (@realDonaldTrump) April 2, 2018

Sinclair is the only station owner in the country that requires its stations to insert pre-produced news stories and commentaries it calls “must-runs” that do not always tell viewers in full disclosure  those segments and news stories were produced by Sinclair’s corporate owners from studios in Maryland. This fall, Sinclair plans to ramp up coverage of the 2018 mid-term elections with recently hired reporters, one who formerly worked for the Russian government-owned RT propaganda outlet, to produce political stories that will be required to air by Sinclair’s local stations nationwide. In fact, Sinclair has hundreds of job listings on help-wanted websites.

Among Sinclair’s top priorities for the fall is getting Rep. Blackburn installed in the U.S. Senate. No elected official has received greater support from Sinclair’s PAC than Blackburn. According to Poyntor, Blackburn has already received $4,500 from Sinclair this year. She is the current chair of the House Communications and Technology subcommittee, which oversees the FCC, the same agency headed by Chairman Ajit Pai that has bent over backwards for Sinclair and its efforts to acquire additional stations, including some of the biggest outlets in the country currently owned by Tribune Broadcasting. Pai is now under investigation by the FCC’s inspector general for possible collusion with Sinclair.

The New York Times’ investigation into the close relationship between Sinclair and Pai has been strengthened with evidence Pai and his staff members have frequently met and corresponded with Sinclair executives several times, usually coinciding with agenda items at the telecommunications regulator that have an impact on Sinclair’s business. The meetings, including one with Sinclair’s executive chairman just days before Pai was appointed to head the FCC by President Trump, have raised eyebrows among some members of Congress, but not Rep. Blackburn.

Sinclair’s top lobbyist, a former FCC official, also communicated frequently with former agency colleagues and pushed for the relaxation of media ownership rules, the Times reported. Pai’s talking points about relaxing media ownership rules were suspiciously nearly identical to the language the lobbyist provided the agency promoting the rules change that will allow Sinclair to grow even larger.

Sinclair’s executives need Blackburn’s support to keep Congress in check as the company grows its station count well above long-standing federal station ownership caps that Pai has systematically sought to relax. Putting her in the U.S. Senate could be critical to protect Sinclair, especially if Republicans lose control of the U.S. House of Representatives in this year’s mid-term elections.

In January, Sinclair mailed letters to its station’s managers urging they quietly participate in Sinclair’s PAC, asking each to contribute up to $5,000. Sinclair will spend that money supporting candidates like Blackburn. A copy of the letter was obtained by FTVLive.

You are receiving this letter because you are eligible to participate in the Sinclair Political Action Committee (PAC), our fund that supports candidates for Congress who can influence the future of broadcasting. The Federal Election Commission strictly defines who may participate, and not everyone in the company meets these qualifications, so please do not forward this letter to anyone.

[…] Since the change in administration last year, we now have an FCC chairman who appreciates the important role of local broadcasting enough to launch a number of politically unpopular deregulatory initiatives necessary to ensure the future of our industry. In response, there have been Congressional efforts to counter those actions, such as a legislative proposal to eliminate the UHF discount, which will prevent any broadcaster from meaningful growth in the future. […] We need allies in Congress who understand the role of local television  and who are willing to defend it in today’s ever-changing landscape.

Corporate contributions to federal candidates are prohibited by law, but our PAC is a legally acceptable way for eligible Sinclair employees to make our collective voice heard in the electoral process.

In addition to direct financial support, Sinclair is expected to produce additional news stories and commentaries it will force-air on its stations that echo the themes and views of the candidates the company supports. Sinclair owns five stations in Nashville and Chattanooga and will own a sixth in Memphis if the FCC approves Sinclair’s acquisition of Tribune-owned television stations.

Sinclair’s Tennessee stations are already loaded with Sinclair’s editorials and slanted news coverage pieces that are required to air as part of the stations’ local newscasts. But some stations also air extra weekly news shows that swing to the right, including one hosted by conservative commentator Armstrong Williams, who bought television stations through his entity Howard Stirk Holdings, using Sinclair’s money and contracts with Sinclair to run “his” stations.

WTVC (NewsChannel 9) and WFLI (The CW) in Chattanooga

• Sinclair-owned WTVC (NewsChannel 9) in Chattanooga regularly airs at least some of Sinclair’s “must-run” content, including nationally produced news packages, and it aired the recent anchor-read scripted segments about media bias. News Channel 9 also airs Sinclair’s weekly news shows Full Measure with Sharyl Attkisson and The Armstrong Williams Show. WTVC 9.2 (a subchannel of WTVC) hosts Chattanooga’s Fox affiliate, Fox Chattanooga.
• MPS Media-owned WFLI (The CW Chattanooga) “receives certain services from an affiliation of Sinclair” and occasionally re-airs some of Fox Chattanooga’s local news programming, such as its 10 p.m. Saturday newscasts. The two stations share a main studio address.

WZTV (Fox 17), WUXP (My30), and WNAB (CW58) in Nashville

• Sinclair-owned WZTV (Fox 17) also regularly airs at least some of Sinclair’s “must-run” content, including nationally produced news packages, fearmongering “Terrorism Alert Desk” updates, and the weekly show Full Measure.
• Sinclair-owned WUXP (My30) shares a main studio address with Fox 17 and re-airs at least some of Fox 17’s local news programming.
• Nashville Broadcasting-owned WNAB (The CW58) “receives certain services from an affiliation of Sinclair Broadcast Group” and also shares a main studio address with Fox 17 and My30. It does not appear to regularly air news programming.

Coming soon: WREG (News Channel 3) in Memphis

• WREG (News Channel 3) in Memphis is currently owned by Tribune Media but will soon be owned by Sinclair if the company’s pending acquisition of up to 42 Tribune stations is approved.

(programming details courtesy of Media Matters)

Kansas House Bill 2563 would require content providers that sell products and services in Kansas to pay into the state’s rural broadband fund.

ISPs and any website that generates at least $500,000 in revenue from Kansas residents would be required to pay into a state fund to subsidize rural broadband, if a bill introduced by a Lawrence Republican becomes law.

Rep. Thomas Sloan’s House Bill 2563 — a bill requiring broadband and content providers to pay into the Kansas Universal Service Fund (KUSF), drew immediate fire from cable and telephone companies across the state, and Sprint Corp. told state officials the bill was illegal.

“Rural residents lack the same broadband opportunities as urban residents because of the high cost to serve low-population density areas,” Sloan said. “We have a classic case of rising customer expectations for capabilities delivered through a broadband communications system and a fiscally stressed telecommunications provider network’s ability to serve high-cost rural customers.”

As in many rural states, finding the funding to solve the rural broadband problem gets more difficult as those hardest to serve are also the most expensive to reach. Kansas currently spends about $40 million annually to reach homes and businesses that are still using dial-up or forced to invest in satellite internet service. Most KUSF money is given to incumbent rural telephone, wireless or cable providers to subsidize expansion, keeping costs in line with each company’s Return On Investment expectations.

But as demand for faster and more robust broadband accelerates, and as the definition of broadband itself has evolved, rural providers are increasingly challenged reaching both unserved customers and those now considered underserved because older technologies like DSL often do not meet the current FCC definition of broadband: 25/3 Mbps service.

Sloan said his bill is designed to address both problems by wiring unserved areas and improving access to reliable, high-speed internet service where only slower alternatives now exist. The bill would provide funding to more than 90 Kansas counties with a population density of less than 100 people per square mile (excepting the county seat). In an agricultural state like Kansas, that would directly inject cash for upgrades into large sections of the state. Sloan says his law would cover at least 40% of a provider’s wiring and upgrade costs.

Rep. Sloan

House Bill 2563 would fund a rural broadband project that:

• is capable of minimum download speeds of 25 Mbps and minimum upload speeds of three megabits per second;
• provides an average latency of less than 100 milliseconds to enable the use of real time communications; and
• provides subscribers with a minimum monthly data allowance of 150 gigabytes per month.

“Poor connectivity to the internet undermines operation of businesses, filing of government documents, school research projects, viewing of entertainment and other day-to-day activities,” Sloan said.

ISPs would likely pass along the costs of the new broadband universal service fund charge to subscribers, which means urban Kansans will be contributing a portion of their monthly internet bill to benefit their rural neighbors.

Sloan’s bill would also take the unprecedented step of taxing internet content companies and for-profit websites that generate at least $500,000 in revenue attributable to Kansas customers and use the money for rural broadband expansion as well. Websites like Amazon.com, Netflix, and Hulu would certainly be liable, but so would thousands of other smaller website ventures, including porn websites and online publishers like newspapers.

Telecom industry lobbyists quickly descended on state lawmakers in Topeka to encourage them to kill Sloan’s bill:

• Catherine Moyer, chief executive officer of Pioneer Communications in Ulysses, represents the interests of the State Independent Telephone Association for Kansas and the Kansas Rural Independent Telecommunications Coalition. She is strongly opposed to the bill because she claims it would weaken the current Kansas Universal Service Fund (KUSF) model that has given rural companies confidence and certainty their rural expansion investments will be backed with adequate state subsidies. Under Sloan’s bill, the disbursement formula and the areas entitled to receive state support would be expanded, potentially reducing funds that were payable to projects under the old KUSF subsidy system.
• Patrick Fucik, national director of legislative affairs for Sprint Corp. in Overland Park, is concerned about broadening the universal service fund to tax content providers and other websites, claiming the state lacks the legal authority under federal law to impose such taxes.
• John Idoux, a lobbyist with CenturyLink, which serves more than 100 Kansas communities with fewer than 1,000 residents, said the bill would likely make lawyers rich from the “prolonged” and inevitable legal challenges that will begin if the bill becomes law, “all while creating false hope of rural broadband availability.” Idoux also wants to make sure none of the KUSF money will be spent in areas already served by a fixed broadband provider (like CenturyLink). He does not want to see public money competing with private investment, even if it results in better service.

An audio-only hearing of the Committee on Energy, Utilities and Telecommunications of the Kansas State Legislature on HB2563, held Feb. 5, 2018. (35:53)

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.