Divided Loyalties? -- Mayor John Marks

A growing scandal involving AT&T and the mayor of the state capital of Florida has further exposed the link between AT&T’s pay-for-play public policy agenda and the politicians willing to act as puppets for the phone company’s interests.

Tallahassee Mayor John Marks strongly promoted an Atlanta nonprofit group to participate in a $1.6 million dollar federal broadband grant to expand Internet access to the urban poor and train disadvantaged citizens to navigate the online world, without disclosing he was a paid adviser to the group.

What the rest of the city never knew is that the Alliance for Digital Equality (ADE) is little more than an AT&T astroturf effort — a front group almost entirely funded by AT&T that actually did almost nothing to bring Internet access to anyone.

The Alliance for Digital Equality, a group supposedly focused on erasing the digital divide, spends an inordinate amount of time running radio ads under the alias of “Alliance for Equal Access” for competition in cable-TV… when that competition comes from AT&T U-verse. Listen to two radio commercials run in Georgia and Tennessee, both AT&T service areas, promoting legislation that was introduced at the behest of AT&T and promoted by ADE. (2 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

In fact, an investigation by a Tallahassee newspaper reviewing the group’s federal tax returns found four of every five dollars spent by ADE went to board members, consultants, lawyers, and media companies for the purpose of promoting AT&T’s agenda against Net Neutrality and for the company’s various business interests:

Marks also didn’t mention when he brought ADE to the City Commission in September 2010 that AT&T has been paying him since the early 1990s as a lawyer and consultant.

Tax returns for ADE show it got $7.36 million from AT&T from 2007 through 2009. Among its expenses, it spent $2.7 million on consulting and legal fees, $1.2 million on travel, $1.1 million on media and communications and $931,509 in pay to officers and board of advisers members.

ADE spent nothing on projects to provide Internet access to underserved areas from 2007-09. It wasn’t created to do so. The group’s mission, as reported to the IRS, was to advocate “technology inflows to underserved communities by interacting with elected officials, policymakers at all levels of government and private sectors.”

In those interactions, ADE presented the same message as AT&T in opposition to greater price regulation of the Internet.

View the 2007, 2008, and 2009 tax returns for the Alliance for Digital Equality yourself.

Some of ADE’s officers and board members are familiar to Stop the Cap! readers as loyal AT&T advocates.  Even worse, many of them routinely play the “race card” whenever AT&T’s agenda is threatened.  Take Shirley Franklin.  She is the former mayor of Atlanta, but these days her biggest constituent is AT&T.  Last August, Franklin helped lead an attack against Free Press, a consumer advocacy group, that she said “target[ed] women, African-Americans and other minorities” after the group complained about the ties between several civil and minority rights organizations and AT&T.

ADE unsurprisingly is also all-for the merger of AT&T and T-Mobile

Julius Hollis, chairman and founder of the Alliance for Digital Equality, was even more strident.

“I am extremely disappointed in the Free Press, not only in its policies and tactics that they are attempting deploy in their strategy paper, but equally disturbing are its attempts to portray the African-American and Latino consumers as expendable in their efforts to promote Net Neutrality,” Hollis said last year. “In my opinion, this is going back to the tactics that were used in the Jim Crow era by segregationists. It’s no better than what was used in the Willie Horton playbook by Lee Atwater who, upon his deathbed, asked for forgiveness for using such political behavior tactics.”

Stop the Cap! exposed ADE ourselves as a “dollar-a-holler” advocate in August 2010 when we learned the majority of the group’s funds came from AT&T.

Anne Landman, managing editor of the Center for Media and Democracy, told the Tallahassee Democrat the purpose of groups almost entirely sponsored by a single corporate interest is to obfuscate the messenger. “It’s a nontransparent way of operating,” she said. “People don’t know who’s behind these efforts. So it’s fake, and it’s phony, and it gives people wrong information. It’s designed to purposely fool people.”

The newspaper spent months trying to track down financial reports, tax filings, and other documentation about the group, and ran into repeated resistance.  At one point, written requests sent to the group’s headquarters in Atlanta were returned unopened and marked “refused.”

ADE’s corporate influence is bad enough, but when the group uses race, gender, and economic cards to attack real public interest groups, it raises eyebrows, particularly when the group doing the attacking is financed by a corporate entity.  The Black Agenda Report, a website that can hardly be accused of racism, called out Franklin and the organization she represents.

The newspaper’s investigation also found all of ADE’s employees were actually independent contractors.  Non-profit group experts claim the entire structure of ADE is unusual because it funnels all of its money through contractors.

Tallahassee Mayor John Marks is apparently one of them, having received $86,000 as a member of ADE’s board of advisers in addition to AT&T paying him directly as a lawyer and consultant.

With the recent revelations, Tallahassee’s broadband grant is now in ruins and will be returned, unspent.  Marks is reportedly under investigation by the FBI for potential corruption.  And another AT&T astroturf effort has been exposed and has blown up in the company’s face.

[flv]http://www.phillipdampier.com/video/WCTV Tallahassee Mayor Under Fire Over ATT-ADE Ethics Scandal 3-29-11 – 9-15-11.flv[/flv]

Stop the Cap! has compiled almost a year of coverage of the burgeoning scandal in the Tallahassee mayor’s office, courtesy of WCTV-TV, which has doggedly pursued the scandal with assistance from its news partner Tallahassee Reports.  (10 minutes)

Verizon Communications was supposed to have a “neutral” position regarding the takeover bid by AT&T to absorb T-Mobile, but Lowell McAdam, CEO could sit on his hands no longer, and told the Wall Street Journal “the match had to occur” and cautioned if the government blocks the merger, it needs to cough up more spectrum for wireless companies like his, and fast.

McAdam made those comments earlier today at an investor conference on the afternoon of the first court hearing on the Department of Justice lawsuit to derail the $39 billion deal.

My Breakfast With Julius

McAdam has the luxury of getting his point across directly with Washington’s movers and shakers.  While consumers continue to clamor in overwhelming numbers against the idea of T-Mobile being absorbed into a super-sized AT&T, McAdam enjoyed breakfast with Federal Communications Commission chairman Julius Genachowski.

Consumers don't have the luxury of breakfast with the chairman of the FCC

“I have taken the position that the AT&T merger with T-Mobile was kind of like gravity,” Mr. McAdam said. “It had to occur, because you had a company with a T-Mobile that had the spectrum but didn’t have the capital to build it out. AT&T needed the spectrum, they didn’t have it in order to take care of their customers, and so that match had to occur.”

“So in my discussions with the FCC and folks on the Hill, if we want to stop or if the government wants to stop a merger like that, they need to then step up and say, this is how we are going to get spectrum in the hands of people,” he said.

Mr. McAdam said that can be done through secondary auctions, incentive options or freeing up additional spectrum. He said the wireless industry needs more spectrum, and the FCC will be “very focused on delivering that.”

McAdam didn’t say T-Mobile could have always sold its unwanted spectrum to AT&T instead of entering into a $39 billion dollar merger deal that will further reduce wireless consumers’ choice in carriers.

Unfortunately, consumers bringing delicious breakfast pastries and a point of view about wireless consolidation are unlikely to find themselves sharing a cup of joe with the head of the FCC.  They can’t even be trusted with the FCC Chairman’s direct phone number, which executives at AT&T and Verizon both have.

No Second Cup of Coffee for Jittery Investors

Investors may not want a cup of coffee themselves, considering the jittery reception some have had to news Verizon would forgo a recurring dividend and spend money at wireless spectrum auctions instead.

“When it makes sense, we’ll have a dividend,” he said. “When there’s a better first use for those dollars, we’ll do that with it, and the dividend will either be on a hiatus or less.”

At least seven states including New York, California, Illinois, Pennsylvania, Washington and Ohio have announced they are joining the Justice Department lawsuit to stop AT&T’s attempted buyout of T-Mobile USA.

The merger has been heavily criticized by consumer groups for its potential to reduce wireless competition and stifle the marketplace with just two dominant carriers — AT&T and Verizon Mobile.  Now several Attorneys General have joined the voices of opposition to the merger.

“This proposed merger would stifle competition in markets that are crucial to New York’s consumers and businesses, while reducing access to low-cost options and the newest broadband-based technologies,” New York Attorney General Eric T. Schneiderman said in a statement.

Washington State Attorney General Rob McKenna said the deal would “result in less competition, fewer choices and higher prices for Washington state consumers.”

“The proposed merger would create highly concentrated markets in Massachusetts and could lead to higher prices and poorer service.” Massachusetts Attorney General Martha Coakley said.

Illinois Attorney General Lisa Madigan said the deal would “substantially lessen competition for mobile wireless telecommunications services in Illinois and across the United States.”

“Blocking this acquisition protects consumers and businesses against fewer choices, higher prices, less innovation, and lower quality service,” Madigan added.

“Our review of the proposed merger between AT&T and T-Mobile has led me to conclude that it would hinder competition and reduce consumer choice,” California Attorney General Kamala D. Harris said. “Enforcement of antitrust law is the responsibility of the Attorney General and is vital to protecting our state’s economic strength and tradition of innovation for the betterment of all Californians.”

Shuler

Although the level of opposition to the transaction continues to grow, AT&T itself claims to remain confident it can push the merger through.

“It is not unusual for state attorneys general to participate in DOJ merger review proceedings or court filings,” AT&T representative Michael Balmoris said.

Several Democratic lawmakers, most of whom receive substantial campaign contributions from AT&T, would seem to underline the company has the support of at least some in Congress.

Rep. Heath Shuler (D-North Carolina), joined 14 Democratic co-signers in a letter sent Thursday to President Barack Obama encouraging him to support the merger deal.

“By settling the proposed merger of AT&T and T-Mobile USA we can put thousands of Americans back to work and promote economic development across the country,” Shuler said. “I urge the President to strongly consider the vast benefits this merger will have on job creation and the economy and quickly resolve any concerns the Administration may have with the proposal.”

Among the co-signers: Rep. John Barrow, Rep. Mike Ross, Rep. Dan Boren, Rep. Dennis Cardoza, Rep. Joe Baca, Rep. Leonard Boswell, Rep. Ben Chandler, Rep. Jim Costa, Rep. Henry Cuellar, Rep. Mike McIntyre, Rep. Mike Michaud, Rep. Collin Peterson, Rep. Loretta Sanchez, and Rep. David Scott.

AT&T currently also has support for their deal from 11 states, many which receive very little service directly from T-Mobile: Alabama, Arkansas, Georgia, Kentucky, Michigan, Mississippi, North Dakota, South Dakota, Utah, West Virginia and Wyoming.

A court hearing is scheduled for Sept. 21 to discuss settlement options.

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/KFOR Oklahoma City ATT T Mobile Merger 9-19-11.mp4[/flv]

KFOR in Oklahoma City explores the latest developments in the T-Mobile/AT&T merger case.  (2 minutes)

The Chicago Tribune‘s advocacy for the merger of AT&T and T-Mobile leaves the facts far behind, and raises questions about just how much the newspaper understands about telecommunications company mergers.

In this morning’s edition, the newspaper claims efforts by the Justice Department to block the merger will “slow [wireless] progress to a crawl.” That’s a half-baked conclusion, considering AT&T’s own accidentally-public internal documents reveal a willingness to spend $39 billion on a merger while balking at spending one-tenth of that amount to upgrade its own 4G network.  The injury to rural America the Tribune fears most was self-inflicted by AT&T even before the merger was announced.

Access to advanced wireless Internet is the key. A merger of AT&T and T-Mobile would bring an under-served swath of America into the 21st century of high-speed mobile data communication. Much like the rural electrification movement of the 1930s, this deal offers a chance for many Americans to leap ahead technologically.

If Justice gets its way, progress will slow to a crawl. We think the FCC should approve the merger after obtaining appropriate concessions — and Justice should settle its case sooner, not later. Dragging out this proceeding stands to hurt a nation that can ill afford more damage from a government too often hostile to business interests.

Evidently the editorial writers at the Tribune have been drinking AT&T’s Kool-Aid.  There is more to see here than AT&T’s advocacy kit, if one is willing to look beyond lucrative, saturation advertising campaigns and lobbying.

The government got the bright idea of helping wire rural America for electricity when commercial providers refused.

AT&T’s own merger announcement spoke glowingly of the “increased efficiencies” a more concentrated wireless marketplace will deliver, but said very little to investors about T-Mobile’s cellular network being the key to unlock rural wireless.  The reason is simple: T-Mobile doesn’t have a rural wireless network.  In fact, T-Mobile’s long-standing focus on urban markets means considerable duplication of resources in medium and large cities — resources that might help reduce the number of dropped calls in cities like New York, Chicago or San Francisco, but hardly a boon for residents of Ottumwa, Iowa, who barely get a signal today from AT&T, much less T-Mobile.

We agree with the Tribune editors when they say improved advanced wireless Internet is important to rural America. But nothing within AT&T’s massive document dump guarantees rural 4G service, especially after four national companies judged it didn’t make much business sense.  Three national carriers hardly strengthens the case.  In fact, investors will expect AT&T to use precisely the same Return on Investment-formulas that have always ruled rural 4G wireless out of bounds.

The Tribune forgets rural electrification came in spite of private power companies, who viciously opposed government electrification projects (unless they benefited from them).  The reason rural Americans went without electrical service until the late 1930s was the same reason rural Iowa doesn’t have lightning-fast 4G service — it doesn’t make much business sense to provide it.

When President Franklin D. Roosevelt declared electricity an essential utility service every American should be able to access at a fair price, government resources picked up where Wall Street left off — financing electric generation projects and encouraging the development of power cooperatives and municipal utilities. It often took more than 20 years to pay off the costs of the infrastructure — at a price (and wait) unwilling to be covered by giant power companies like Chicago’s Commonwealth Edison at the time.

It’s much the same story for AT&T today.  The enormous telecommunications company was provided an estimate of $4 billion to upgrade its network to 4G service nationwide.  Company executives refused, suggesting the time required to recoup that investment was too far out for their tastes.  But a $39 billion dollar merger with T-Mobile, despite the much higher price tag, delivers immediate benefits they can take to the bank: decreased competition and pricing innovation.  T-Mobile delivers both on its own, and even in fourth place influenced the service plans and pricing at other wireless carriers.  By eliminating that competition, the pressure to reduce prices or enhance service is diminished.  The ability to raise prices, or reduce the number of services, is enhanced.

Astonishingly, the Tribune writers completely ignore the biggest reason why AT&T cannot afford to slow progress to a crawl.  Its name is Verizon Wireless, and AT&T ignores its own network at its peril.  That’s why competition, even from America’s #4 carrier, remains critically important.

While the Chicago Tribune seems comfortable rallying for the cause of one of their advertisers — a multi-billion dollar corporation it sees as a victim of government “anti-business” hostility, we’re more concerned about protecting American wireless consumers from the results of AT&T’s efforts to cut competition (and consumer-friendly services) to a bare minimum.  AT&T’s carrot is the illusory promise of enhanced wireless service in rural communities the company routinely ignores.  The Justice Department, thankfully, prefers the stick — recognizing an anti-competitive, anti-trust feeding frenzy when it sees one, and is correct when it gives it a good whack.

So who is for the ABC Plan?  Primarily phone companies, their business partners, and dollar-a-holler astroturf friends:

American Consumer Institute:  SourceWatch called them a telecom industry-backed astroturf group.  Karl Bode from Broadband Reports discovered “the institute’s website is registered to ‘Stephen Pociask, a telecom consultant and former chief economist for Bell Atlantic [today Verizon].”  The group, claiming to focus “on economic policy issues that affect society as a whole,” spends an inordinate amount of its time on telecommunications hot button issues, especially AT&T and Verizon’s favorites: cable franchise reform and opposition to Net Neutrality.

Anna Marie Kovacs:  Determining what is good for Wall Street is her business, as founder and President of Regulatory Source Associates, LLC. RSA provides investment professionals with analysis of federal and state regulation of the telecom and cable industries.

Dollar-a-holler support?

Consumer Awareness Project: A relatively new entrant, CAP is AT&T’s new darling — a vocal advocate for AT&T’s merger with T-Mobile.  But further digging revealed more: the “group” is actually a project of Washington, D.C. lobbying firm Consumer Policy Solutions, which includes legislative and regulatory advocacy work and implementation of grassroots mobilization.

That is the very definition of interest group-“astroturf.”

Randolph May from the Free State Foundation supports "state's rights," but many of them want no part of a plan his group supports.

Free State Foundation: A misnamed conservative, “states rights” group.  Leader Randolph May loves the ABC Plan, despite the fact several individual states are asking the FCC not to impose it on them.

Hispanic Technology & Telecommunications Partnership:  Whatever Verizon and AT&T want, HTTP is also for.  The group was embroiled in controversy over its unflinching opposition to Net Neutrality and love for the merger of AT&T and T-Mobile.  Its member groups, including MANA and LULAC, are frequent participants in AT&T’s dollar-a-holler lobbying endeavors.

Robert J. Shapiro: Wrote an article for Huffington Post calling the ABC Plan worth consideration.  Also worth mentioning is the fact he is now chairman of what he calls an “economic advisory firm,” which the rest of the world calls a run-of-the-mill D.C. lobbyist firm — Sonecon.  It comes as no surprise AT&T is a client.  In his spare time, Shapiro also writes reports advocating Internet Overcharging consumers for their broadband service.

Indiana Exchange Carrier Association: A lobbying group representing rural Indiana telephone companies, primarily owned by TDS Telecom.  It’s hardly a surprise the companies most likely to benefit from the ABC Plan would be on board with their support.

Indiana Telecommunications Association: A group of 40 telephone companies serving the state of Indiana.  For the aforementioned reasons, it’s no surprise ITA supports the ABC Plan.

Information Technology and Innovation Foundation:  Reuters notes this group received financial support from telecommunications companies, so lining up behind a plan those companies favor comes as little surprise.  ITIF also believes usage caps can deter piracy, so they’re willing to extend themselves way out in order to sell the telecom industry’s agenda.

Internet Innovation Alliance:  Another group backed by AT&T, IIA also funds Nemertes Research, the group that regularly predicts Internet brownouts and data tsunamis, which also hands out awards to… AT&T and Verizon.

The Indiana Exchange Carrier Assn. represents the phone companies that will directly benefit from the adoption of the ABC Plan.

Bret Swanson:  He penned a brief note of support on his personal blog.  When not writing that, Swanson’s past work included time at the Discovery Institute, a “research group” that delivers paid, “credentialed” reports to telecommunications company clients who waive them before Congress to support their positions.  Swanson is a “Visiting Fellow” at Arts+Labs/Digital Society, which counted as its “partners” AT&T and Verizon.

Minority Media & Telecom Council: Tries to go out of its way to deny being affiliated or “on the take” of telecom companies, but did have to admit in a blog posting it takes money from big telecom companies for “conference sponsorships.”  Some group members appear frequently at industry panel discussions, and mostly advocate AT&T’s various positions, including strong opposition to reclassify broadband as a utility service.

MMTC convened a Broadband and Social Justice Summit earlier this year that featured a range of speakers bashing Net Neutrality, and the group’s biggest highlighted media advisory on its website as of this date is its support for the merger of AT&T and T-Mobile.  Yet group president David Honig claims he can’t understand why some consumer groups would suspect groups like his of engaging in dollar-a-holler advocacy, telling The Hill, “We’ve seen no examples of reputable organizations that do things because of financial contributions. It’s wrong to suggest such things.”

Mobile Future: Sponsored by AT&T, Mobile Future curiously also includes some of AT&T’s best friends, including the Asian Business Association, LULAC, MANA, the National Black Chamber of Commerce, and the United States Hispanic Chamber of Commerce.

Montana Independent Telecommunications Systems: Primarily a group for Montana’s independent telephone companies, who will benefit enormously from the ABC Plan.

What major corporate entity does not belong to this enormous advocacy group?

The National Grange:  A group with a long history advocating for the interests of telephone companies.  Over the years, the National Grange has thrown its view in on Verizon vs. the RIAA, a request for Congress to support industry friendly legislation, a merger between Verizon and NorthPoint Communications, and USF issues.

The Keep USF Fair Coalition was formed in April 2004. Current members include Alliance for Public Technology, Alliance For Retired Americans, American Association Of People With Disabilities, American Corn Growers Association, American Council of the Blind, California Alliance of Retired Americans, Consumer Action, Deafness Research Foundation, Gray Panthers, Latino Issues Forum, League Of United Latin American Citizens, Maryland Consumer Rights Coalition, National Association Of The Deaf, National Consumers League, National Grange, National Hispanic Council on Aging, National Native American Chamber of Commerce, The Seniors Coalition, Utility Consumer Action Network, Virginia Citizen’s Consumer Council and World Institute On Disability. DSL Prime helps explain the membership roster.

Taxpayers Protection Alliance:  One of the tea party groups, TPA opposes higher USF fees on consumers.  The ABC Plan website had to tread carefully linking to this single article favorable to their position.  Somehow, we think it’s unlikely the group will link to the TPA’s louder voice demanding an end to broadband stimulus funding many ABC Plan backers crave.

TechAmerica: Guess who is a member?  AT&T, of course.  So is Verizon.  And CenturyLink.  TechAmerica call themselves “the industry’s largest advocacy organization and is dedicated to helping members’ top and bottom lines.”  (Consumers not included.)

Tennessee Telecommunications Association: TTA’s independent phone company members stand to gain plenty if the ABC Plan is enacted, so they are happy to lend their support.

Rep. Terry's two biggest contributors are CenturyLink and Qwest.

Representative Greg Walden (R-Oregon):  His top five contributors are all telecommunications companies, including CenturyLink, Pine Telephone, and Qwest.  He also gets money from AT&T and Verizon.  It’s no surprise he’s a supporter: “We are encouraged by the growing consensus among stakeholders as developed in the ‘America’s Broadband Connectivity Plan’ filed with the Federal Communications Commission today, and we hope that consensus will continue to grow.”

Representative Lee Terry (R-Nebraska): He co-signed Rep. Walden’s statement.  Rep. Terry’s two biggest contributors are Qwest and CenturyLink.  Now that CenturyLink owns Qwest, it’s two-campaign-contributions-in-one.  And yes, he gets a check from AT&T, too.

Representative Steve Scalise (R-Louisiana): “Today’s filing of the ‘America’s Broadband Connectivity Plan’ is welcomed input on the intercarrier compensation and Universal Service Fund reform front,” Scalise said.  Now Scalise is ready to welcome this year’s campaign contribution from AT&T, which he has not yet reportedly received.  In 2008, Scalise received $13,250.  In 2010, $10,000.  This cycle, so far he has only been able to count on Verizon, which threw $2,500 his way.  Scalise voted earlier this year to overturn the FCC’s authority to enact Net Neutrality.

USTelecom Association: The only news here would be if USTA opposed the ABC Plan.  Included on USTA’s board of directors are company officials from: Frontier Communications, AT&T, CenturyLink/Qwest, Windstream, FairPoint Communications, and Verizon.  That’s everyone.

Wisconsin State Telecommunications Association:  Their active members, including Frontier Communications, are all telephone companies inside Wisconsin that will directly benefit if the ABC Plan is enacted.