Pai

Federal Communications Commission Chairman Ajit Pai will meet with Wall Street analysts at a Wells Fargo investors conference on Thursday closed to the public and news media.

Pai is expected to focus most of his remarks on the topics of 5G wireless networks and forthcoming spectrum auctions, but will also likely praise the Trump Administration’s overall deregulatory policies and achievements Pai feels point to the regulator’s recent successes. In attendance will be top executives from T-Mobile, Verizon, AT&T, and the powerful D.C. law firm Wilkinson Barker Knauer, LLP that specializes in serving telecommunications industry clients. That firm will present a regulatory discussion entitled, “Will Washington Topple Tech and Telecom.”

A review of past investor conferences shows it is rare for a chairman of the FCC to appear at such private events, usually attended by professional analysts working for Wall Street investment firms and top executives from the businesses analysts cover for their investor clients. The propriety of public officials attending closed door events with the industries they regulate is controversial, particularly because topics discussed during informal meetings are not always disclosed to the public through “ex parte” notices filed with the Commission. But Pai has proven to be an industry-friendly chairman and formerly served as counsel for Verizon Communications.

A transcript of Pai’s formal remarks at the event will be published on the FCC’s website within a few days of his speech, and it likely Pai will speak on issues already a part of the agency’s public record. Normally the opportunity to strengthen personal ties between regulators like Pai and the regulated and a chance to meet Pai to exchange views is worth gold to many investors, but this specific event will be conducted entirely “virtually” online.

Defenders claim such meetings allow the FCC to become better informed about Wall Street investor concerns not discussed by corporate executives worried about any negative impact on their stock price. They also contend there is no opportunity for Pai to engage in “ex parte” discussions because the event is entirely webcast online. But critics note regulators that appear at such industry events rarely attend Question and Answer events open to the public. Critics view that as further evidence of the kinds of cozy D.C. relationships between the government and special interests many ‘good government’ groups decry as a conflict of interest.

Gov. Mike DeWine and his wife, Francis.

Ohio’s incoming Republican state officeholders are being showered in gifts, cash, food and drink to celebrate their 2018 election victories and get their start of the 2019 legislative term off ‘in the right direction’, all courtesy of Ohio’s biggest telecommunications and for-profit utility companies.

It’s the perfect opportunity for powerful state lobbyists to introduce themselves and get their feet in the doors of the incoming Republican officeholders that dominate the governor’s office and state legislature. At least $1.7 million in gifts and cash were directed to incoming Gov. Mike DeWine and his running mate, Lt. Gov. Jon Husted alone.

Some familiar companies donated the maximum $10,000 apiece to the DeWine-Husted Transition Fund, a special set-aside account to cover inauguration activities and allow incoming politicians to count stacks of $100 bills. AT&T and Charter Communications — the dominant phone and cable companies in Ohio — each maxed out their contributions just before DeWine announced a new industry-friendly appointment to the Public Utilities Commission of Ohio (PUCO) and prepares the 2019 budget for the Consumers’ Counsel, an underfunded state office that represents the interests of Ohio consumers dealing with problem utilities, phone, and cable companies.

DeWine did not disappoint his corporate benefactors, this week announcing the appointment of Samuel Randazzo, a retired lawyer with a 40 year history of representing the interests of utility companies, as the newest commissioner at PUCO.

“We are disappointed in this choice, as Mr. Randazzo has a lengthy career fighting against renewable energy and energy efficiency in Ohio,” Heather Taylor-Miesle, president of the Ohio Environmental Council Action Fund, said in a release. “This move is out-of-step with the rest of the Midwest, where governors are committing to the future of energy, instead of the past.”

Randazzo has a long record of opposing utility mandates or regulations that interfere with the industry’s ability to generate profits, and is expected to be one of the friendliest regulators for utility companies in recent Ohio memory. Where did DeWine get Randazzo’s name? Scott Elisar, an attorney in Randazzo’s former law firm, was also a member of the nominating council that presented the list of four candidates for DeWine to consider for the PUCO position.

Consumer groups are also concerned that DeWine will soon appoint another member of the Commission after current PUCO Chairman Asim Haque leaves on March 1 to pursue a new job opportunity.

Randazzo

“We recommend that [his] seat be filled with a bona fide representative of residential consumers, especially considering that the current PUCO commissioners include two former utility representatives,” a statement from the Office of the Ohio Consumers Counsel said this week.

Other newly elected officials are also getting a taste of the action, with donor contributions limited to $2,500 each. Considering the number of special interests writing checks this year, several members of DeWine’s administration are also enjoying considerable free cash, despite the contributions limit: Attorney General David Yost of Columbus, $33,500; state Auditor Keith Faber of Celina, $29,000; Secretary of State Frank LaRose of Hudson, $30,500; and state Treasurer Robert Sprague of Findlay, $15,000.

An early test of what corporate influence can buy from Ohio legislators suggests it does not cost very much to participate in “pay for play” politics. FirstEnergy Solutions, Ohio’s bankrupt utility that reported “massive financial problems” last spring, still managed to scrape together $172,000 in campaign contributions for Ohio House candidates — mostly Republican, and another $565,000 for the Republican Governors Association during the 2018 election.

FirstEnergy spent much of last year lobbying the legislature to stick ratepayers with a $30 annual rate increase to bail out some of its unprofitable power generation facilities. It failed, along with a more comprehensive proposed corporate bailout package worth $2.5 billion. FirstEnergy became one of DeWine’s biggest supporters in his race for governor. DeWine, in turn, has signaled his support for the FirstEnergy bailout rejected last year. That could explain why DeWine received five times more money in contributions from the utility than his Democratic opponent.

On the first day of Ohio’s new 2019 legislative session, by sheer coincidence, the General Assembly announced a new standing committee on power generation, which will have the authority to approve a new bailout package for the troubled utility. FirstEnergy also announced it was abandoning some of its more costly energy producing facilities. Decommissioning costs will likely be financed by new surcharges on Ohio residential and business customer utility bills.

The Senate approved a resolution on a largely party line vote Wednesday that sends a symbolic message to the FCC it erred when it voted to repeal net neutrality.

The final vote pitted all 49 Democrats against all but three Senate Republicans to condemn the FCC’s decision to rollback the rules, scheduled to take effect in June. The three Republicans that joined the Democrats in favor of preserving net neutrality were Susan Collins from Maine, Lisa Murkowski from Alaska, and John Kennedy from Louisiana — the latter two a surprise.

“Today is a monumental day,” said Sen. Edward Markey (D-Mass.) during debate over the resolution. “Today we show the American people who sides with them, and who sides with the powerful special interests and corporate donors who are thriving under this administration.”

The measure faces a much tougher fight in the Republican-dominated House, where it may have trouble even coming up for a vote.

Using the Congressional Review Act, a law that permits Congress to revisit — and reject — decisions by federal agencies within 60 “session days” of their approval, Democrats drew a clear line in favor of net neutrality, which may become an issue in the midterm elections if the Republican-controlled House refuses to bring the measure up for a vote. If the measure passes the House, it will require the signature of President Trump to take effect. That may be unlikely, considering the president once claimed net neutrality was a plot by the Obama Administration to gain control of the internet.

Kennedy explained his vote in favor of net neutrality as an issue of trust.

“You either trust your cable company or you don’t,” Kennedy explained. “If you trust your cable company, you won’t like my vote. Under the 2017 order, a cable company can censor, throttle, or employ fast lanes so long as it discloses. The response from the other side of that is, well, just switch cable companies. But 22% of Louisianans and 19% of all Americans have access to only one internet service provider that can provide the minimum FCC mandated speed. So what are they going to do?”

FCC Chairman Ajit Pai reiterated his belief net neutrality protections were not needed and would deter investment by cable and telephone companies in their networks, a claim hotly disputed by consumer groups that point to evidence investment rose even after net neutrality took effect.

The issue of keeping the internet free and open remains bipartisan, with wide percentages of Republicans and Democrats in favor of net neutrality. That may put Senate Republicans who voted against the measure and are up for re-election on the hot seat this fall.

NPR:

This issue doesn’t cut along clean party lines, said Steven Kull, who runs the Program for Public Consultation at the University of Maryland and has studied public attitudes on net neutrality. The program’s research has found that majorities of Americans support government-mandated net neutrality protections.

“People are on the Internet a lot and it’s a big part of their daily experience and the prospect that it will be changed in some fundamental way is disturbing to quite a lot of them,” Kull said.

Fear is a great motivator for voters. Senate Democrats believe their resolution that put every Democrat on record in support of net neutrality — and most Republicans on record against it — can turn what was once considered a wonk issue, into a wedge issue this November. “People underestimate the passion of Internet voters, at their peril. They are mad, and they want to know what they can do, and this vote will make things crystal clear,” he said.

March was a big month for lobbyists visiting the Federal Communications Commission, which opened the doors to wireless special interest groups for “ex parte” meetings with agency staffers that, in turn, brief the three Republicans and two Democrats that serve as FCC commissioners.

Last month’s ex parte filings reveal strong evidence of a coordinated, well-financed campaign by America’s wireless operators and cable companies to get the FCC to ease off regulations governing forthcoming 5G networks, particularly with respect to where tens of thousands of “small cell” antennas will be installed to deliver the service.

Four industry trade groups and companies are part of the concerted campaign to scale back third party control over where 5G infrastructure will end up. Some want to strip local governments of their power to oversee where 5G infrastructure will be placed, while others seek the elimination of laws and regulations that give everyone from historical societies to Native American tribes a say where next generation wireless infrastructure will go. The one point all four interests agree on — favoring pro-industry policies that give wireless companies the power to flood local communities with wireless infrastructure applications that come with automatic approval unless denied for “good cause” within a short window of time, regardless of how overwhelmed local governments are by the blizzard of paperwork.

Here are the big players:

The Competitive Carriers Association (CCA)

The CCA is primarily comprised of rural, independent, and smaller wireless companies. In short, a large percentage of wireless companies not named AT&T or Verizon Wireless are members of CCA. The CCA’s chief goal is to protect the interests of their members, who lack the finances and political pull of the top two wireless companies in the U.S. CCA lobbyists met ex parte with the FCC multiple times, submitting seven filings about their March meetings.

CCA’s top priority is to get rid of what they consider burdensome regulations about where members can place cell towers and antennas. They also want a big reduction in costly environmental, tribal, and historic reviews that are often required as part of a wireless buildout application. CCA lobbyists argue that multiple interests have their hands on CCA member applications, and fees can become “exorbitant” even before some basic reviews are completed. The CCA claims there have been standoffs between competing interests creating delays and confusion.

Costs are a relevant factor for most CCA members, which operate regional or local wireless networks often in rural areas. Getting a return on capital investment in rural wireless infrastructure can be challenging, and CCA claims unnecessary costs are curtailing additional rural expansion.

NCTA – The Internet & Television Association

The large cable industry lobbyist managed to submit eight ex parte filings with the FCC in March alone, making the NCTA one of the most prolific frequent visitors to the FCC’s headquarters in Washington.

The NCTA was there to discuss the Citizens Broadband Radio Service (CBRS) band, which is of particular interest to cable companies like Charter Communications, which wants to get into the wireless business on its own terms. Cable lobbyists, under the pretext of trying to avoid harmful interference, want to secure a large percentage of the CBRS band for their licensed use, at the expense of unlicensed consumers and their wireless industry competitors.

The cable industry wants CBRS spectrum to be wide, spacious, and contiguous for its cable industry members, which should open the door to faster speeds. The lobbyists want to make life difficult for unlicensed use of the band, potentially requiring cumbersome use regulations or costly equipment to verify a lack of interference to licensed users. They also want their traffic protected from other licensed users’ interference.

CTIA – The Wireless Association

The wireless industry’s largest lobbying group made multiple visits to the FCC in March and filed 10 ex parte communications looking for a dramatic reduction in local zoning and placement laws for the next generation of small cells and 5G networks.

The CTIA has been arguing with tribal interests recently. Tribes want the right to review cell tower placement and the environmental impacts of new equipment and construction. The CTIA wants a sped-up process for reviewing cell tower and site applications with a strict 30-day time limit, preferably with automatic approval for any unconsidered applications after the clock runs out. Although not explicitly stated, there have been grumblings in the past that tribal interests are inserting themselves into the review process in hopes of collecting application and review fees as a new revenue source. Wireless companies frequently question whether tribal review is even appropriate for some applications.

Sprint has had frequent run-ins with tribal interests demanding several thousand dollars for each application’s review under the National Historic Preservation Act (NHPA), which is supposed to protect heritage and historical sites.

In Houston, Sprint deployed small cells around the NRG Stadium, but found itself paying fees to at least a dozen Indian Tribal Nations as part of the NHPA. The NHPA opens the door to a lot of Native Americans interests because of how the law is written. Any Tribal Nation can express an interest in a project, even when it is to be placed on public or private property that is not considered to be tribal land. In Houston, Sprint found itself paying $6,850 per small cell site, not including processing fees, which raised the cost to $7,535 per antenna location. Those fees only covered tribal reviews, not the cost of installation or equipment. Some tribes offered better deals than others. The Tonkawa Tribe has 611 remaining members, mostly in Oklahoma. But they sought and got $200 in review fees for the 23 small cell sites deployed around the stadium. The Kiowa Indian Tribe of Oklahoma, not Texas, charged $1,500 for the 23 applications it reviewed.

Sprint complains it has paid millions in such fees over the last 13 years and no tribe to date has ever asked to meet with Sprint or suggest one of its towers or cell sites would intrude on historic or tribal property.

“Tribal Nations are continuing to demand higher fees and designate larger and larger areas of interest,” says Sprint. “At present, there are no constraints on the amount of fees a Tribal Nation may require or the geographic areas for which it can require payment for review. The tribal historic review process remains in place even in situations—such as utility rights-of-way—where the Commission has exempted state historic review.”

The CTIA wants major changes to the NHPA and other regulations regarding cell tower and antenna placement before the stampede of 5G construction begins.

Verizon

Verizon has been extremely busy visiting with the FCC during the month of March, filing 10 ex parte communications, also complaining about the tribal reviews of wireless infrastructure.

Verizon argues it wants to expand wireless service, not effectively subsidize Native American tribes.

“The draft order’s provisions to streamline tribal reviews for larger wireless broadband facilities will likewise speed broadband deployment and eliminate costs, thus freeing up resources that can, in turn, be used to deploy more facilities,” Verizon argued in one filing.

Verizon has also been carefully protecting its most recent very high frequency spectrum buyouts. It wants the FCC to force existing satellite services to share the 29.1-29.25 GHz band for 5G wireless internet. Verizon has a huge 150 MHz swath of spectrum in this band, allowing for potentially extremely high-speed wireless service, even in somewhat marginal reception areas.

“Verizon assured the commission that even when sharing with other services, we would be able to make use of the 150 MHz of spectrum in this block to provide high-speed broadband service to American consumers,” said one filing.

Frontier is the dominant phone company in West Virginia.

Frontier Communications terminated the employment of West Virginia Senate president Mitch Carmichael just weeks after he refused to kill a pro-competitive state broadband expansion bill the company fiercely opposed.

Carmichael (R-Jackson), worked for Frontier for six years, most recently as a sales executive. Shortly after voting in favor of a bill making it easier for public broadband co-ops to deliver better broadband service in West Virginia, he was suddenly given two weeks notice his employment was being terminated.

Frontier refused to comment about its sudden decision to eliminate Carmichael’s job, but there is speculation the company was unhappy with Carmichael’s unwillingness to act on their behalf in the state legislature. Carmichael told the Charleston Gazette his dismissal came as a complete surprise, and he was not aware of any other layoffs in recent weeks.

“This was not something I wanted at all,” Carmichael told the newspaper. “They had a bad year, from a legislative perspective. They severed ties from me. 

Carmichael also noted Frontier was insistent on getting him to sign a nondisclosure agreement that would forbid him from talking about his job being terminated. He claims he refused to sign it.

The newspaper calls Carmichael Frontier’s most powerful ally in the state legislature. As Senate president, Carmichael was instrumental in killing a 2016 bill that would have launched a statewide municipal broadband network that Frontier never wanted to see get off the ground. Carmichael argued the competing network would have discouraged Frontier from investing in or expanding its own network, largely acquired from Verizon Communications in 2010. The bill died in the House of Delegates.

Carmichael

But as West Virginians continue to endure poor quality DSL service from Frontier and the company continues to experience financial pressures from its declining stock price and increasing investor discontent, it seemed unlikely Frontier would embark on dramatic new spending to boost internet speeds. This year, legislators proposed allowing up to 20 families or businesses to form nonprofit co-ops to offer internet service where Frontier and other providers have failed to expand service. The bill also permits up to three cities or counties to join forces and jointly construct new public broadband networks.

Frontier’s lobbyists loathed the bill, worrying about the prospects of facing new competition. The company devoted significant attention to block the bill in the legislature, but was apparently surprised when Carmichael refused to repeat his 2016 objections and recused himself from debate on the bill, and later voted for it. A short time later, his job was gone.

Whether Frontier assumed Carmichael’s primary loyalty should lay with the company and not the public that elected him to office isn’t known. Ironically, Carmichael tried to leave Frontier last summer after accepting a job with Frontier rival Citynet. Frontier offered a lucrative pay increase to convince Carmichael to change his mind. Ultimately, Carmichael returned to Frontier days later last August after he said the company begged him to stay.

Carmichael makes it clear he wasn’t in office just to represent Frontier’s political and corporate interests.

“The one thing I’m not going to do here as Senate president is advance special interests,” Carmichael told the newspaper. “It was obvious the body [Legislature] wanted that bill, and I wasn’t going to stand in the way of it.”