Telecom Lobby Spent 8 Times More in 2005 than 2002

But proposed federal franchise legislation put cable on the spot, with NCTA responding in 2005 by spending more and hiring Hill-savvy Pres. Kyle McSlarrow. The group, which laid out $5 million in 2003, spent $7.3 million in 2004, a rate it let drop slightly in 2005 to $7 million, Senate filings show. Individual cable firms also spent more: Comcast’s 2005 filing said it spent $3.9 million, vs. $2.3 million the year before, and Cox spent $2.1 million, vs. $620,000, records showed.

Cable opposed the franchise legislation from square one on grounds that it would let new entrants in too easily, NCTA said in numerous forums, including Congress. The legislation (HR-5252) was revised many times to appease cable. But telcos have the most to gain from the bill, which would streamline their entry to the video market -- though many Hill observers rate its prospects for passage as slim.

Cable also worked the Hill trying to fend off proposed family tier and a la carte bills, Senate filings showed. As an alternative, industry offered voluntary family tiers. In the end, a la carte seems to have fizzled -- several bills, including one by Sen. McCain (R-Ariz.), never got off the ground. Senate Commerce Committee Chmn. Stevens (R-Alaska) pursued a non-legislative approach, recruiting former MPAA Pres. Jack Valenti to head an education campaign aimed at promoting technology to block inappropriate content.

Spending Was Higher

US Telecom’s ranked 7th among the top 2005 lobby budgets listed on Political Moneyline.com, which analyzes House and Senate data on lobbyist and political spending. Leading the league: AARP, followed by General Electric, 2 U.S. Chamber groups and 2 health care groups. AARP reported spending $36.2 million in 2005; US Telecom, $16.8 million.

“Anytime you have the potential for new regulation and new laws then you're going to have battles within the telecom industry,” Political Moneyline.com cofounder Kent Cooper said. Uncertainty combined with fast technological change propelled telecom into the big-ticket lobbying stratum, even though the bills in question may not come to fruition this congressional session, Cooper said.

But today’s lobbyist troop pales in comparison to memory of the armies active as the 1996 Telecom Act was drafted, said John Dunbar, senior fellow at the Center for Public Integrity (CPI), a non-profit that tracks political and lobbying money. Then the game was local versus long-distance companies, Dunbar said: “The old AT&T -- their lobbying core was legendary.” MCI had a similarly formidable reputation, he said. Those firms’ absorption via mergers altered the landscape and revenue streams; lobbying firms trimmed payrolls.

Today’s campaigning is energetic, but it’s not in the same ballpark as the 1996 effort, Dunbar said, predicting that the pattern of recent years will continue. Passage of the 1996 Act and mergers meant years of less intense lobbying, Dunbar said. However, the market dynamics have changed, he added. “Now they have a new foe,” he said: “Cable has really gotten their act together,” he said, although Bells are “more unified.”

Lobbying reports don’t require firms to isolate spending by issue, so it’s hard to track filers’ priorities. But most reports listed overall telecom reform, plus video franchising, VoIP, net neutrality, a la carte, broadcast flag and decency legislation. Some filers list each bill they work on, perhaps by bill number, along with members they meet with and federal agencies they contact. Others give general summaries. Some large firms hire outside consultants expert in single issues such as broadcast flag, and many maintain a presence on the Hill even if no major legislation is pending.

Most telcos spent more lobbying in 2005 than in 2004, the data show. AT&T/SBC reported spending $16.3 million vs. $8 million in 2004; Verizon, $6.8 million, up from $6.3 million; and Qwest $3.4 million vs. $3.3 million. BellSouth showed a slight drop to $7.3 million in 2005 vs. $8 million in 2004. But with mergers and hiring of consultants, it’s difficult to pinpoint trends, campaign analysts said.

The spending “can be difficult to track, especially with the mergers,” Dunbar said: “That paperwork is notoriously undependable.” Dunbar heads a DPI project examining telecom spending. “Old landline and Bells and cable are definitely girding for a fight,” he said. Anytime that occurs, he said, “there’s going to be an extra amount of money spent.”

DTV Transition

Wireless and consumer electronics (CE) companies spent more as Congress debated mandating an end to analog broadcast signals, the data showed. CTIA doubled its spending in 2005 to $4.2 million, while CEA showed a 7% gain from $355,000 in 2004 to $380,000 last year. Philips spending nearly doubled to $680,000, while Panasonic posted a 4% rise to $1.6 million; Sony’s spending remained unchanged and Thomson’s was down 2%, the filings show.

Congress set digital transition rules in a budget law passed in Feb. (CD Feb 17 p1) -- arguably the 109th Congress’s biggest telecom effort, observers said. The law “has enormous consequences for the industry looking out 5 to 10 years,” analyst Paul Gallant of Stanford Washington Research Group said: “It was a major accomplishment given the political challenges.”

Broadcasters posed a major political challenge -- they opposed a mandated hard date, arguing it would hurt consumers. For many lawmakers, defying the broadcast lobby in an election year was a tough call, but at the end of the years consensus formed around the issue. Records show NAB spent $7.1 million in 2002 and $7.8 million in 2005. Once the group’s board got comfortable with the inevitability of a mandated transition date, the debate turned to funding for digital set-top boxes to make analog TVs work.

Chipmaker Zoran captured lawmakers’ interest as one of the first to claim digital converter boxes could be made en masse to retail at about $50 - crucial in getting funding in the bill. Zoran, which previously reported no Hill lobbying, spent $100,000 the 2nd half of 2005, demonstrating its product to show lawmakers how it would work.

Lobbying spending varies yearly, but isn’t likely to dip much because many expect Congress to take up telecom bills next year if HR-5252 doesn’t pass. “They'll be back at it next year,” said Dick Wiley, whose firm represents telecom clients on the Hill. The next round of legislation may be broader than the House measure and narrower than the Senate bill, he said. It would need to address Universal Service Fund issues and have consensus around video franchising, he said: “USF has to be tackled. It'll be interesting.”