ILECs and their amazing astroturf machine

Fred Goldstein,  October 2004


common carriers have to allow anyone, even their own competitors, to buy from them at nondiscriminatory rates and terms. And that's too much for the big ILECs, who want a pony. ...


... It's called astroturf.  Not the stadium rug for which it's named, but the creation of phony "grass roots" organizations as public relations fronts...

the king of astroturf is Sam Simon, whose firm, Issue Dynamics (IDI), describes its public relations job as "developing a campaign that gets your messages out through paid and earned media"...

The plain truth, of course, is that the Incumbent Local Exchange Carriers want unregulated monopolies over all telecommunications.  That's not what the law calls for, and it's not a rational public policy to allow that sort of thing, but lots of kids want ponies too, so ILECs can have their dreams.  It's more than a bit sad, however, that the Bush-era FCC has been firmly in their camp, trying to neutralize the Telecommunications Act.  Such actions are not only hostile to the ILEC's competitors, but they're also harmful to consumers.  So the FCC majority needs some kind of political cover for its actions.

One key to the Bells' success is their skill at public relations.  Sure, they do regular advertising, but that's not the kind of thing that shapes public or legislative opinion.  And along with the P.R., they have huge lobbying engines, hundreds of paid lobbyists on Capital Hill and across the states.  Competitors have been terribly outgunned; other than AT&T and MCI, CLECs have largely been absent there.  The Bells are good at feeding the press.  And, since the Great Telecom Meltdown so soured Wall Street on competition, much of the finance industry has retreated to their old reliable divident-paying friends.  So the Bells' stories are the ones that get heard.

Does capital improvement depend on a monopoly?

At the heart of the Bells' message is the claim that they simply cannot afford to improve their capital plant if they stand the risk of having it be used by competitors.  Besides, it's their property, so they should be the only ones to use it, or decide how it's used.  The fact that there are no competitors is not their problem; the Telecom Act allows competitors to string their own wire down the street (if they can fit on the poles; sometimes even that option would be stifled by the huge pole replacement costs) so it's not really a monopoly any more!  This is a very narrow definition of monopoly, to be sure, not based in either economic theory or law, but by finding one narrow meaning of monopoly that no longer applies, they have "plausible deniability".  So over a hundred years of common carrier regulation is at risk, because common carriers have to allow anyone, even their own competitors, to buy from them at nondiscriminatory rates and terms. And that's too much for the big ILECs, who want a pony. 

In the mid-1980s, they talked about installing fiber to the home over the next two decades. At that time, the newly-minted RBOCs were prohibited from engaging in the "information services" business, lest they compete with their customers.  That restriction and practically every other competitive restriction is gone, but it's still not enough -- only now, they promise that they'll upgrade some share of their homes passed to fiber optics if and only if they don't have to let those pesky CLECs, Internet Service Providers, or other potential competitors (think video program providers) on to it.  And they sing praises of the "broadband" nirvana to come, when they and only they control the content of their wire.

Getting a phoney signoff

So who backs them?  Not legitimate consumer groups, like Consumers Union and the Consumer Federation of America.  They support competition, which has saved consumers billions of dollars and done wonders to make the Internet widely available.  But in the topsy-turvy world of Washington, all sorts of odd names show up in the strangest places.  It's not just nut groups like the Greening Earth Society, a coal industry-sponsored front which denies the existence of global warming and thinks that in any case a rise in atmospheric carbon dioxide is just fine and dandy.  Nobody who doesn't write for Forbes takes them seriously.  But in telecom policy, the RBOCs have some strange bedfellows indeed.

Take, for instance, the Gray Panthers, a senior citizens' advocacy group.  And the American Association of People with Disabilities (AAPD).  And the Black Leadership Forum.  And the League of United Latin American Citizens (LULAC).  They jointly signed an ex parte paper to the FCC that says, "We thank you for the clarification in the Triennial Review Order that assures that multi-unit premises (MUPs), such as apartment buildings, are treated like single-family homes (with no requirements for providers to share or “unbundled” their networks)...".  Yep, I'm sure that Black "leaders" and Latino citizens all over the country are convinced that nonwhite people won't have good access to telecom if the content on the wire can come from anyone but the giant corporation with the century old rights of way!  And when they "add our voices to those who are urging the Commission to clarify that when it repealed the Section 251 unbundling requirements of the Telecommunications Act of 1996 it did not intend to leave similar requirements in place under Section 271", I'm sure that gray granny in Brooklyn is ever so troubled that because of those awful black-letter unbundling requirements of the Telecom Act that she wants overruled, she can now make calls to her grandchildren out Long Island without paying Verizon's huge "zone" charges!  Why in her day, a phone call more than a couple of miles away cost a days' wages, and by gum her grandkids shouldn't be spoiled by cheap calls!  And disabled folks are no doubt sure that a competitor will never come up with better assistive technology than a monopolist!

How do these organizations come up with such counterintuitive positions?  It's called astroturf.  Not the stadium rug for which it's named, but the creation of phony "grass roots" organizations as public relations fronts.  In the telecom world, the king of astroturf is Sam Simon, whose firm, Issue Dynamics Inc. (IDI), describes its public relations job as "developing a campaign that gets your messages out through paid and earned media".  "Earned" media?  I wonder if they teach that in J-school. "Issue Dynamics provides a full package of professional stakeholder management services for clients who seek strategic alliances with stakeholders in the following segments: consumer, civil rights, education, disability, senior citizens, Hispanic, African-American, Asian-Pacific American, Native American, small business, rural, state/local government associations, technology, among others."  Yep, stakeholders for sale!  Want to get support from Left-handed Samoans against pay cable?  Sure, that group can probably be created for a fee too.  IDI counts the RBOCs among its key clients.

Now who wrote that aforementioned plea to the FCC to let the Bells kick competitors off of their network? It didn't go out under the IDI name, of course.  It went out from the Telecommunications Research and Action Center (TRAC), which established its reputation in the 1980s for publishing reports on long-distance rates.  It really looks like a consumer organization, and on occasion, in the distant past, it occasionally acted like one.  But dig a bit deeper and you discover that its chairman is IDI's President, Sam Simon, Bell flack par excellence.  TRAC's board of directors also includes a minister and three lawyers, one of whom, Dirck Hargraves, is a former NAACP chapter president.  Sound good, but his day job nowadays is with IDI. And TRAC essentially functions as a front for the Bells, especially helping Verizon
pursue its blood feud against AT&T. 

TRAC's not the only big IDI astroturf name working the Bell beat, either.  The Alliance for Public Technology (APT) often signs off on RBOC initiatives, and proudly list BellSouth, Verizon and SBC among their Sponsors and Affiliates.  Is that who you'd think of first when your goal was "fostering access to affordable and useful information and communication services and technologies by all people"?  Not me, either. But then its founding chair, Barbara O'Connor, used to be a Pacific Telesis executive and its current Executive Director, Sylvia Rosenthal, just happens to also be an Assistant Vice President at IDI?   And would you expect an ISP trade group
to be opposed to DSL competition?  The US Internet Industry Association "Applauds FCC Broadband Policy" and encourages ISPs to move to WiFi instead of wireline access.  Yeah, right.  Guess who is quietly behind that one?  Of course the ISPs it represents are primarily the ILEC-captive ones, clients of a certain Washington P.R. firm.

So why do minor charities stick their name on IDI astroturf?  Is it surprising that the Verizon Foundation gave $50,000 to the Black Leadership Forum in 2002?   And that LULAC got $205,500?  And that the AAPD not only got "major" donations from both Verizon and the Verizon Foundation, but put a Verizon VP on its own board?  Even a real charity is often willing to sell its name in exchange for a little smack, especially if it's in a subject area that's outside of its area of interest.  So IDI can leaven its home-grown astroturf like TRAC with the signatures of some third parties.  It's all so Politically Correct, yet filthy, at the same time. Mom'n'pop CLECs just don't have that kind of money to give; most are struggling to stay alive, not how to shelter a fraction of their billions of annual earnings via foundations whose recipients just happen to lobby ontheir behalf.

The press, of course, rarely gets it.  They love to hear from charities.  They eat this up, frequently quoting TRAC and other astroturf as if they were real consumer organizations.  Competitors should stay vigilant and point out who is behind these supposedly pro-consumer, but really pro-monopoly, positions.  So often, the trail leads back to the same four companies and their agents.