SBC merger support: Grass-roots with a twist

ST. LOUIS -- On July 17, a group called the Campaign for Telecommunications Access submitted a 26-page legal brief to the Federal Communications Commission endorsing SBC Communications' proposed buyout of Ameritech.

The group, consisting of 51 advocacy organizations for elderly and disabled people, argued that the telephone companies are "the only clear last hope for bringing broadband technology the last mile to our homes and neighborhoods." Letting the two Bell giants combine "is likely to enhance the probability that they will roll out [this] technology," the group added.

Ten days later, the group, which had swelled to 62 members, fired off a new letter to the FCC complaining that the merger's opponents, such as long-distance carriers and new local carriers, were playing politics by insisting on ever-stricter post-merger restrictions.

"The vast bulk of [these carriers] just boldly demand one benefit or another to enhance their wealth -- as though making them wealthy is somehow good for the public interest," the letter said.

Here's what neither letter revealed: that the Campaign for Telecommunications Access is largely funded by -- you guessed it -- SBC.

As has become common in such high-stakes telecom political battles, the final stage of the government's SBC/Ameritech merger review is being accompanied by a rumble of lobbying from purported grass-roots organizations with undisclosed ties to the parties in question. An SBC takeover of Ameritech could change the enterprise network landscape in the Midwest, but FCC Chairman William Kennard wants the agency to make all its merger decisions based on how it thinks the new owner will treat residential customers. Some independent user organizations are charging that the lobbying activity is an attempt to distract the FCC from what the organizations view as SBC's poor track record in past telephone company takeovers.

The headquarters of the Campaign for Telecommunications Access is the St. Louis law office of David Newburger, an attorney with long-standing ties to SBC as well as its principal subsidiary, Southwestern Bell. Newburger is well-known in the St. Louis disabilities community and has earned accolades since the late 1970s for representing blind, deaf and other disabled people in legal battles against city housing, transportation and other authorities. Newburger says he first became involved in telecom when he went to bat in favor of caller ID -- generally considered a big benefit for disabled people -- about 10 years ago.

But Newburger concedes that by 1994 he had accepted funding from Southwestern Bell for a self-styled grass-roots coalition called ConnectMissouri. That group began battling before the Missouri Public Service Commission for a new telecom regulatory structure that ConnectMissouri said would preserve universal service. Other consumer groups complained that the structure would stifle local competition.

Newburger declined to discuss the amount of funding for ConnectMissouri, which officially listed as members such groups as the state associations for the blind and deaf. But he said Southwestern Bell provided all the money, even though none of the numerous ConnectMissouri filings obtained by Network World reveals this fact.

In 1997, Newburger became chairman of Keep America Connected, a Washington-based consumer coalition that has pressed carriers about the need to protect universal service. But it turns out that the coalition was actually formed by a public-policy consulting group with close ties to the U.S. Telephone Association. Long-distance carriers have denounced Keep America Connected as little more than a regional Bell operating company front group (NW, Jan. 26, 1998, page 1).

And last year, Newburger helped form the Campaign for Telecommunications Access with what he says includes funding from SBC and other RBOCs. He and other St. Louis activists have been writing to the FCC in droves defending the SBC/Ameritech merger -- even though St. Louis is the place where Ameritech was supposed to compete with SBC before pulling back after the mid-1998 merger announcement.

Newburger says residential customers wouldn't have benefited much by Ameritech becoming a competitive local exchange carrier in St. Louis because CLECs invariably go after business customers first, and his group is seeking residential broadband offerings. Yet the Campaign for Telecommunications Access also wrote to the FCC in December attacking the then-proposed merger between AT&T and cable TV giant

Tele-Communications, Inc. (TCI) -- a deal with the explicit purpose of rolling out broadband services to millions of residential customers.

Newburger says the group opposed that merger because TCI recently showed bad faith in St. Louis by rolling out a new digital television service without an option for additional audio descriptions of visual actions desired by sight-impaired people. Disabled people have a "visceral reaction" to this kind of corporate decision, he says.

But that's a selective view of mergers, say some shoestring consumer groups fighting the SBC/Ameritech merger, particularly those in Ameritech's region who fear SBC's reputation for aloofness. "The farther away the headquarters is, the less interested they are in serving [low-income] communities," says Ellis Jacobs, a lawyer for the Dayton (Ohio) Legal Aid Society, who represents the Edgemont Neighborhood Coalition.

National organizations that have argued against the merger, such as the Consumers Union, the Consumer Federation of America (CFA) and the American Association for Retired People (AARP), say the letters now coming in are an attempt to neutralize that opposition.

"This is an Astroturf war. It's completely artificial," says CFA Research Director Mark Cooper. "It's a campaign orchestrated by Southwestern Bell to try to convince regulators that there is broad-based public support for the merger."

Newburger denies that, saying there's nothing unusual about corporations and consumer groups working together if their views are aligned. Accepting funding from SBC is merely "the costs of being able to make something good happen," he says. And there's no legal requirement to disclose the funding of comment letters in an FCC proceeding, he adds: "That's not relevant. It's not a question the FCC asks us."

Indeed, Washington insiders note that other large carriers also regularly engage in hidden -- though perfectly legal -- funding for grass-roots lobbying. But they say SBC may need groups such as the Campaign for Telecommunications Access more than other telcos because the Consumers Union and the AARP have opposed the merger, and other groups have complained about SBC's 1997 takeover of Pacific Bell. The Campaign for Telecommunications Access got its 62 participating commenters by asking groups to sign on to the letter extolling the proposed merger's potential in the residential broadband arena, but several signers seemed markedly less enthusiastic when recently contacted by Network World.

"Personally I don't know if you can say that anyone has done a great job" of rolling out broadband services, says Wilhemina Gunther, president of the Illinois Assistive Technology Project, a group that helps disabled people obtain new skills.

SBC also has to battle the fact that the FCC and Texas regulators have recently slapped SBC with penalties for improper lobbying.

The FCC has held up the SSBC/Ameritech merger for more than a year while it intensely negotiates additional conditions to the transaction.

"They're squeezing [SBC CEO] Ed Whitacre because they don't really like him very much, he's pissed them off so many times," says one top former FCC official who asked not to be identified.

This story, "SBC merger support: Grass-roots with a twist" was originally published by Network World.

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