Profiles in corruption: How telecoms control the state Legislature

The ambush of Scott Wiener's net neutrality bill was just the latest example of how one industry holds almost unlimited power in Sacramento.

The last couple of weeks have not been good ones for those who see communications as a social justice issue.

The 2015 Open Internet Order, which ensured Internet neutrality and fairness, was finally stripped out of the law books per order of the Trump FCC, now run by a former lawyer for Verizon. San Francisco’s plan for a publicly-owned fiber broadband network was put on hold, and all indications are that Mayor Breed will likely bow to AT&T and Comcast by keeping it from resurfacing. And California’s own net neutrality bill, designed to reverse what Trump’s FCC had done, got ambushed by an upstart young Assemblymember.

AT&T’s annual “Speaker’s Cup” golf tournament is a case study in out-of-control lobbying.

The California bill’s sponsor, Sen. Scott Wiener, did it right—he listened to the experts (folks at the Electronic Frontier Foundation, Stanford law professor Barbara van Schewick, and others), and crafted a bill, SB 822, that many regarded as the gold standard in net neutrality, with protections even better than the FCC’s 2015 Open Internet Order.

SB 822 was voted out of three Senate committees by healthy margins, and then passed by the full Senate on May 30 on a 23-12 vote, even picking up votes from otherwise AT&T-friendly legislators like Kevin De Leon and Ben Hueso.   

But they were waiting for it in the Assembly, with knives sharpened.  

At about 10pm on Tuesday night, Assemblyman Miguel Santiago’s Conveyance and Communications Committee released amendments designed to gut the bill, allowing the telcos and cable companies to charge content providers for the privilege of reaching consumers (that would be you, dear reader), even though you are paying for Internet access service that promises non-discriminatory end-to-end access to all content on the Internet. Under the Santiago amendments, carriers like AT&T and Comcast could collect twice every time you view a Netflix film or other content, once in your monthly bill, and once from the content provider.   

The next morning, those amendments – released not 12 hours earlier – were rammed through the Committee without debate. Santiago would not let the bill’s sponsor (or anyone from the public) speak before the vote, even though Wiener repeatedly asked to be heard, and complained about the Committee’s irregular (if not illegal) procedure, as shown in video which is shocking even to longtime Sacramento observers. Santiago acted this way even after receiving extraordinary letters from Nancy Pelosi and Anna Eshoo, essentially warning him that the whole world was watching and asking him not to remove key protections in the bill.

What could explain Santiago’s determination to cripple the bill, and prevent an open discussion before the vote? Maybe the fact that he received over $66,000 from communications carriers in the several years before this vote, while other Committee members voting for the amendments received from $23,000 to $102,000 each. And that the California Democratic Party has received a great deal more from AT&T, Comcast, and other major industry players.

This story is disturbing enough in its basic outline, but much more troubling is the long history of exactly this sort of behavior. The big telecom and cable companies call the shots in Sacramento, with power that can only be compared to the railroad’s stranglehold on the capital more than a century ago. Time and again the public interest has been sacrificed by legislators eager to do the carriers’ bidding.

Some have described this as “corruption,” and while the word is sometimes used too glibly, it might behoove us to ask what we mean when we talk about “corruption.” At what point do “normal” if questionable practices become corruption? One of the dictionary meanings of corruption is “decay, rot.” It is in this sense that we use the word “corruption”—i.e., conduct that eats away at the fiber of a democratic society.

With that definition in mind, let’s take a look at some examples of how this sort of corruption works: 

  • In 2006, Assembly Speaker Fabian Nunez shepherded AB 2987, the innocuously sounding Digital Infrastructure and Video Competition Act, or DIVCA, through the State Legislature. DIVCA in fact deregulated the cable industry in California by destroying local control over cable franchising and public rights of way, replacing it with a rubber-stamp process at the California Public Utilities Commission (CPUC). Nunez didn’t have to draft the bill himself, however – that was taken care of by the American Legislative Exchange Council (ALEC), funded by the Koch brothers and other right-wing libertarians, which produces model bills for state legislatures designed to serve corporate interests.

In the middle of his heavy lifting on DIVCA, Nunez took time out to be feted at AT&T’s “Speaker’s Cup” at Pebble Beach, where lobbyists and other corporate representatives paid $10,000 to $50,000 (now $50,000 to $500,000) to “hobnob with Nunez and other elected officials over golf games, cocktails, spa treatments and dinner,” as the LA Times put it. Afterwards, AB 2987 passed the Legislature easily under Nunez’ sponsorship and was signed into law by Republican governor Arnold Schwarzenegger.

One can follow the bloodlines a little more closely: De Leon was Nunez’ campaign manager, was elected to the State Assembly with Nunez’ strong backing, and later became State Senate President pro tempore. DeLeon nominally joined his much weaker net neutrality bill to Wiener’s, but didn’t even show up for the Assembly hearing. Santiago, in turn, was the district director for John Perez who succeeded Nunez as Assembly speaker in 2014.

  • In 2012, State Senator Alex Padilla sponsored SB 1161, another piece of legislation modeled on an ALEC template, and perhaps one of the most insidious bills the California Legislature has ever produced. Supported by an array of astroturf tech groups and nonprofits supported by AT&T and other communications industry giants, SB 1161 was sold as a way to promote tech innovation and “keep the CPUC’s hands off the Internet,” even though the real impact of the bill was the near-complete deregulation of broadband service in California. The Legislature bought the sales pitch hook, line, and sinker, even though the CPUC never had any jurisdiction over the Internet to begin with – its jurisdiction is over the wired and wireless infrastructure, and protecting consumers from deceptive and unfair-practices. Padilla himself received over $100,000 in contributions from telecom industry players, according to some reports, and went on to his reward as Secretary of State.

Padilla’s co-sponsor was L.A. Assemblyman (now State Senator) Steven Bradford, who received political contributions from AT&T and other telecom providers throughout his career. Bradford was referred to in political circles as a “front person for AT&T,” and was known to sport an elegant woolen crochet blanket with the AT&T Speakers Cup logo in the middle, thrown smartly over the leather sofa in his office. 

  • In 2014, another little known young legislator Henry Perea carried AB 1717 for AT&T and the cellular carriers. This was an industry initiative to relieve prepaid mobile service operators of their duty to collect public interest surcharges when their service was sold through third-party stores. While arcane and innocuous on its face, what the bill really did was chip away at CPUC’s oversight over universal service and other public interest programs. The CPUC opposed the bill and predicted confusion and fragmentation of its programs if the bill passed, which is exactly what has happened. Litigation has ensued on multiple fronts, including a lawsuit brought by T-Mobile and other carriers against the CPUC for its part in trying to implement the Rube Goldberg scheme designed by the carriers and the Legislature.

This was not a problem for Perea, however. Shortly after passage of the bill, he resigned with one year left in his Assembly term to become a lobbyist, first for the pharmaceutical industry and then for the Western States Petroleum Association. This of course left his district in Fresno without an Assemblyman, and stuck his constituents with the bill for the 2016 special election which was expected to cost Fresno taxpayers several hundred thousand dollars.

Perea also collected on the front end. He received over $61,000 in direct contributions from the telecom industry. He was also a good friend to the California Foundation on the Environment and the Economy, a non-profit funded in large part by utilities and oil companies. In 2011, 2013, and 2014, CFEE provided Perea with trips to Italy, Eastern Europe, and Chile worth between $9,000 and $10,000 each.

Again, we can follow the money back to AT&T and its cohort. Hueso has received more than  $61,000 from the communications industry, and even the often progressive Quirk took over $43,000 from electric and telecom utilities.

  • Also in 2017, state Senator De Leon prevented a vote on the Senate floor on a bill which sought to do for privacy what SB 822 did for an open Internet—restore the rules promulgated by the Obama-era FCC. After languishing for the better part of a year, AB 375 was just last week hurriedly amended, passed, and signed by the governor, but only after a distraught real estate developer named Alistair MacTaggart sunk millions of dollars into a ballot initiative called the California Consumer Privacy Act (CCPA) to do what the Legislature wouldn’t.

All of which brings us back to Miguel Santiago’s mugging of the net neutrality bill last week. Why does this keep happening? Why do legislators, some of whom may be very good on other issues like policing and immigration, even occasionally heroic, as De Leon was on Proposition 54, turn to jelly and sell out their constituents on telecom?

One reason is that telecommunications is a technically complex area. It’s also an area in which the industry aggressively seeks to keep its core operations confidential, wrapped in a fog of euphemisms when discussion cannot be avoided. Often neither legislators nor the public understand the details, making it easy for special interests to hold sway. Legislators who are termed out are easy prey for industry lobbyists like AT&T’s Bill Devine, 11th most powerful man in the state, according to the Capitol Weekly. 

A related phenomenon may be apathy. Although communication is about information equity and affordable access to the digital economy, and thus a social justice issue par excellence, it is often ignored by voters, even progressive ones. Net neutrality, for instance, is just what it sounds like, a rule requiring a level playing field for communications, which in turn does not pick favorites when it comes to content or opinion. Seems like a no-brainer for democratically-minded people. Yet eyes glazed over for years … although this may be changing

Perhaps the most telling reason for the communication industry’s hold on Sacramento are the extraordinarily refined methods of influence it has developed.

The “AT&T Speaker’s Cup,” for instance, began in 1998 under the auspices of the California Assn. of Highway Patrolmen as a way to honor former Assembly Speaker Antonio Villaraigosa and generate donations for campaign funds he controlled. After Proposition 34 capped donations to individual lawmakers in 2000, AT&T and other telecom and cable companies began using the Pebble Beach shindig as a way to funnel money to the state Democratic Party. The event has evolved into a major source of influence, with AT&T and its cohort dispensing Lady Gaga tickets, GoPros, luggage, and iPad minis for legislators, in addition to the contributions to the Party. In 2012, the LA Times reported that AT&T had spent upwards of $14,000 a day on Sacramento lobbying over the prior seven years, a number that has likely doubled over the last five years.

CFEE is another example of a sophisticated means of influencing California decisionmakers, albeit more sophisticated and a little less secretive than the Speaker’s Cup. It has the trappings of a policy institute, convening overnight conferences at swank resorts in Napa and Sonoma Valley, to which it invites regulators and legislators to hear from an apparently heterogeneous array of speakers, and to partake of California’s fine food and drink. Although CFEE’s large Board of Directors contains seats for representatives from environmental, labor and consumer groups, the ICT (Information, Communication & Technology) wing of CFEE is nevertheless in the firm control of the telecom and cable providers, who largely determine its speakers and who is invited to hear them.

In 2011 and 2012, for instance, then Sen. Alex Padilla and other guests were treated to a barrage of presentations about the technological wonders that would await Californians if only the CPUC and other regulatory bodies would get out of the way. Shortly thereafter, Padilla introduced SB 1161, forbidding the CPUC to regulate anything that was “IP enabled.” As all telecom operations were becoming IP enabled, this amounted to a de factoderegulation of the entire network. From his current perch as Secretary of State, Padilla has continued to be a regular CFEE attendee.

CFEE and the Speaker’s Cup are only two of the many devices the communications industry has cultivated to get their case in front of California legislators like Miguel Santiago.

So what to do? We as progressive Californians need to have longer memories about the legislators who carry water for the large telecom and cable companies. We need more transparency about political contributions and other perks provided to them, and about their activities as legislators, so that the public can connect the dots between bills and contributions. And we also need mechanisms to get our own views before legislators, like regular town halls (between elections) and other meaningful opportunities for citizens to ask real questions about current events and legislation. Campaign finance reform is another obvious fix, so politicians are freer to be accountable to the people rather than the sources of large campaign contributions. And finally, the creation of a unified social justice platform that has communication rights as one of its core planks.

Stay informed. And vote.

Chris Witteman served as counsel to the California Public Utilities Commission for 17 years. More at twitter.com/ChrisWitteman 

Tracy Rosenberg is the executive director of Media Alliance, a Northern California democratic communications advocate. More at www.media-alliance.org