The Corporate and ALEC Takeover of the FCC
- It is one thing when we find that the Chairman of the FCC, Ajit Pai, was a former Verizon attorney;
- Or that the transition team was led by a consultant who has been working for Verizon over the last two decades;
- Or that the new head of the FCC’s Consumer and Governmental Affairs Bureau is a former lobbyist and lawyer for Charter Communications, the cable company (that owns Spectrum, formerly Time Warner Cable).
But when the second Republican FCC Commissioner, Michael O’Rielly, speaks at ALEC’s (American Legislative Exchange Council) Communications & Technology Task Force and calls on the group to take actions to help the FCC take down net neutrality and the speech is listed as business as usual at the FCC—we know that the FCC is captured. (I note that in 2013 then-commissioner Pai spoke to the same ALEC group.)
I just posted an article from 2013 that outlines how a Petition filed by AT&T, which was based on ‘model legislation’ created by ALEC, is now the game plan for the current FCC in 2017. The plan is to remove all regulations, all obligations, and consumer protections so that the corporations can optimize profits.
The FCC’s plans are couched in twisted word speech, calling for “Internet freedom” yet we find that it is just freedom for the large corporations, the large phone and cable companies – AT&T, Verizon, Centurylink and the cable companies, who are all members of ALEC, as far as we can tell.
And it is clear that this FCC is just out of control. Talk about being biased, the FCC’s own press release and fact sheet called: “What Capitol Hill Is Saying About Restore Internet Freedom Proposal” clearly shows that Congress and the FCC ‘care’ about “Internet freedom”, but it doesn’t include any of the Democrats. I thought that the FCC was an independent agency and supposed to be bi-partisan.
- “Representative Bob Latta, Chairman of the House Energy and Commerce Committee’s Subcommittee on Digital Commerce and Consumer Protection, issued this statement on the mistake of Title II.
- Senator Roy Blunt, Vice Chairman of the Senate Republican Conference, commended the FCC for beginning to roll back misguided Internet regulations.
- Bicameral statement from Senate Commerce, Science, and Transportation Committee Chairman John Thune; Senate Communications, Technology, and the Internet Subcommittee Chairman Roger Wicker; House Energy and Commerce Committee Chairman Greg Walden; and House Communications and Technology Subcommittee Chairman Marsha Blackburn: “We have long said that imposing a Depression-era, utility-style regulatory structure onto the internet was the wrong approach…
There are more quotes in the release.
Who Is ALEC?
ALEC is based on the notion that corporations need to be able to manipulate the political environment to get laws changed in their favor. Thus, ALEC has groups like the ‘Communications & Technology Task Force’, where the phone and cable companies help to create helpful ‘model’ legislation. This faux legislation is then used throughout the US and is pushed through by politicians, most of whom are being campaign-financed by the companies. They are also given donations via the companies’ ‘foundations’ in their districts to make them look good.
I know this because in 2007 I noticed a pattern to the legislation being put forward in multiple states, and though the language and titles may be changed to cover over their tracks, the end result was the same. I wrote two articles for the Harvard Nieman Foundation for Journalism Watchdog Project about how this was done, a decade ago.
- How much of your state’s legislation is being drafted by industry? November 30, 2007. The American Legislative Council, or ALEC, lets corporations cultivate legislators and win support for industry-written bills while not technically breaking lobbying rules – and paying no taxes.
- Wisconsin: A case study in how corporations get the legislation they want January 31, 2008. This article describes how model corporate bills get introduced and enacted in Wisconsin, to the detriment of the common good.
In 2017, AT&T is now on ALEC’s Private Enterprise Advisory Council, (along with Pharma, Exxon Mobil, Koch industries and Altria, (who owns Phillip Morris, among other tobacco companies)). Meanwhile, the NCTA, the association-lobbying group for the cable industry, is the ‘private chair’ of the Communications and Technology Task Force.
This is a partial list of the cabal that was part of ALEC’s telecom group in 2013, the last available data, though it could have changed since then.
The ALEC communications cabal includes the three largest incumbent wireline phone companies, AT&T, Verizon, Centurylink, (and the group also controls the majority of the wires to the cell sites) as well as the two largest wireless companies, AT&T and Verizon, and three of the largest cable companies, Time Warner Cable (now Spectrum) which merged with Charter, and Comcast.
One would think that this is a conspiracy; almost all of the major companies in an industry, in one room, writing legislation for their own purposes.
“The FCC’s plans are couched in twisted word speech, calling for “Internet freedom” yet we find that it is just freedom for the large corporations...”
Commissioner O’Rielly Calls for ALEC to Help Squash Net Neutrality
But this is truly ugly. Commissioner O’Rielly is pitching ALEC, claiming that the FCC needs to help get rid of net neutrality because a) it’s a redistribution of ‘hard-earned assets’; b) this is really a plot to move towards socialism; and c) it will vanquish capitalism and economic liberty.
“The members of ALEC can serve an important role as the new Commission seeks to restore free market principles to broadband offerings. Many of you know all too well of the pressure on us to buckle and acquiesce to the whims of the misinformed screaming for net neutrality. You likely face it at your respective statehouses as you debate the various matters before you. The “progressive agenda” being pushed in so many settings is really an effort to use government as a means to redistribute hard earned assets from one group of people to favored interests. Do not let your voices go unheard as net neutrality advocates slowly, but surely, seek to drag the U.S. economy toward socialism. This debate is just one component in a larger and much more pernicious effort to vanquish capitalism and economic liberty.”
In The Book of Broken Promises, I detail how these “hard-earned assets” were paid for through overcharging customers multiple times, not by the corporations’ shareholders. How? There were contracts in place to do upgrades of the state utilities, which were not enforced by the government. Moreover, there is a massive shell game that’s been going on for over a decade where the companies’ other lines of business are being illegally funded through overcharging local phone customers and the government has failed to audit the financial books of these utilities, these corporations.
And worse, the FCC’s own accounting rules are at the heart of this financial shell game.
Unfortunately, O’Rielly’s speech doesn’t bother with actual facts and it is now clear that his bias is to just throw money at those who failed to fulfill basic obligations, but charged customers, including low-income families.
“The (Universal Service Fund) program’s high-cost portion provides subsidies, generated from consumer fees, to private sector companies to invest and buildout broadband networks in areas of America that are unserved today. This, I believe is a defensible program...”
No. It’s not defensible because it is generated by consumers paying ‘additional’ taxes, but more importantly, the FCC failed to investigate why these areas were never upgraded in the first place. AT&T had obligations under the AT&T-BellSouth merger, for example, to have 100% of 22 states’ territories completed by 2007. Yet, somehow, AT&T received $428 million dollars in 2015 to do the areas that should have been already completed. And this is only one of other different government buckets of money that AT&T gets from the federal and state governments.
“AT&T Accepts $428 million from Connect America Fund for Rural Broadband”, FCC, August 2015
We filed a complaint with the FCC. Of course, AT&T completed 100% of its 22 state territories. (It sold off one state since then.) The FCC defended AT&T without an audit or investigation. And this was done by the previous Democrat-based FCC administration.
O’Rielly is also against municipality build outs of broadband.
“What I am unwilling to do and will never support is allowing government-sponsored networks to use their unfair advantages to offer broadband services. Doing so would be the quickest way to destroy the private broadband market and reassure creation of a market monopoly position by these networks.”
Wrong. O’Rielly didn’t bother to examine the record which shows that municipalities are building out their networks because the incumbent phone companies, Verizon, AT&T and CenturyLink, failed to do the build outs, even when they charged local phone customers to do the build outs. And it is these companies that have the monopoly on the market and block competitors. And they are protected by the government.
And when I mean that these companies failed to do build outs, here’s just one example.
Example: This is an excerpt of filings by virtually all of the phone companies with the FCC to have ‘permanent’ deployments of fiber buildouts in these cities and regions, mostly to be completed by the year 2000. The sick part is that in every state we checked, the laws were changed to have customers pay for these network upgrades. These were never built. (Ameritech built cable services but sold them off to WOW after the merger with SBC (now AT&T).)
- Was there ever any investigation by the FCC? No.
- Were there ever any refunds for not building out the networks? No.
- Are monies still being collected in 2017 based on the overcharging added through rate increases? Yes.
- Did O’Rielly ever ask about the history and why cities are doing work arounds because the incumbents failed to deploy? No.
Finally, let’s get real about why the ALEC-friendly FCC wants to get rid of the Title II and this old utility regulation.
The Communications Act of 1934 & Title II
This is the opening of the Communications Act of 1934. It brought phone service to all Americans (via a copper wire) and it also established the FCC.
Notice the most important thing—the Act does not focus on businesses, such as AT&T, (which was one of the reasons the FCC was created; to reign in the growing monopoly’s abuses (back in 1930’s)). No. It focuses on the people of the US, with the goal of universal service at ‘reasonable’ rates.
“SEC. 1. [47 U.S.C. 151] PURPOSES OF ACT, CREATION OF FEDERAL COMMUNICATIONS COMMISSION. For the purpose of regulating interstate and foreign commerce in communication by wire and radio so as to make available, so far as possible, to all the people of the United States, without discrimination on the basis of race, color, religion, national origin, or sex, a rapid, efficient, Nationwide, and world-wide wire and radio communication service with adequate facilities at reasonable charges, for the purpose of the national defense, for the purpose of promoting safety of life and property through the use of wire and radio communication…there is hereby created a commission to be known as the ‘Federal Communications Commission,’ which shall be constituted as hereinafter provided, and which shall Execute and enforce the provisions of this Act.”
At the core of Title II is Section 202, and the principles it encapsulates are centuries old.
“SEC. 202. [47 U.S.C. 202] DISCRIMINATION AND PREFERENCES. (a) It shall be unlawful for any common carrier to make any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services for or in connection with like communication service, directly or indirectly, by any means or device, or to make or give any undue or unreasonable preference or advantage to any particular person, class of persons, or locality, or to subject any particular person, class of persons, or locality to any undue or unreasonable prejudice or disadvantage.”
It says that you can’t discriminate. And this concept that telecommunications is for ‘open networks’ and freedom? The Act is about freedom from the corporations screwing with your connection. And this concept of common carrier goes back centuries; it isn’t something that started in 1934.
Think of roads. People can’t simply put up a toll booth and hold you hostage unless you pay them when using a public road. They can’t discriminate or only let Ford brand cars travel on the road, or restrict any foreign car or make them pay a toll or use some detour.
But this is not what the corporations want. They claim that the customer-funded networks are really private property for private use. As we pointed out, the FCC has failed to recognize that these wires are part of a state utility, that customers paid thousands of dollars extra for upgrades of these state utilities (and never got it) and that there were commitments, in writing, a contract, yet the corporations were able to simply scheme their way out of doing the work, but collected billions per state.
To Pai and O’Rielly, corporations come first. And ALEC is based on the idea that politicians should do the bidding of these corporations—and privatize publicly funded assets, claiming that it will block ‘socialism’ in America.
How these people became FCC Commissioners without passing a basic test about the factual history of America’s broadband ― that there were commitments to do upgrades of the state utilities and that these upgrades were charged to local phone customers for this work, even if they didn’t show up ― is beyond me.