RBOCs are Spending Money, Find Out Where (cont'd)

In the House, Representative Pickering (R-MS), and Representatives Stearns (R-FL) and Boucher (D-VA) also introduced IP-related bills. Pickering's bill (H.R.4129) differs from Sununu's in that it doesn't prohibit other carriers from collecting access fees from VoIP providers. Notably, telecom was the top industry supporting Pickering over the last election cycle. In contrast, the Stearns-Boucher bill limits FCC authority over VoIP services to E-911 issues, disability access, universal service funding and access fees when VoIP traffic intersects with the legacy telephone network. Telecom ranks fourth for Stearns and fifth for Boucher among industries supporting them during the last election cycle. The data suggest that the greater contributions from RBOCs, the more likely an elected official is to support laws and regulations that favor RBOC interests.

Recall the Tauzin-Dingell bill, which would have eliminated the restrictions preventing RBOCs from offering high speed data services in local phone markets until they proved they had opened those markets to competition. This bill passed the House but was defeated in the Senate. telecom was the fifth ranking industry supporting Representative Billy Tauzin (R-LA), in the election cycle preceding the bill’s proposal. For Representative John D. Dingell (D-MI), telecom ranked third in contributions.

Resistance to Change
It is easy to get lost in this sea of numbers. What is important is to realize that the RBOCs are demonstrating a consistent willingness to spend tens of millions to influence Washington and pay fines for non-compliance (see May issue of Pipeline), rather than spend the hundreds of millions it would cost to comply with previously stringent competition regulations or to fund significant improvements to their networks and operations to remain profitable while delivering advanced, next generation services.

An anonymous source who spent 15 years with one of the RBOCs and now consults to them on a strategic level explains that there is no sense of urgency within RBOCs to greatly improve the ways in which they do business. “If you are a person who comes into a telco, you come in at eight and have a huge stack of paper on your desk. You do the best to get through it, but you leave at four regardless. When you retire, the stack is still on your desk.”

Further, the source explains, RBOC external affairs groups are directed to influence regulations so that the RBOCs themselves don’t have to make radical changes to their operations in order to comply. Of the lobbying numbers presented earlier, 60 to 75 percent of total expenditure went to the RBOCs’ own lobbying groups. “They had a person for every city in the state, and they dealt at the city, regional, state level and up. This isn’t new, this goes back to the first time a tariff was introduced,” said Pipeline’s source. The source further explains that he was “in external affairs in 1992. When (an RBOC) knows going into a year that there’s a possibility of paying fines (for non-compliance with regulations), they immediately take money out, set it aside and say, ‘this is our fine money.’ They would rather pay the fines than [change]. If there is a regulatory issue out there and the pain to pay the fines is less than the cost to change, they pay the fines and they budget for it a year in advance,” the source reports.

As the RBOCs use their financial power to influence regulations and protect aging revenue streams, they are not only making it more difficult for their competitors to remain solvent. They would also appear to be holding the United States back in terms of its ability to remain competitive in the global telecommunications industry. In the end, RBOC actions to influence Congress result in legislation that is aimed solely at protecting revenue streams that new technology and new market forces might otherwise drive into obsolescence. Unfortunately this means that the supposed purpose of regulation – to prevent market abuses while bringing quality services to consumers at fair prices – is lost in the exchange of dollars. As a result, aging networks and eroding services are sustained while those driving innovation – such as VoIP application providers – face arbitrary hurdles that threaten their ability to prosper and limit consumers’ ability to benefit from their advancements.

Authors note: Figures presented in this article were gathered from the Center for Responsive Politics and the United States Senate Office of Public Records.

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