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Document 5 of 26.

October 29, 2000 Sunday

SECTION: NATIONAL; Pg. 14

LENGTH: 1889 words

HEADLINE: Bell lobbyists find partner in Tauzin;
Their cash, his tactics make them sure bill will pass in House Bells say they can't vie in Net market

BYLINE: By John McQuaid; Staff writer

BODY:
WASHINGTON -- In late June, after almost a year of work, Rep. Billy Tauzin, R-Chackbay, reached the magic number: 218. He had assembled a bipartisan majority of the House in support of his controversial bill, "The Internet Freedom and Broadband Deployment Act."

It was a modest victory, Tauzin said, not the same as actually passing a bill. "We knew it was symbolic. We didn't overcelebrate. We didn't do any kind of champagne party," he said.

Tauzin knew his bill wasn't going anywhere this year over the opposition of the powerful Commerce Committee chairman, Rep. Tom Bliley, R-Va. But when the history of the Internet is written, achieving the large coalition -- which is even larger today as the result of dogged months of work by Tauzin and lobbyists for telephone companies that stand to benefit -- might prove to be a decisive event. Tauzin's aim was to build formidable support for a bill, positioning it for next year. By then, Bliley will have retired and either Tauzin or another of the bill's top supporters will take his place as the committee chairman and be ready to pass it.

It's the kind of incremental struggle that goes on all the time in Washington, a multiyear push by legislators and lobbyists working hand in glove.

What's exceptional in this case is that Tauzin's bill -- the first major change proposed for the Telecommunications Act of 1996 -- would alter the Internet's fabric, the physical web that makes up the vast computer network and sends its content flowing into homes and businesses.

Many analysts believe it would give the giant regional Bell telephone companies a leg up in the race to offer high-speed, broadband Internet service, which will soon be the standard, by erasing key restrictions on them. Tauzin says the restrictions are retarding the Bells' ability to offer broadband, especially in rural areas that are the last on most companies' lists to wire.

But those restrictions were created to level the playing field for companies competing against the Bells and to open local phone markets. So Tauzin's lobbying has sparked fierce opposition, pitting him and the Bell companies against those competitors, consumer groups and the Federal Communications Commission.

Tauzin's anti-regulatory, populist philosophy meshes well with the Bell companies' interests. Until recently they were monopolies, and the federal government is still watching and regulating them closely. They also serve millions of customers in local markets, creating a powerful grass-roots base to lobby politicians across the country.

Bells lobbying big-time

Smaller opponents have noted the power of the Baby Bells' all-out lobbying efforts.

"They are very effective," said John Windhausen, the president of the Association for Local Telecommunications Services, a group comprising small Bell competitors. "They've got a ton of lobbyists, a ton of resources. We just can't keep up with them politically."

Members of Congress often form alliances with industries important in their home states, and sometimes specific companies. The relationships are reinforced by political money: Companies and their employees give to members, who in turn can help raise money for other members and donate to their campaign funds through political-action committees.

The dynamic was on full display the past two weeks in Washington, as big telecommunications firms staged a full-court press to get special industry breaks tacked on as "riders" to the appropriations bills being hashed out in the House and Senate.

In his post as chairman of the telecommunications subcommittee, Tauzin's skepticism of federal rules restricting big business and the Bells' collective wish for regulatory relief has brought them together in a marriage of philosophy, influence and money. Tauzin has sided with them on this and a number of related issues.

Another Tauzin-sponsored measure, for example, would cut the money the Bells must pay to competitive local phone companies when a call is made from a Bell number to a competitor's number.

Many of those calls are made to Internet providers. Bell companies say that's why they're losing lots of money: Nobody calls back to the customer, so the competitor avoids paying similar charges to the Bell company. But the competitors say the bill would force them to pass the extra costs on to the Internet companies and ultimately to consumers. The Bell companies were lobbying furiously last week to get the measure tacked onto an appropriations bill before Congress adjourns.

Siding with competitors

But Tauzin has not tied himself so tightly to the Bells that everyone else is excluded. Following his anti-government line, he also has taken up the side of the big Bell competitors -- long-distance and cable system owners -- on some issues, for example saying the government shouldn't write new rules opening currently closed cable systems to carry Internet service providers.

He also has tried to limit the FCC's reach in other ways favorable to telecommunications companies in general. If he ends up as chairman of the full committee, he promises a very rough time for the FCC, which he describes as outmoded and heavy-handed toward businesses.

So it's not surprising that telephone companies of all kinds were the top contributors to Tauzin's campaign chest this election cycle, giving a total of $52,950 -- beating out the electric and oil and gas industries, according to the Center for Responsive Politics, a watchdog group. Verizon, the largest Baby Bell, which serves the Northeastern states, was his largest single contributor, with its employees giving Tauzin $13,750 total. Second was SBC Communications, the second-largest Baby Bell.

Overall, the telephone companies have spent lots of money during this political cycle, and the Baby Bells lead the pack by far.

AT&T leads in overall giving among telephone companies. But the Baby Bells outgive the long-distance and cable industries combined. In the current election cycle, AT&T has given $3.1 million to all campaigns. It's followed in the rankings by four Baby Bells: Verizon, SBC, BellSouth and USWest, which have so far given a combined $7.7 million.

Win-win situation

Tauzin's aggressive stance in favor of the Bell companies might signal a more sympathetic climate for them in the House in the future. Retiring Commerce Chairman Bliley has been a staunch ally of the long-distance industry. He was heavily involved in crafting the Telecommunications Act and has resisted Tauzin's attempts to change it.

But Tauzin and the Bell companies have engineered a near-perfect scenario for their bill. If the Republicans retain control of the House next year, then either Tauzin or Rep. Mike Oxley, R-Ohio, will take over the Commerce Committee. If the Democrats win it back, Rep. John Dingell, D-Mich., will take over. All back the Tauzin bill, and Dingell is its principal Democratic sponsor.

Tauzin aides and the Bell company lobbyists conferred on the bill's language. They didn't want to be accused of just doing a favor for the Bell companies. "The bill was written to be very precise so that it wouldn't be just a way to avoid the opening of the local loop required under the '96 law," said Ward White, BellSouth's vice president for federal relations in Washington.

So the change was written narrowly, to apply only to phone calls carrying digital data signals, not voice calls. But, as opponents point out, the distinction will soon disappear, to the advantage of Bell companies. It won't be long before all calls, Internet and voice, will be carried over high-speed, digital connections.

War-room scenario

Bell lobbyists met regularly amongst themselves and with Tauzin as they plotted their strategy for lining up support.

"This was a war-room type scenario for 18 months," said David Bolger, a spokesman for the U.S. Telecommunications Association, which represents the Baby Bells and coordinated the effort. "We had twice-a-week meetings. It was 'Who's in? Who's out? Who do we need to get?' "

They marshaled two main arguments to line up supporters: First, that the Bell companies were being unfairly kept out of the Internet market by a law that hadn't anticipated it. Second, they argued that the companies would be the most likely to deliver high-speed services to poor and rural areas that otherwise might never get them.

They delivered those messages with one of the most skillful lobbying operations in Washington. Besides their umbrella trade association, each company maintains its own stable of lobbyists. They also financed an organization, IAdvance, to spotlight the "digital divide" issue and hired two well-known spokesmen, former White House press secretary Mike McCurry and former GOP Congresswoman Susan Molinari.

The advantage is especially strong in the House. They are national companies that have a reach down to the local level, literally into most homes in America. They have multiple facilities and employ people in every state. Virtually every House member has some Bell facilities in his or her district.

Each company had local employees, officials and consumers send letters to their members of Congress urging they sign onto the legislation.

Internet savvy is rare

Opponents say the effort has actually played on a general lack of knowledge of Internet-related issues on Capitol Hill.

"There are very few congressmen who understand broadband and understand the marketplace," said J.J. Johnson, AT&T's vice president for congressional affairs. "You get someone like Congressman Tauzin, who is a very good communicator and very well-connected, and he says this is going to speed up the deployment of broadband to your area, you're going to want to sign on."

Johnson and other opponents of the bill hope that the delay until next year will work in their favor. Co-sponsoring a bill isn't binding, and bills must be refiled at the start of each year, so Tauzin will have to start from scratch again in 2001.

To become law, versions of the bill must pass both the House and Senate, and while the House bill stands a pretty good chance, prospects in the Senate are dicier. A similar bill, sponsored by Sen. Sam Brownback, R-Kan., doesn't have the same broad support as Tauzin's bill. While Senate Commerce Committee Chairman John McCain has voiced support for the concept, he hasn't pushed it. And some committee members involved in drafting the Telecommunications Act, including Senate Majority Leader Trent Lott, R-Miss., oppose the concept.

Tauzin is confident

Time is of the essence. If it doesn't pass next year, the speed of the Internet, and even the plodding FCC, might ultimately turn the tide against Tauzin.

If the FCC moves to let more Bell companies into long-distance markets in states -- and observers think more will make it in the coming months -- then an important argument for the bill will lose currency, even if it will take years to approve applications in all 50 states.

Tauzin is confident that his work so far stands him in good stead. "It's like a lot of these major efforts that roll over from one Congress to another," he said. "It's a building process. Issues get primed, they get ripe, and then they get settled. It's going to be ripe next year. Then we'll settle it."

GRAPHIC: STAFF PHOTO BY G. ANDREW BOYD Rep. Billy Tauzin, center, who heads the telecommunications subcommittee in the House, jokes with a fellow congressman, Rep. Jose Serrano, D-N.Y., outside the House chamber after a vote. STAFF PHOTO BY G. ANDREW BOYD Tauzin, right, listens to Rep. Chris Smith, R-N.J., as they ride the underground train from the Rayburn Office Building to the House for a roll call vote. STAFF PHOTO BY G. ANDREW BOYD Tauzin lambastes a witness testifying before the House Energy and Power subcommittee during a hearing on Capitol Hill this month. Tauzin's role as head of the House subcommittee on telecommunications puts him in a powerful position to affect legislation on Internet issues.

LOAD-DATE: October 30, 2000

Document 5 of 26.


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