Anyone who has watched the post 9/11 homeland security spending debacle knows that there is a close connection between "security" and spending. What's their connection in telecom? As Deep Throat used to say, follow the money.
CALEA compliance is a good example. When CALEA passed in 1994, existing providers were given years to make their networks compliant. In the 1996 Telecom Act, Congress inserted a special provision to
ensure that the government (actually we consumers, through a
surcharge), not the incumbents, paid for the cost of making
communications networks wiretappable (i.e., CALEA-compliant). This was one of the most tangible results of the millions of dollars in lobbying fees spent by incumbents at the time.
In 2005, the FCC issued an order applying CALEA to a slew of new service providers, such as broadband service and VOIP providers. It gave them 18 months to comply, but did not tell them what the rules they had to comply with were. The order was so vague no one had any clear idea of what the FCC was going to require. This was just another example of the FCC sowing fear, uncertainty and doubt (the infamous dotcom FUD) that slows down competitors and aids incumbents. The incumbents' FCC lobbying dollars were well spent.
Last week, the other shoe fell. The FCC issued a follow-up order extending CALEA obligations to broadband Internet access providers and PSTN-interconnected
VOIP providers that do not have their own networks. The FCC set May 14, 2007, a mere year away, as their compliance deadline, and the order requires the providers to submit interim reports. In
addition, unlike 1996, the FCC decided that a national surcharge to recover CALEA
costs is not in the public interest and wants carriers to pay these
costs. The result, as CNET correctly notes, is to impose a tax on new VOIP and broadband competitors. Again, incumbent lobbying money was well spent.
The good news is that the FCC may have been too eager to expand CALEA at the behest of the FBI and the incumbent networks. A number of parties challenged the original 2005 FCC order, and by coincidence the oral argument of that appeal was argued last week in the Court of Appeals for the D.C. Circuit . According to news reports, the judges hammered the FCC's lawyer, and there may be a good chance the FCC order will be overturned.
So maybe money can't buy respect from judges. Maybe lifetime tenure was a good idea. But enough Federalist claptrap. Back to the money. Here's where the money is going these days, according to Telecom AM:
TELECOM REFORM LOBBY ADS ADD UP TO ALMOST $1 MILLION WEEKLY
Cable and phone firms this year have spent nearly $1
million weekly on ads lobbying for video franchise reform and other
issues related to broadband and fiber video, consultant Gary Arlen
said. That's about 4 times spending for Tauzin-Dingell bill ads, Arlen
told us: “This is a phenomenal sum.” Except for the National Cable
Telecom Assn. (NCTA), which Arlen expects to run through $50,000 weekly
for a year, most outlays will occur in less than 2 months, he said.
AT&T is burning $600,000 weekly, outspending any entity Arlen
studied. The figures, mostly on D.C.-area broadcast TV ads, came from
Arlen's talks with ad executives and analyses of broadcast data.
USTelecom spending is 2nd, at about $250,000 weekly. TV4US is spending
$75,000 weekly, Arlen said. NCTA wouldn't discuss its spending, but a
spokesman said: “The volume of advertising clearly shows the Bells are
spending significantly more.” Officials at TV4US and AT&T didn't
comment.
A USTelecom spokeswoman said
Arlen's figures were wrong, but declined to comment on its spending. A
study funded by that group found telco entry into video markets will up
payments to municipalities for video services as much as 20%. AT&T
and Verizon fiber TV products, by getting people to spend more on
“wireline video services,” would boost such payments $249 million-$413
million annually, said Brookings economists Robert Crandall and Robert
Litan.
In Washingtonspeak, saying something is wrong and declining to comment is akin to conceding "he got it right." In a followup email, Gary Arlen told me that the AT&T figure is part of the "new AT&T's" branding and
image campaign, with the focus on the company's drive into video services. Arlen pointed out that the media splurge is aimed at a handful of
Commerce committee members and their staffs (see my April 30 post), and that the intensity of the media spree
has put conflicting commercials back-to-back during newscasts, Sunday morning
political shows and other up-market TV programs that this target audience
presumably tunes in to. Although the deluge may confuse some viewers, Arlen says cable
lobbyists told him that confusion would be fine for their purposes -- espeically if confusion
means that Congress won't adopt legislation that would make it easier for telcos
to move into the video business via a national franchise. Arlen's last point was that net neutrality is not necessarily part of THIS campaign, but it's
implicit in the overall telecom legislative scheme, of course.
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