Telecom Dollars at Work in Washington

In the U.S., election day is nearly here. And telecom dollars are hard at work behind the scenes.

In a little more than a decade, telecommunications companies gave more than $86 million to fund campaigns for federal office, according to the Center for Responsive Politics (CRP), which just published a list of the 100 biggest election donors since 1989. Telecom companies chipped in about 8.6 percent of the more than $1 billion given by the top 100 donors in that time period.

Telecom interest in Washington is great, especially since, given the dire economy, any move that changes the nature of competition for broadband providers may quickly affect a company's bottom line. So far in the 2002 election cycle, telecom chieftains and venture capitalists are again among the nation's top political contributors, with five individuals giving a combined amount of about $1.6 million, the CRP says.

Not surprisingly, the focus of much of the telecom lobbying relates to the regulation of high-speed Internet connections. "The broadband bills have really been the focus of [telecom] lobbyists for a long time," says Steven Weiss, communications director for the CRP.

"This is an issue that involves lots of big, profitable companies and they're entrenched in their opposition to one another," he says.

The donors are big. The donations are big. The issues are big. But those spotlighted in the list aren't impressed. "This latest study is just a way of slicing and dicing the same old numbers," says Bill McCloskey, a spokesman for BellSouth Corp. (NYSE: BLS), which was the 29th largest donor on the list. "We support the candidates we support because they ask us to. The people who do call us are aware of our issues, care about our issues, and the ones we support agree with us on our issues.

"You can't turn down requests from your friends, and most of these people are our friends."

Table 1: Largest Telecom Campaign Contributors (Since 1989)
Rank Among Top 100 Contributors Company/Entity Total Contributions Since 1989 Political Leaning
10 Communications Workers of America $17,597,372 Strongly Democrat
12 AT&T Corp. (NYSE: T) $17,464,374 On the fence
26 AOL Time Warner Inc. (NYSE: AOL) $12,195,822 Slightly Democrat
29 BellSouth Corp. (NYSE: BLS) $10,838,209 On the fence
30 SBC Communications Inc. (NYSE: SBC) $10,695,349 On the fence
31 Verizon Communications Inc. (NYSE: VZ) $10,255,052 Slightly Republican
64 WorldCom Inc. (OTC: WCOEQ) $7,425,076 On the fence
TOTALS $86,471,254
Source: The Center for Responsive Politics

Note: Numbers are based on contributions of $200 or more from political action groups and individuals to federal candidates and from individual and soft money donors to political parties, as reported to the Federal Election Commission.

The leading broadband bill is H.R. 1542, which was introduced by Representatives W.J. “Billy” Tauzin (R-LA) and John D. Dingell (D-MI). The Tauzin-Dingell bill seeks to permit the Bell companies to offer high-speed data services without opening up their local phone networks to competitors. RBOCs support the bill, while CLECs and Internet service providers say it would leave them without a means to compete.

Companies with cable interests also oppose the bill because more RBOC participation in the high-speed Internet market would eat away at their U.S. market dominance.

The Tauzin-Dingell bill passed in the House by a vote of 273 to 157, but the bill has been stalled in the Senate by Ernest "Fritz" Hollings (D-SC), who leads the Senate Commerce Committee. Hollings opposes Tauzin-Dingell and has introduced his own bill, which calls for Bells to "place their retail operations, responsible for marketing services to consumers, in a separate division from their wholesale services, responsible for selling capacity on the network."

BellSouth's biggest single recipient was Dingell, who has received about $128,925 since 1990, the CRP says.

The Communications Workers union most heavily supported Rep. Martin Frost (D-TX), who's gotten about $73,048 since 1990. Frost is a vocal supporter of the Tauzin-Dingell bill.

On the other side of the broadband fence is AT&T Corp. (NYSE: T). AT&T's biggest single recipient since 1990 was Senator John McCain (R-AZ), who got $70,700. McCain hopes to break the broadband deadlock with his own bill, which would allow incumbent carriers to offer broadband to residential consumers without having to share their facilities with competitors. The McCain bill, however, would not deregulate the business broadband market.

With the 2002 election races well underway, a few telecom executives have again put their money where their interests are. Of the data collected so far by the CRP, Yes Network CEO and former telecom fat cat Leo Hindery Jr. is the contribution leader.

Table 2: Largest Individual Campaign Contributors (In 2002 Election Cycle)
Rank Among Top 100 Individual Contributors Contributors Total Contributions To Democrats To Republicans
26 Leo Hindery Jr. The Yes Network $478,216 100% 0%
35 Charles Ergen, Echostar Communications Corp. $376,000 52% 45%
73 Bernard Daines, World Wide Packets Inc. $257,000 0% 100%
79 John Chambers, Cisco Systems Inc. (Nasdaq: CSCO) $247,358 27% 66%
90 John Doerr, Kleiner Perkins Caufield & Byers $236,000 92% 1%
TOTAL $1,594,574
Source: The Center for Responsive Politics

Note: Based on data released by the Federal Election Commission on October 31. All figures are based on FEC reports filed by members of Congress through October 15. They cover financial activity that took place between January 1, 2001, and September 30, 2002.

[Tangent: Hindery, who blamed analysts and the press for the telecom crash, drew an annual salary of $995,000 when he served as CEO of Global Crossing Holdings Ltd. from March to October 2000. He also got 5.5 percent of the stock of Global Crossing's GlobalCenter subsidiary, which he helped sell to Exodus for about $6.1 billion in stock before both companies collapsed in bankruptcy (see GlobalX: The Burst Bubble).]

Other big election contributors in the 2002 cycle include Kleiner Perkins Caufield & Byers' John Doerr and Cisco Systems Inc. (Nasdaq: CSCO) CEO John Chambers.

Of course, the reasons for campaign contributions are numerous. Besides hot button issues such as broadband regulation, companies and their executives might also be voicing their concerns on healthcare, workers compensation, or any number of other matters.

The payoff for such generosity is often even tougher to pinpoint. "Does it pay off? Well, there hasn't been a significant piece of telecom legislation passed since 1996," McCloskey says.

— Phil Harvey, Senior Editor, Light Reading
flanker 12/4/2012 | 9:25:22 PM
re: Telecom Dollars at Work in Washington A few comments:

1) $86 million in political contributions over ten years is not a lot of money. Isn't that what most dotbomb start ups blow through in a year? Isn't the federal budget about $2 trillion? Doesnt the telecom industry (services and equipment) generate something like $400 billion in revenues a year. Get a grip.

2) The CWA is a union.

3) Why do you characterize Verizon as leaning slightly Republican. Are you insane? Do you know their donor record from 1993 - 2000, when Bill Clinton was president? It was a Republican congress that passed the 1996 Telecom Act: are you saying Verizon was cheerleading that legislation from the sidelines with donations to the GOP? The ILECs will back anyone interested in legislative protection. It used to be the Democrats. Now its the republicans offering regulatory "relief" by completely deregulating the local loop and allowing the ILECs to charge what they like for access. This has nothing to do with ideology, this is just stupidity on the part of Republicans from the deep south whose highest level of education is the third grade.

DCITDave 12/4/2012 | 9:25:09 PM
re: Telecom Dollars at Work in Washington 1) What's your point? We should only report campaign contributions that are higher than the federal budget?

2) We know. CWA is correctly labled in the story chart as a telecom-related entity.

3) Since '89, 61 percent of the $$ VZ has contributed to federal elections has gone to Republican candidates. To answer your question, we are not, as far as we know, insane.
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