Telecom mergers force firms to pick sides

Recent mergers in the telecommunications industry are forcing lobbying shops to choose between clients that have become potential rivals, as Congress takes up another major reform effort. Telecom lobbyists describe the upcoming battle over telecom reform as a contest between “Baby Bells” such as SBC and Verizon and cable giants such as Comcast and Cox.

Recent mergers in the telecommunications industry are forcing lobbying shops to choose between clients that have become potential rivals, as Congress takes up another major reform effort.

Telecom lobbyists describe the upcoming battle over telecom reform as a contest between “Baby Bells” such as SBC and Verizon and cable giants such as Comcast and Cox.

In 1996, the last year Congress tackled major telecom reform, the principal combatants were long-distance providers, such as AT&T and MCI, against the Baby Bells, which primarily provided local phone service.

Because long-distance providers and cable companies were rarely in opposition, lobbyists often represented both business interests. But those groups are in sharper conflict now with Verizon’s pending purchase of MCI and SBC’s move to buy AT&T.

The cable industry and the Baby Bells are edging closer to each other’s traditional territory as technology advances. Phone companies want to send content over their lines as cable companies move to provide phone service. Each side wants to ensure it doesn’t face more government regulation than its rival.

The new allegiance between long-distance and local service providers is forcing firms to choose sides.

Wexler & Walker Public Policy Associates and Ryan Phillips Utrecht & McKinnon each represented both cable and long-distance companies.

Ryan Phillips was paid $640,000 last year to represent Comcast and the National Cable and Telecommunications Association (NCTA), cable’s main trade group.

MCI paid the firm $200,000 to represent its interests. The long-distance phone company also paid Wexler & Walker $400,000 that same year. Comcast paid $480,000, according to disclosure forms.

Both firms have ended their relationships with MCI to remain on Comcast’s team.

“Clearly, the companies are heading for a collision,” one Wexler & Walker lobbyist said.

According to registrations, four firms have represented both AT&T and the NCTA: Akin Gump Strauss Hauer & Feld, Patton Boggs, Shipp & Associates and the Palmetto Group.

Patton Boggs also represented MCI.

And several firms have represented both individual cable companies and MCI or AT&T, according to disclosure forms.

Because there is often a lag time between when registrations are filed and when they are posted online, additional firms may have dropped one client in favor of another.

Other firms did not respond for comment before The Hill’s deadline.

A Comcast spokesperson said in a statement: “Like all companies we routinely take steps to ensure our consultants are not put in to a position of conflict.”

While the mergers have caused firms to end contracts with some clients, representing the interests of telecom companies continues to be a boon to K Street coffers.

During the last six months of 2004, the U.S. Telecom Association, whose members include three Baby Bells, spent $10 million on its reform campaign, more than double what it had spent the year before.

Walter McCormick, president of the U.S. Telecom Association, said his group has two overarching priorities: “to move beyond government managed competition” and to “secure universal service for the future.”

Traditional telecom companies want cable companies to pay universal service fees, which go to shoring up service in rural areas that might otherwise be underserved.

Cable companies, meanwhile, don’t want to be burdened with regulations, such as “must carry” rules that require local programming, while their new rivals operate unfettered by government intervention.

The NCTA spent more than $3.5 million during the first six months of 2004, the latest semiannual report available. In 2003, the group spent more than $5 million lobbying.