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October 24, 2000

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Communications Lobby Puts Full-Court Press on Congress


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WASHINGTON, Oct. 23 As Congress nears adjournment, some of the nation's most powerful corporations have enlisted important lawmakers to tuck provisions into spending bills that could reshape the balance of power among telephone companies, Internet companies, broadcasters and cable operators.

The measures would relax restrictions that have made it impossible for AT&T to expand further in the cable industry. They would save the regional Bell companies billions paid to local carriers that some rivals and groups say would be shifted to Internet users. And they would kill a plan to create hundreds of new low- power FM stations for churches, schools and community groups.

It is, of course, unknown which provisions will survive the horse- trading, but if some are adopted, the legislation would be among the most important for the telecommunications industry since a landmark measure that began deregulation four years ago. While it has become a fall tradition for special interests to extract favors from Congress in a session's final days, some officials, consumer groups and lawmakers expressed alarm at the unusually large number of "riders" narrowly focused attachments to broad spending bills.

Lawmakers sponsoring the measures defended the practice, saying that Congress had failed to have them adopted in other bills and that there was a need to have the issues addressed. Although some riders have received the support of a committee or a chamber of Congress, supporters feared that by themselves they might be rejected by the White House, and they therefore stand a better chance of becoming law attached to spending bills.

"One of the reasons for accomplishing these items in riders is that they have a chance of surviving in the end because the bills they are on may not be vetoed," said Representative Billy Tauzin, the Louisiana Republican who is hoping that two measures he has supported killing the FM proposal and changing the Bell access charges are attached to the spending bills. "As a stand- alone proposition, they might be the subject of a veto. These are issues that begged to get settled as rapidly as possible."

The White House has publicly criticized two riders, saying it opposed an attempt to kill the low- power FM plan and another that would kill Deutsche Telekom's proposed acquisition of Voice Stream. But officials have not expressed their views on many of the other riders.

Mr. Tauzin, likely to be the next head of the Commerce Committee if Republicans retain control of the House, said the process was so secretive, involving the Congressional leadership and the leaders of the appropriations committees, that he did not even know what riders the House and Senate negotiators planned to attach, or what they would look like. Some officials and consumer groups criticized a legislative process that they said leaves the public in the dark over so many important issues, and that is so beholden to campaign contributions.

"This is the special interest money grab," said Gene Kimmelman, co- director of the Washington office of Consumers Union, which has waged a last-ditch effort to get the riders killed. "It is AT&T seeking to protect its cable profits and not be forced to divest. It's the Bell telephone companies seeking millions of dollars from Internet providers and their customers who use the Internet. It's the broadcasters trying to block community radio stations to enhance their dominant position in the market. And it's cable companies seeking taxpayer support to provide local channels in the communities that they are already supposed to wire."

William E. Kennard, chairman of the Federal Communications Commission, said that in his seven years at the agency, he had never seen so many riders still in play this late in the session. "This is a process where lots of work gets done in the dead of night in the back rooms and in many cases, on issues that have already been resolved on the basis of a full and public record," Mr. Kennard said. "At appropriations time, lobbyists work like ninjas, doing their work under cover of darkness. At the end of the legislative season, there is no time when special interest money is so powerful."

Among the provisions is one that has been heavily pushed by AT&T to relax the cable concentration rules that have prevented it from expansion and may force it to sell some units next year. Congressional aides say the company has the support of Ted Stevens, the Alaska Republican who heads the Senate Appropriations Committee. Mr. Stevens wants to attach a rider that would ease the rules that bar a company from owning more than 30 percent of the market.

AT&T is the largest contributor to federal candidates and political parties in the current election cycle, having donated more than $4.3 million, nearly two-thirds of which has gone to Republicans, according to a study last week by the Center for Responsive Politics.

In a strategy described last week by one Congressional aide as "rough playground justice," the Bell regionals have responded by saying that since AT&T is getting its pet issue taken care of, they want theirs. They have prevailed on other lawmakers to insert a rider that could be worth billions to them.

That rider would reduce the amount of money they pay to the newer local exchange carriers as part of the "reciprocal compensation" that is paid for using their equipment to terminate calls. But those local carriers say they would have to make up the difference by raising rates for Internet service providers, which in turn would have to raise rates for consumers to get Internet access.

Three Baby Bells Verizon, SBC Communications and BellSouth are among the top 25 donors to federal campaigns and parties, having given more than $7.1 million in the last two years.

The nation's largest broadcasters, meanwhile, have proposed a measure that would kill the F.C.C.'s plans to issue new licenses to hundreds of low-power FM stations. The industry, led by the National Association of Broadcasters, has maintained that the new stations will produce signal interference that will make it more difficult for listeners to hear other stations. Mr. Kennard and other officials say that this is a smoke screen and that the broadcasters are simply afraid of competition. The largest broadcasters have also been lobbying to relax the law that prevents them from controlling more than 35 percent of the television market.

There has also been a struggle among the lawmakers over the provision that could kill Deutsche Telekom's acquisition of VoiceStream. The two companies have waged a costly lobbying campaign to kill a rider introduced by Senator Ernest F. Hollings, Democrat of South Carolina, that could unhinge the deal. Mr. Hollings has said that since Deutsche Telekom is more than 25 percent owned by the German government, it should not be allowed in the United States market.

Congressional aides said that the Senate majority leader, Trent Lott, an early supporter of the Hollings rider, changed his position at the urging of Senator Slade Gorton, Republican of Washington, Voice Stream's home state. Todd Young, a spokesman for Mr. Gorton, said the senator shared the administration's views that the Hollings amendment violated American trade obligations. He said it was also important to Mr. Gorton because VoiceStream is an important constituent.

With Mr. Gorton in a tight re- election race, VoiceStream executives have contributed more than $100,000 to his campaign and the Republican Party.

Senator Conrad Burns, a Montana Republican who is also facing a stiff re-election challenge, has sponsored a rider that would benefit satellite broadcasters in his state by providing for loan guarantees to encourage them to expand in his state. Cable companies have also been lobbying Congress to make the loan guarantee provision applicable to them.

Larry Akey, a spokesman for Mr. Burns, said the issue was of overriding importance to his constituents, who rely heavily on satellite service, and therefore it does not matter whether the measure is approved in an appropriations bill or elsewhere.

"Clearly it's an established avenue for important policy changes," Mr. Akey said of the use of riders. "It's important enough for consumers that whatever mechanism we can get to use, we'll use."

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