The FCC proposal to bring broadband under tighter regulatory control has triggered a fierce lobbying battle in Washington.
Tech companies, cable firms and phone service providers have upped their lobbying spending. Top technology CEOs have stopped by FCC Chairman Julius Genachowski’s office to express their point of view. And companies that have never hired lobbyists in the past have set up K Street accounts for the first time.
“When you actually move a service from an information service to a telecommunication service, that can completely change business structures,” said Vince Jesaitis, director of government affairs at the Information Technology Industry Council. “It’s not surprising there has been such a big blitz on this in the last couple of months.”
The move to take greater control over broadband is one of several issues that have faced Silicon Valley since President Obama entered the White House. Debates over online privacy, stimulus funds and the international tax structure have all required greater monitoring by tech lobbyists.
But despite the increased lobbying, it is unclear at this point whether the FCC will move forward on its proposal to reclassify broadband without legislative help from Capitol Hill. Genachowski is trying to build a consensus approach among the relevant stakeholders, with AT&T, Google and others at the negotiating table.
At stake, potentially, is the future of the Internet. Net neutrality — a longtime campaign promise of President Obama’s — would require Internet service providers to treat all online traffic equally. Under Genachowski, the FCC has been working to put this principle into action.
But the FCC’s authority to come up with new rules took a hit earlier this year. A federal court overruled the FCC for punishing Comcast after it limited its consumers’ online use of BitTorrent file-sharing software.
After the ruling, the FCC went back to the drawing board. It proposed in May that broadband services be reclassified as a Title II service under the Telecommunications Act — not a Title I service, which they are now. The reclassification would move broadband into a more tightly regulated realm. But the FCC has promised to regulate lightly, such as not controlling price rates for services, under its proposal.
There has been huge pushback from cable and phone companies that feel the reclassification proposal would give the FCC too much power. In a statement, Kyle McSlarrow, president and CEO of the National Cable & Telecommunications Association (NCTA), said his group sees “great danger in attempting to shoehorn modern broadband services into a Depression-era regulatory regime without serious collateral effects to investment, employment and innovation.”
The fight over broadband seems to be reflected in increased payouts to lobbying firms. Google has spent $2.7 million on lobbying fees so far this year, compared to $1.8 million at this point in 2009, according to lobbying disclosure records. It also added Liberty Square Partners to its K Street stable.
Amazon has spent more than $1 million on lobbyists in 2010, compared to nearly $700,000 at this point last year.
Cable and phone companies are also spending big on K Street.
AT&T has spent more than $9 million on lobbying fees so far this year, almost a million more than what it spent at this point in 2009. Like Google, the phone company has added lobbyists, hiring Crossroads Strategies and the Keelen Group earlier this year.
Verizon has spent close to $9.2 million on lobbying in 2010, a huge increase over 2009, when the company had paid out $6.9 million. It has also since acquired Alltel, making it the largest wireless carrier in the nation. NCTA has also upped its lobbying, spending about $7.8 million in 2010 so far, about a million more than its spending at this point last year.
Other tech companies have signed up with K Street for the first time. Data Foundry, a Texas-based tech company, hired Comstock Consulting in April to lobby on net neutrality and reclassification. Earl Comstock, a former legislative director for ex-Sen. Ted Stevens (R-Alaska), is lobbying for the company.
Big-time CEOs have gotten in on the lobbying action as well.
AT&T Chairman and CEO Randall Stephenson, for example, met with Genachowski on July 20 to say the reclassification proposal would create “significant regulatory uncertainty,” according to FCC records. Also, back in June, Bob Pisano, interim CEO of the Motion Picture Association of America, discussed potential legislative options with FCC staff. And Time Warner Cable Chairman and CEO Glenn Britt met with Genachowski in June and discussed reclassification.
Since the reclassification proposal was announced, the FCC chairman and his senior aides have been hosting meetings with cable, phone and tech companies as well as consumer groups to craft a possible legislative alternative.
Time is running out to reach a compromise. Congress has little time left to act before the midterm elections, and if Republicans win control of the House, observers expect anti-broadband reclassification legislation would pass.
“I think it depends what comes out of the discussions,” Jesaitis said. “If you have the IT companies, the telecom companies, the cable companies and the consumer groups all agreeing on a set of principles, then that could significantly increase the potential for legislation to move.”
The FCC has not set a timeline for a final decision on the reclassification proposal. The final round of comments for the proposal are due by Aug. 15.