Big Telecom Tries Another Deregulation Scam

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by Chris Witteman and Tracy Rosenberg. Originally published in 48 Hills

They’re at it again.  After losing in their attempt to torpedo net neutrality protections in California, Assembly members are back with a new and better way to make life easier for AT&T and Comcast.

VOIP may be a thing, but every message ultimately goes over wires controlled by a small number of corporations that don’t want regulations

California Assemblywoman Lorena Gonzalez’ AB 1366 would effectively keep California’s telecommunications network beyond the oversight of the California Public Utilities Commission or any other regulatory agency in California. The trick is to say that the CPUC can’t touch anything running with Internet Protocol, which now means pretty much all of the modern telecom network.

How is it possible– at a time when reliable and accessible communications networks are more essential than ever in California, when the State is dealing with wildfires and other climate-induced emergencies, and when most Californians’ only choice for home broadband is the cable monopolist – that the Legislatureseems intent on extending the deregulation of the companies that own and operate California’s communication network?

It is, to say the least, a strange time to be doing this. The fruits of the Legislature’s first deregulation seven years ago have been somewhere between unpromising and disastrous.  Communication providers have felt free to cut off first responders because they have allegedly exceeded their data caps, emergency messages have failed to reach fire victims because wireless companies have refused to install backup power at their cell sites, and AT&T just filed a lawsuit against the California Office of Emergency Services  contesting the requirement that they provide critical E911 information (information about emergency calls made with Internet Protocol) to the California Public Utilities Commission … because, you know, E911 is Internet stuff.  Assemblywoman Gonzalez’ bill echoes the arguments of the Trump administration that the Internet is none of the State’s business, arguments the administration has used to put California’s net neutrality rules – passed just last year  – on ice.

To sell such an absurdity requires ingenuity, and a cover story with some heartstrings attached. Enter Assemblywoman Gonzalez, crafting a narrative about poor refugee women who rely on Skype and Whats App to call home. “We know especially in immigrant communities the ability to call home for free is extremely important,” says Gonzales before the Assembly’s Communications and Conveyance Committee, “and thanks to innovations in technology, and things like WhatsApp and Skype, we now have that ability.”

While this might be good theater, it has no relation to reality.  AB 1366 is not about Skype or WhatsApp.  As Bill Clinton might have said, “it’s about the wires, stupid!”  California’s communications network runs on wires, wires owned by AT&T, Verizon/Frontier, and Comcast, and those companies don’t want any pesky regulators looking over their shoulders or limiting the profits they can extract from their ownership of this infrastructure.

People who use Skype or WhatsApp, or Facetime or Ring, still have to get connected to the network, connectivity that only the companies with the wires can provide (even wireless phones rely on the wired network).   CPUC oversight, which AB 1366 seeks to eliminate, focuses not on the apps running on the network, but on the network itself.  Without the CPUC, as the Communications Workers of America make clear, there is no government entity to ensure that the network performs in a reliable, safe, and affordable manner.   Reliable infrastructure is a precondition for the very innovation Ms. Gonzalez says she wants to protect.  These wires are the essential 21stcentury utility, critical to almost every area of life from the economy to public safety, education, and all forms of electronic communication.

None of this seems to matter in Sacramento. Gonzalez choreographed a series of two-minute testimonies from obscure groups allegedly representing El Salvadorans, nonprofits, and “telehealth”providers, who read from scripts claiming that CPUC oversight would make their data more expensive – but offering no basis in fact for these statements.

They were followed by consumer and labor representatives who tried to explain the disastrous consequences that deregulation has brought and will likely continue to bring.  The Electronic Frontier Foundation described how AB 1366 and its predecessor prevent any state oversight over future 911 calls, end meaningful privacy protections, and further consolidate the AT&T/Comcast duopoly; The Utility Reform Network cautioned that AB 1366/SB 1161 essentially negate consumer protections and universal service safeguards), and the Communications Workers of America warned (at minute 15) that this legislation renders the CPUC helpless to prevent ongoing network deterioration.

But the Communications and Conveyance Committee appeared uninterested in what either side had to say.  No Committee members asked any questions. The committeechair,  Miguel Santiago — who tried last year to kill California’s statewide net neutrality bill— asked for a vote, the committee voted 10-0 to send the bill on to the next committee, and Santiago gaveled the hearing to a close.

Where did AB 1366, and its predecessor SB 1161, come from? You may never have heard of the American Legislative Exchange Council (ALEC) but this secretive group – with AT&T, Comcast, Verizon and a host of other telecom corporations and trade groups as current or former members – developed the initial legislative template, and then (with its industry partners) found an otherwise liberal California legislator, Alex Padilla, to sponsor the initial bill, SB 1161, in 2012.  ALEC is, in fact, a radical right wing group, funded by the Koch Brothers and based on the “shrink government until you can drown it in a bathtub” philosophy of the Tea Party, Grover Norquist and James Buchanan.  In addition to working against regulatory oversight of the nation’s telecommunications networks, ALEC has been at the forefront of climate change denial and public school privatization, among other items on the corporate Right’s political agenda.

SB 1161’s deregulation lasts only through 2020, so the Legislature has to act this year to extend it. The sponsor of the earlier bill, Alex Padilla, has gone on to his reward as Secretary of State.  He has, however, continued to work with Assemblywoman Gonzalez, with whom he has sponsored progressive “motor voter” laws, and whom (it is rumored) he is grooming to succeed him as secretary of state.

So why do sometimes progressive legislators turn around and do corporate America’s dirty work?  In our earlier reporting, we documented how Padilla and other key members of the legislature had received large sums of money from the telecommunications industry.  In 2019, the money-lines are more difficult to trace – whether influence is bought through non-profit sponsorships or other direct or indirect means is unclear, but what is clear is that there is no rational policy reason for the votes we have seen in the Assembly.   Both state Senate committee staff and the CPUC have issued analyses warning of the potentially devastating results of this bill, to little avail.

One can only understand this as theater, where one actor might wear multiple masks and play multiple roles.  For instance, the NonProfit Alliance — which spoke in favor of the bill — is not a non-profit as that term is commonly understood, but rather a recently incorporated Washington DC trade group that lobbies for commercial firms offering fundraising, marketing and promotionservices to non-profits and others.  That didn’t keep it from wrapping itself in the banner of the United Farm Workers (hearing at 5:50), claiming implausibly that CPUC oversight of the communications network would somehow prevent farm workers from receiving “key information .. about their rights under state law, including shade, water, protective clothing [and] sexual harassment.”  No one on the Assembly committee challenged that statement. Meanwhile, the NonProfit Alliance is working in Washington DC to preempt California’s state consumer privacy law.

Nor did anyone on the committee ask whether AB 1366 is in fact a disguised attempt to amend the California Constitution, which gives the CPUC oversight of “the line, plant, or system” necessary for the “transmission of telephone” communications in the state.

Stay tuned for the next act. The bill is now headed toward the Senate where the legislators might actually play the roles written for them in law (one can hope), rather than read from the script provided by Big Telecom.

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