THE BLOG

Telecom Sleaze: ALEC and Its Communication's Funders -- AT&T, Verizon, Centurylink, Comcast and Time Warner Cable

05/02/2015 02:15 am ET | Updated May 01, 2016

For full details: The Book of Broken Promises; $400 Billion Broadband Scandal & Free the Net, (See: Chapter 28: Fake Consumer Groups, Biased Research, Lots of Lobbyists, Paid-Off Politicians: Behind the Broadband Curtain, (Throw in ALEC)).

Over the last few weeks, a group called the American Legislative Exchange Council, (ALEC), has been sending out 'cease and desist' letters to Credo Mobile, who questioned ALEC's role in blocking municipalities from offering broadband, as well as Common Cause and even the League of Conservation Voters, who challenged the group's denial of global warming. I'll get back to this.

But it is ALEC that should cease operations and everyone reading this must ask -- why is the Department of Justice (DOJ) not investigating ALEC and its corporate communications members and funders -- AT&T, Verizon, Centurylink, Comcast & Time Warner Cable?

We ask: Is ALEC and these five companies a "Trust" that should not be trusted but rather investigated?

15 U.S. Code § 1 - Trusts, etc., in restraint of trade illegal; penalty

"Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court."

Simply Put: How is it legal for one organization, ALEC, and its "communications member" funders, AT&T, Verizon, Centurylink, Comcast & Time Warner Cable, to all work together to create "model legislation" that mainly benefits these companies?

As a group, these five companies control most of the wires that go into homes and offices, schools and libraries, etc., for phone, cable, broadband and Internet (ISP) services, as well control the majority of wireless spectrum that controls wireless services. Moreover, they also control critical network infrastructure, (known as "Special Access"), that is used by content companies, such as Netflix, or even the wireless competitors as well as all WiFi services and their hot spots are all attached to wired infrastructure sooner or later.

And how is it legal for ALEC and these five companies to work with ALEC state-based politician members, many of whom are campaign-financed and/or corporate foundation-grant-laden by these same communications companies, who tweak this model legislation-from-Hell and then force-feed it through state legislatures, with the help of heavily funded, massive, well coordinated skunkworks (hidden and not so hidden) networks of astroturf (fake-grassroots) corporate-funded think-tanks, lobbyists, and co-opted non-profits and minority groups (many of whom are heavily funded by these companies) and do this in multiple states as well as at the federal level?

And let us be clear: There are different corporate-cabals within ALEC; some focusing on a social agenda, like harming voter rights and workers rights, or others that target fracking restrictions or killing off climate change legislation.

But this one ALEC cabal is about keeping the 'monopoly/duopoly' controls of these five companies over all communications services -- with the intent to harm all other competitor companies, not to mention the public interest, i.e., you.

This cabal's fabricated model legislation is not by the people or for the people, but for the companies and by the companies to raise your rates, block your rights to have choice of who provides your broadband, Internet or cable services over the wires you paid to deploy, or to stop municipalities networks from competing. "Free Market" to them means free them from competition, oversight and regulations.

One has only to look at the ever increasing monthly bills, like this Brooklyn, New York, Time Warner Cable Triple Play bill, which went up 112% from the advertised price in just two years, to realize that something is terribly wrong.

Moreover, this is not about Netflix or Facebook or Amazon as they do not control critical infrastructure; they use the Internet and offer services via these telco/cableco 'Last Mile' broadband connections, (if you can get it) as their services ride over physical wires or airwaves mostly controlled by AT&T, Verizon, Centurylink, Comcast & Time Warner Cable.

Doesn't this violate this law?

"15 U.S. Code § 2 - Monopolizing Trade a Felony; Penalty

"Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not exceeding $100,000,000 if a corporation, or, if any other person, $1,000,000, or by imprisonment not exceeding 10 years, or by both said punishments, in the discretion of the court."


ALEC's Communications Members: AT&T, Verizon, CenturyLink, Time Warner Cable & Comcast's Market Power and Coverage

By 2014, these five companies, created via mergers and acquisitions, control most communications in the US.

  • AT&T, Verizon, and Centurylink control about 90% of the phone networks, which are part of the original Bell companies' state-based utilities, such as Verizon New York or AT&T California.
  • AT&T, Verizon and Centurylink do not compete for residential wireline broadband, cable or Internet, even though every merger required these companies to compete; instead, they just divvied up America.
  • Verizon and AT&T also control the majority of America's wireless services.
  • Verizon has a deal with CenturyLink to provide wireless service in its territories.
  • AT&T, Verizon and Centurylink also have monopoly control over the majority of "Special Access" wires that go to the cell towers, WiFi and hot spots which also gives them control over the much of the wireless competitors' costs.
  • FACT: Almost all wireless services end up being carried over a wire.
  • Time Warner Cable and Comcast control the majority of America's wired cable services. TWC and Comcast do not compete with each other for cable service; they just divvied up America. And worse, they recently wanted to merge.
  • The incumbent cable and the incumbent Bell phone companies control America's High-speed broadband services, as well as the ISP service (which traditionally was a competitive and separate service); they just divvied up America.
  • All 5 companies control most of the connections and wires used by the content providers and competitors who use the broadband and Internet networks, from NetFlix on one side, to other phone and broadband/data competitors like Level 3 on the other.
  • Verizon has a deal to bundle their wireless service with these cable companies' bundles instead of upgrading the networks for wired cable competition.

In short, these five companies represent and control most of, and in some areas ALL of America's wireline, wireless, cable, ISP, high-speed broadband and communications infrastructure -- and ALEC facilitates their ability to gather together to create 'model' legislation that mostly only help them.

How is this not a violation of this law?

Model Legislation from Hell

How it works? While the details need to be investigated by the Department of Justice and state attorney general offices, it appears that AT&T, Verizon, Centurylink, Time Warner and Comcast (or their law firms), most likely write drafts of 'model legislation' that address a specific part of the companies' business that they want to control or 'deregulate' or shut down any oversight or block competition. And this has been going on for decades behind the scenes.

Indications of why we need this investigated include:

  • Why would a state legislator write 'model' legislation for other states? They wouldn't.
  • AT&T's 2007-2014 submissions to the FCC about its "IP Transition" are taken directly from the ALEC state-based model legislation.
  • ALEC has continuously claimed that it has 200 members in the Communications & Technology Task Force and that they are creating the legislation. But these laws only help the AT&T et al; and when tracking the flows of money it would appear that most of these state politicians received financial assistance on multiple levels from these companies.
  • ALEC member state-based assemblymen and state senators have an extensive background in both telecommunications and writing laws -- Not.
  • Corporations and industry groups have been writing their own beneficial legislation for decades, but usually on the Q-T.

I'll come back to this.

ALEC Politicians -- Follow the Money.

ALEC's state-based politician members are mostly state legislators, though some have moved on to Congress.

These model laws are handed to waiting ALEC members, who are not 'unbiased' or 'working for their own constituents', as most receive some funding from AT&T, Verizon and Centurylink or the cable companies, which can include:

  • The funding of their political campaigns, including fundraisers.
  • The grooming and shaping of their movement to key leadership positions in their state legislatures, or even on to Congress.
  • They can receive funding for groups and organizations that they are members of;
  • They can receive foundation grant money from the Verizon, AT&T, or Comcast foundations that are used in their districts to show that they are 'working hard' for their constituents.

While there are ALEC members who are genuinely interested in the telco and cable company agenda, as we tracked, in most states, there are few who do not receive some perk to assist them in being 'genuinely' interested.

Skunkworks & Astroturf

And then this 'model legislation' is force-fed through a un-social-network that includes:

  • Teams of lobbyists, both from the company as well as part of an ALEC state-based team.
  • Corporate-funded 'think tanks', who write reports that, of course, are used to 'prove' the point of the companies' policy positions.
  • Astroturf groups, which are designed to help get specific types of legislation through, like killing the rights of municipalities to offer competitive services or shutting down the state public service commission's ability for oversight.
  • Co-opted non-profits and minorities organizations -- thousands of groups who work together and can get hundreds of thousands of dollars each, sometimes millions, for non-related projects, even though the actions of this model legislation directly hurts their own constituents.
  • Coordinated action through various skunkworks-organizations (some hidden from view) and all of this is being done as part of campaigns in multiple states simultaneously.
  • A full court press with the press, from getting 'academics' and well-known people to ghost-pen op-ed pieces, that are placed by the PR firms, or starting diss-information campaigns to discredit those who don't agree with their hyped position, or more recently -- cease & desist letters.

We've Documented the Gory Details in Telecommunications Over the Last 8 Years.

In 2007, I came across ALEC when some state legislature bills to block municipalities from offering broadband service, and others to remove regulations in the name of 'freeing the net' showed up and they looked eerily similar and familiar, even though they were being proposed in different states by different phone companies.

And the more I dug, the uglier it became. Sections of these telco-cable bills were almost identical; even phrases and wording were a match. At the same time, one woman, Cynthia Latham, contacted me; her name had appeared as a supporter of one of these bills even though she wasn't -- as did a bunch of dead people. We wrote two articles for Harvard Nieman Watchdog to document ALEC's (then behind the scene) role, the model legislation being used, the state politicians doing the heavy lifting -- and their funders, in this case what is now-AT&T. (Sadly, Cynthia passed away awhile back.)

Working with others, including David Rosen, we uncovered some of the moving parts of this corporate cabal and wrote about it over the last eight years, focusing on communications issues. In fact, in 2013 we had the first "Reverse ALEC" event, hosted at Brooklyn Law School's BLIP Clinic. See the video featuring speakers from Common Cause and the Center for Media & Democracy, among others.

And in 2013, I wrote a two-part series:

Model Legislation to Kill "Title II" in the Name of "Free the Net": More Sleaze from AT&T, Verizon, CenturyLink and ALEC.

If you want a picture of just how screwed you are by all of this, consider that ALEC, with the help of America's incumbents phone companies, created model legislation that has been used to eliminate oversight and obligations of the wireline telecom infrastructure in many of the states -- but most importantly, it is a brilliant turn-of-a-phrase to remove all "1930's Title II" regulations -- that's right; the same Title II propaganda phrase that has been the battleground for Net Neutrality on so-called broadband infrastructure has been in vogue and doing damage since at least 2007.

In a verbal jujitsu, ALEC and AT&T et al were able to get rid of Title II regulations in the majority of the US, state-by-state, by claiming it would bring 'Internet Freedom" and the gullible, naïve or just plain deceived helped to get this ALEC abomination, the "Advanced Voice Services Availability Act", passed.
A report by NRRI called "Completing the Process", in 2014 detailed the bloodbath, where the name of the report alone should be sounding alarms.

"Deregulation of retail wireline telecommunications continued to be a focus for state regulators and legislators during the 2014 legislative sessions. By the end of 2013, 30 states had reduced or eliminated retail telecommunications regulation. Two additional states, Colorado and Iowa, were added to the map in 2014, bringing that total to 32. Bills pending ...increase that number to 36, covering nearly 75% of the country.

"During 2014, legislators continued to focus on leveling the playing field between the Incumbent Local Exchange Carriers (ILECs) and their competitors by proposing bills that would eliminate or significantly reduce carrier of last resort obligations (COLR), reduce or eliminate the state commission's authority to resolve customer complaints for both wireline and IP-enabled services, and eliminate oversight of IP-enabled services. By the end of 2013, 15 states had eliminated or significantly reduced COLR obligations. By the middle of 2014, bills in Colorado and Michigan increased that total to 17, with additional legislation still pending in Pennsylvania and Massachusetts."

In plain English, "IP" refers to redefining services to be classified as an 'Information Service', (Title I), and thus the telecommunications regulations, Title II, no longer apply. Ironically, this ALEC/telco model legislation is the reverse of the FCC's decision to 'reclassify' broadband and Internet as "Title II".

"Carrier of Last Resort", (COLR), means that if your line breaks, screw you. They have no more obligations to offer or even repair your wires. Or, got a complaint? Too bad; they removed the ability of the state regulator to do any oversight or protect your rights. The protections being strip-mined are all under 'Title II" of the Communication Act of 1934, amended in 1996.

As we mentioned before, the reason we know it was designed by the phone companies is because they are not only the primary beneficiary of this verbal flip-floppery; AT&T used this as part of their FCC "IP Transition" rhetoric -- to shut down regulations and oversight on the federal level. While they cry 'Free the Internet' and 'Gee, technology will solve everything', truth be told, this is nothing more than a plan to shut off the telecom networks in areas that the company does not want to upgrade to fiber -- and then force customers onto more expensive wireless service.

Here's the ALEC spin from The States' Broadband Plan: January 2014

"The American Legislative Exchange Council's model Advanced Voice Services Availability Act protects Internet freedom and innovation from the threat of overregulation.

"Unfortunately, policymakers continue to apply 20th Century laws, designed for monopolistic challenges from a bygone era, to 21St Century technologies like broadband. When old laws govern new technologies, costs rise and innovation slows.

"To this end, the model Act exempts Internet protocol-based technologies from state utility regulation, and preserves several rights and responsibilities for states and providers, while also respecting the Federal Communications Commission's (FCC) jurisdiction."

Note: The terms "state utility regulation" and "20th Century laws" refer to laws classified as "Title II" -- and "protects Internet freedom" is really, free these companies from regulations and capital expenditures for maintaining or upgrading their network infrastructure. Unfortunately, most of the Tech and Internet companies backed this play over the last few years, missing the ALEC-AT&T et al miss-direction.

IMPORTANT: However, the confusion goes deeper as there is a secret -- in the state laws they never used the term "Title II" -- just "TDM" or "Public Switched Telephone Network", "PSTN'. However, all of these telecom-wonk terms refer to 'telecommunications'-- which they have been able to paint as 'old' or 1930's-based.

The Just Plain Sleazy Cease & Desist.

Ironically, ALEC has decided to start taking on those who question what they've been saying for years on a number of topics. According to the National Journal:

"Last month, attorneys representing ALEC sent a cease-and-desist letter to Credo Mobile, a progressive wireless carrier, asking it to stop making claims that it opposes the expansion of municipal broadband services.

"ALEC contends that it does not oppose city broadband but only advocates that certain 'steps' be required before a municipality can provide telecom services.

"ALEC made the letter available on its website shortly after The Washington Post reported that the group had sent separate cease-and-desist letters to Common Cause and the League of Conservation Voters. Those letters threatened legal action if the progressive groups did not immediately 'remove all false or misleading material' that accused ALEC of denying global warming."

Credo has decided to ignore the cease and desist. Read their response.

As we noted, way back in 2007 there were a host of bills designed to harm municipalities and competition -- so this is not new or news. ALEC's bills, used by AT&T et al, that were being dumped into state legislatures over eight years ago included the "Cable and Video Competition Act" and the "Municipal Telecommunications Private Industry Safeguards Act". Translated, these means -- remove any obligations on statewide 'cable franchises' and protect the 'private' monopoly while killing off video/cable competition.

By 2015, ALEC-based laws that block cities from offering competing broadband services have been implemented in over 20 states. In 2015, the FCC, with the backing of the Obama Administration, took actions as a federal matter that would reverse these state-based ALEC bills. Of course, even before the ink was dry, the FCC's decision was taken to court.

Next Steps

In discussions with lawyers about next steps, while intrigued, the consensus has been that much of this is 'business as usual'. To me, that is the reason to deal with ALEC and this Telco/Cableco Trust. What used to be a dirty, little secret in D.C. and state legislatures, that the industry wrote the legislation and then the corporations gave it to their friends, with a bag of money, has become a heavily funded, well-organized, public, 'business as usual' affair that ALEC and its corporate funders have brought to new heights of hubris.

And if you want real hubris, ALEC is registered as a non-profit; it doesn't even pay taxes.

In short, ALEC, with AT&T, Verizon, Centurylink, Comcast & Time Warner Cable -- the Trust that can't be trusted, needs to be investigated.

Ironically, for once I even agree with Verizon's new commercial slogan when it says -- "Never Settle".