07/26/2006 03:42 pm ET Updated May 25, 2011

Bad Karma for Verizon CEO Ivan Seidenberg

The entrenched corruption in our political system couldn't happen without a correspondingly corrupt attitude in our corporate boardrooms.  The modern business PAC system started in the late 1970s, and I don't think it's a coincidence that corporate power began its (renewed) ascendence in the 1980s.  Bribery is bribery, even if it's legal.  And the accounting scandals we've seen in the last six or seven years, many of which involved telecommunications companies like Global Crossing and Worldcom, did not happen in a vacuum.  They happened because greed overtook the rule of law in both Congress and business.  And there will probably be new corporate scandals, since the problems haven't really been fixed (thank you Senator Lieberman).

Which brings me to net neutrality.  The telco companies are spending something along the lines of $100 million in lobbying and advertising to get national video franchising and control over the internet.  It has turned into a progressive fight, with Democrats and moderate Republicans protecting the internet against extreme right-wingers and astroturf groups.  Business reporters like to pretend that it's Google versus Verizon, but it's not.  This is a public outcry on behalf of net neutrality, and against phone and cable companies that we don't like.

I'm not sure what's going to happen in the Senate, but the telephone companies may have damaged themselves beyond repair in their overreach this session.  These companies are dogs with fleas, and the public is now wise to them.  It's not just Verizon's union-busting, or their censorship over the cell phone networks they do control.  It's not just their attempt to grab control of the internet and screw it up, or their obvious purchase of Republican Senators and Democratic and Republican House members.

It's more fundamental, a basic corruption of their corporate mission.  

There are two rather devastating portraits of the phone companies that came out recently.  This one, from Businessweek, is by far the most damaging.  The article is a damning look inside these goliath corporations.  Far from innovative and profitable companies seeking new approaches to communication, AT&T and Verizon are marketing-driven, clumsy, and monopolistic corporations afraid of the future.  They are constantly whining about the need to scale and aggressively merging with each other, but unlike the earlier AT&T monopoly which used its scale to build an incredible research laboratory churning out Nobel Prize after Nobel Prize, the newer and meaner AT&T/Verizon has virtually no R&D at all.

Will the telcos use their positions to bring more new ideas to consumers? For years technologists have talked about the possibilities opened up by combining television and high-speed Internet. But neither Verizon nor AT&T take advantage of that. Talk to them about what's next, and both companies bring up the possibility of providing weather and sports scores in a box on the TV screen. Not exactly radical. But it's what you'd expect from companies that are afraid of new technology.

That paucity of new ideas has led critics to think the telcos see their future not in developing better services but in extracting greater and greater tolls from anyone who wants to use their networks. Over the last few months AT&T in particular has managed to scare the heck out of technology companies by talking about charging Internet content providers such as Google Inc. (GOOG ) or YouTube for access to the customers on its new network. That's a logical plan for a company like AT&T, but it's probably not one that can be sustained forever.

I'm told that Businessweek was going to put this story on the cover in June, but buckled under pressure from Verizon CEO Ivan Seidenberg and toned down the content.  Seidenberg intervened because he didn't want the negative publicity during the hot legislative fight.  This is a rather remarkable revelation, since the article was primarily directed not at Verizon but at AT&T, Seidenberg's purported competitor.  Which means, of course, that there's probably collusion here, not competition, and the collusion is about ripping off the public.  It's also somewhat stunning that Business Week caved to pressure from the business side, but then, I'm a crazy blogger so what do I know about ethics.

It gets worse.

In the Milwaukee Journal Sentinel, Barry Orton shows that it's not just that these companies want to eviscerate net neutrality.  That's only one part of the bill.  The other is about video franchising, which allows telcos to sell cable and compete with the likes of Comcast.  That's not so bad in itself, but AT&T is also preparing to do some major league redlining.

In fact, AT&T has already told Wall Street that it does not intend to serve everyone with its network improvements, dubbed Project Lightspeed.

As USA Today reported in May: "During a slide show for analysts, SBC (now AT&T) said it planned to focus almost exclusively on affluent neighborhoods. SBC broke out its deployment plans by customer spending levels: It boasted that Lightspeed would be available to 90% of its 'high-value' customers - those who spend $160 to $200 a month on telecom and entertainment services - and 70% of its 'medium-value' customers, who spend $110 to $160 a month.

"SBC noted that less than 5% of Lightspeed's deployment would be in 'low-value' neighborhoods - places where people spend less than $110 a month."

I'm tired of the no accountability culture of Washington, DC.  If you are a lobbyist for a telecommunications company, what these companies do is now your responsibility.  Tom Daschle, for instance, is working at Alston and Bird, a well-known law firm that lobbies for telecommunications companies like Verizon.  Good luck in 2008, Senator.  There are others, a lot of others, and I know that people are keeping lists of who's been naughty and who's been nice.

As a side note, I must say I'm glad the telecom companies hired so many Democrats to run their PR campaign.  At least in this case the horrible messaging and tactics of the insider Democratic incompetents worked for the public this time.  Maybe that's the magic formula - hire Democratic consultants to run right-wing campaigns.

Anyway, back to the main point.  I have no objection to lobbying, and I don't mind the practice of hiring advocates for one's cause.  What is morally obnoxious about these companies is their combination of bad faith, dishonesty, and greed.  They don't keep their word, their rhetoric doesn't match their behavior, they threaten lawmakers with bad PR and PACs, and they ladle oodles of cash into nonprofits that come very close to pet projects.

I encourage lobbyists and corporate executives at this point to reflect on the status of their profession.  It is not your job to lie for your client, or to allow your client to make commitments you know they will not make good on.  Executives should not be in the business of using rhetoric that isn't true, or failing to follow through on commitments.  Actions have consequences, and while it has been a nice long ride since the 1980s for corporate lobbyists, that time is coming to an end.

The system is breaking down.  You can see it in the electricity blackouts across the country, in the outcry for net neutrality, in the defeat of Ralph Reed for corruption, in the anger at the Terry Schiavo situation, and in the sour mood that is manifesting itself in Connecticut.  Americans don't like what's happened, and are looking around for a different way of doing politics.  It is long past time for ethical behavior to reassert itself in boardrooms and in Congress.  

My advice to the telecom companies is to walk away from this fight, and come back with a more reasonable proposal next Congress.  Stop the ads.  Stop the lies.  I don't have much faith in their willingness to do this, but then, neither do the American people.  And they should be scared of that, very scared.  Excess profits tax anyone?