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If America really wants to drain the swamp, take a good look at AT&T

If America really wants to drain the swamp, take a good look at AT&T
[Photo: Flickr user Orin Zebest]

AT&T was caught off guard last Tuesday when its relationship with Trump’s personal attorney Michael Cohen (a $600,000 payment to Cohen’s shell company, Essential Consultants) was suddenly exposed to the daylight. As is often the case, it happened only by accident. AT&T’s name was included on documents released by porn star Stormy Daniels’ lawyer Michael Avenatti  as part of his effort to detail Cohen’s efforts to hush up the president’s alleged affair with his client.

Now, some lawmakers are demanding answers. On Monday Sens. Elizabeth Warren (D-Mass.), Richard Blumenthal (D-Conn.), and Ron Wyden (D-Oregon) wrote a letter to the company stating:

“AT&T had a significant financial interest in key administration decisions, including whether the Department of Justice would contest the proposed merger with Time Warner, whether the Federal Communications Commission would overturn net neutrality rules, and whether the Administration would push a tax plan that gave huge breaks to corporations like AT&T. Given these ongoing and significant matters, the unusual series of payments by AT&T to the President’s personal attorney raise obvious questions about corruption and whether AT&T, Essential Consultants, and the Trump Administration were engaged in a pay-for-play operation.”

But if you know anything about AT&T’s history, this shouldn’t be too surprising. The company has an army of lawyers at its disposal, is hair-trigger litigious, and is no stranger to backroom dealing in the Capitol. During 2017, the company paid $16,780,000 to 31 lobby firms, according to government filings.

The company already has 96 D.C. lobbyists, including three former members of Congress, working to push through the company’s proposed acquisition of Time Warner—a deal which would further consolidate the media market and reduce competition. It would put one of the largest video distribution networks in America, and a mountain of video content, under the control of one company. Last year, its lobbyists helped lead the fight to scrap net neutrality, the Obama-era regulations that prevented AT&T and other telecom giants from selling expensive “internet fast lanes” on its network, and from favoring its own content over others on the web.

With these issues at stake, AT&T apparently didn’t have any qualms about jumping in bed with some unsavory bedfellows. At the time AT&T retained Cohen’s firm, the fate of its bid to buy Time Warner was its greatest concern–the biggest action item for it D.C. lobbying operation. And Cohen’s main client, Donald Trump, was likely the biggest impediment to the deal. On the campaign trail in 2016 he’d called it “too much concentration of power in the hands of too few.” AT&T may have seen Cohen as a possible conduit to Trump, and a way to influence the president-elect’s opinion of the Time Warner deal.

The Department of Justice eventually sued to block the Time Warner deal on antitrust grounds. The case is now making its way through the courts. The DOJ may have been influenced by Trump, or it may have acted on legitimate concerns about media consolidation and stifled competition. The White House says the DOJ acted on its own. Regulators going back to the Obama administration have become more sensitive to the antitrust implications of big mergers, and have been more willing to act.

Trump spent the last two years on the campaign trail railing about the dirty dealings in D.C.’s “swamp,” but the influence of big money, corporations, and lobbyists is bigger than ever since he’s been president.  In D.C. its become commonplace for lobbyists to write legislation. Politicians regularly rotate from the halls of power to the posh offices of K Street lobbying firms, Rolodex in tow. For example, the leader of AT&T’s lobbying office, until 2016, was James Cicconi, a former aide to both Ronald Reagan and George H.W. Bush; AT&T bought the advantage of Ciccone’s deep political connections and broad influence when it made him SVP of external and regulatory affairs in 2005.

“A big mistake”

By the end of last week AT&T was contrite. CEO Stephenson, who has already been called on by Rep. Ro Khanna to appear before Congress in the matter, is saying the Cohen deal was a “big mistake,” and that AT&T’s reputation has been damaged by the affair. There was even a little ceremonial bloodletting; Stephenson announced that AT&T’s chief D.C. lobbyist Bob Quinn would be put out to pasture. But this only happened when the media learned of the Cohen retainer this week, not when AT&T originally learned of it in November 2017.

AT&T’s original claim was that it retained Cohen’s firm to gather “insights into understanding the new administration,” adding that it did not retain the firm to do any actual lobbying or legal work. But that created the look of influence-buying, so AT&T soon after released another statement saying it paid Essential to do “actual work.”

The company was a little more descriptive in an email to employees Wednesday: It said it retained Cohen’s firm to advise it on how to approach “regulatory reform at the FCC, corporate tax reform and antitrust enforcement.”

If you want to understand the lay of the land within the agencies that deal with these issues, you hire consultants who are expert in the workings of the Federal Communications Commission, the Treasury Department, the House Ways and Means committee, and the Federal Trade Commission. You don’t hire a real estate attorney from Long Island who used to do personal injury work.

The AT&T memo continues: “Companies often hire consultants for these purposes, especially at the beginning of a new Presidential Administration . . .”

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They probably do, but not the personal attorney of the incoming president. That is unheard of. It’s painfully, glaringly obvious that AT&T hired Cohen for no other reason than his proximity to the president.

In a memo to employees on Friday, Stephenson insisted that AT&T broke no laws by retaining Cohen’s firm. As far as we know, that’s true. Quinn’s office was careful to describe the services it asked of Cohen in a way that would not set off influence-buying alarms.

Mastering the influence game

AT&T, after all, has lots of experience with things like this. It would just as soon assert itself in the market via lawsuits and regulatory favors than spend the time and money needed to improve its products and services.

This is proved out by the numerous times AT&T has sued to block carriers from offering competitive broadband service in markets that it serves. For example, the company went to court in both Louisville and Nashville to stop Google from bringing its fiber broadband service to those cities. AT&T doesn’t like competition, and has fought in state houses and Congressional offices to limit it.

Over the years, it’s worked, at least in home broadband. In much of AT&T’s service area, consumers have only a couple of real choices for home broadband service. A 2018 FCC report found that only about a third of the U.S. population has access to more than one internet provider that offers service of 25 megabits per second or more–the FCC’s own definition of high-speed broadband. Only 39% of people in the country’s rural parts have access to even one option for 25 mbps+ service. Wireless broadband is more competitive, according to another FCC report.

AT&T has a history of winning policy battles that really matter to it in D.C. Not that its record is perfect. Regulators stopped its $39 billion bid for T-Mobile in 2011, despite a massive lobbying push.

AT&T also needs a lot of lawyers to play defense. The company is now under investigation by the FTC for allegedly throttling the data speeds of consumers who went over a certain amount even though they bought data plans advertised as “unlimited.” And the Justice Department is reportedly investigating AT&T for allegedly colluding with Verizon to make it harder for consumers to switch between wireless carries.

And AT&T, of course, seeks to influence lawmakers with cold, hard cash. Of the telecommunications companies AT&T was by far the biggest contributor to the campaigns of members of Congress during the 2016 election cycle–contributing four times as much as Verizon. Through its people and political action committees, the company donated more than $11.7 million to 472 of the 535 members of Congress, according to the Center for Responsive Politics.

The Cohen affair is a case study in the day-to-day business-as-usual of the D.C. influence game, of which AT&T is one of the major practitioners. Find it on the same short list with pharmaceuticals giants, Big Energy, and the NRA. This is the “swamp” that Trump ranted about, how it looks and works. It’s a foul-smelling place, and a heartbreaking one, where the well-being of regular America is too often ignored.

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