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FEATURE Business Lobby Death Match SBC and AT&T duke it out at the Texas Capitol BY DAVE MANN T here’s something perversely entertaining about watching a political lobbying contest between two massive corporations bent on annihilating each other. It’s a bit like indulging in a Jerry Bruckheimer filma terrible waste of money and manipulation, but one hell of a spectacle. This session, the biggest heavyweight-business bout in the Texas Legislature features telecommunications conglomerates SBC trol the industry’s greatest prizehigh-speed Internet service, commonly called broadband. While most people, including many a legislator, tune out at the mere mention of broadband deregulation, it’s almost a death match for SBC and AT&T. Billions of dollars are at stake hereno one knows precisely how much, at least they’re not saying publicly. But SBC and AT&Twith profits and share prices tumblinghave targeted high-speed Internet service as the savior that will lift them off the bottom of an ailing economy. SBC has the advantage in the Texas market because it built and owns the local network of broadband lines. It doesn’t want to share them anymore. The 1996 Telecommunications Act and a 1995 state deregulation law forced SBC to open those broadband lines to AT&T, and any other companies that want access, at extremely low rates. So SBC’s game plan this session is for Texas lawmakers to boot AT&T and friends off SBC’s broadband lines. That would give SBC’s high-speed other telecoms and guarantee the company a bundle of cash. AT&T, hardly a presence at the Lege the past 15 years, is desperate to avoid exile from Texas’ high-speed market, and has ratcheted up its political spending and lobbying to match SBC, the recent high roller of Texas politics. It’s not clear exactly how much money the two sides are spending \(full guess is between $10 million and $15 million each. The two companies are going all out in this high-stakes struggle. Beyond the standard lobbying arts, each side is trying everything from slick television and newspaper ads to generous gifts to the favorite charities of legislators. The ringside bell rang in early February when Sen. Ken tion that would free SBC from sharing broadband lines. According to SBC, the measure will simply allow the company to build new broadband lines without having to share that investment with competitors. As an added bonus, SBC promises to bring its DSL service to untouched swath.s of rural Texas. SBC also claims the bill will let it challenge the real competition on broadbandcable companies. It points out that cable’s broadband offerings, such as Time Warner’s Roadrunner service, have an advantage because they aren’t forced to share lines with competitors. All SBC wants, it says, is a fair chance to compete with cable. AT&T also makes the “open marketplace” argument, saying it wants to keep the status quo and preserve fair competition for DSL service. MCI, Consumers Union and AARP have rallied to AT&T’s cause. They argue that granting SBC free reign over broadband lines will eliminate competition for DSL and wallop consumers with unchecked prices and fees. Several smaller telecoms will probably go under if SB 377 passes, critics predict. Both arguments hold merit, industry lobbyists say, effectively canceling each other out. Telecom regulation is so complex that most legislators will never understand it, and neither will most of the public. Each side tosses around arguments about “free marketplaces” and “fair competition” in advertisements and daily newspaper stories. But the fate of SB 377 hinges on which massive conglomerate executes the soundest lobbying strategy by spending the most money wisely, and forging the right political alliances. SBC has mastered this formula, molding a political machine that spends more money, gives more gifts and befriends more legislators than any other company. Accordingly, SBC pushed through favorable deregulation bills in 1995, 1997, 1999, and, to a somewhat lesser extent, in 2001a remarkable winning streak in legislative politics. While AT&T, with its vast resources, can match SBC’s spending, insiders say, SBC’s haymaker remains its local influence, with employees and economic impact all over the state. It’s that local edge that makes this session’s bloodiest and most expensive industry battle SBC’s to lose. The first step in any lobbying war is to open the vault. As with most other business ventures, spending the most money doesn’t guarantee a successful lobbying campaign, but it’s a good start. No one has lavished money on the Lege like SBC. It starts with campaign contributions, though that’s only a small part of SBC’s efforts. The company dumped $135,000 into campaign coffers in the last election cycle, according to filings with the Texas Ethics Commission 4 THE TEXAS OBSERVER 3/14/03