The Center for Public Integrity

Note to readers: This story has been reposted. Since the report was originally released, the Center for Public Integrity has changed the way it calculates lobbying expenditures to reflect a more stringent methodology for determining the total amounts. The change was made to correct the potential overstatement of totals. Figures or relevant text that have been changed are indicated with asterisks. (2/28/2006)

What do nearly all of the tight-knit group of congressional aides who crafted the pro-business Telecommunications Act of 1996 now have in common? Salaries as industry lobbyists.

Some call it cashing in. Some call it an opportunity they can't pass up. Others call it an offer they can't refuse.

"Some people had no choice but to go through the revolving door because you have to make a living on what you do and what you know," said Christopher McLean, who went on to senior roles in the Clinton administration and then left government for a Washington, D.C.-based lobbying firm following President George W. Bush's 2000 election victory.

Whatever their motives, the aides have taken the common route from political staff member to champion of private interests.

Through press accounts, primary sources and detailed interviews, The Center for Public Integrity has identified a short list of the 15 staffers most involved in the years-long process of drafting the 1996 act. Thirteen of them, it turns out, became lobbyists, and another is a lawmaker who gets generous financial support for his campaigns from telephone companies. Another worked for a telecom lobbyist before helping to draft the law.

Those staffers have defended the integrity of their work on the 1996 act, but some telecom observers have their doubts. Adam Thierer, for example, an analyst at the libertarian Cato Institute, has called it a fundamentally flawed law loaded with contradictory giveaways and payoffs to various industry players.

The cable television industry has significantly* increased the amount it spends to sway opinion in Congress and at the Federal Communications Commission since 1998, according to a new Center for Public Integrity analysis.

The industry spent more than $10 million* on lobbying in 1999 compared with more than $15 million* in 2003, a jump of 50 percent*, according to records. All told, the industry spent more than $88 million* on lobbying from 1998 through mid-2004.

The cable television industry also spent $20.5 million on political campaigns since 1998 and sponsored 127 trips for members, family and staff of the two congressional committees that oversee the industry from 2000 through the first quarter of 2004 at a cost of $225,670.

In addition to contributions, lobbying and junkets, the Center also analyzed employment patterns of former FCC staff and senior employees of the House and Senate commerce committees. Researchers identified 16 former senior government officials who went to work for the cable industry since 1996.

The top spenders on lobbying among cable systems are:

The four regional Bell operating companies remaining from the break-up of AT&T accounted for roughly two-thirds of all Federal Communications Commission fines and settlements paid since January 2000, according to a Center for Public Integrity investigation.

The majority of the total was paid by companies that ran afoul of rules written to create competition in local telephone markets. Since a 1996 rewrite of federal communications law, the so-called Baby Bells have battled to hang on to their dominance of the local telephone service market in the United States.

The three companies that have paid the most fines or settlements since January 2000 are all Bells. On top of the list is Denver-based Qwest Communications International Inc., which has forked over $17.1 million, including a $9 million fine paid recently. Second is Verizon Communications with $12 million, and third is San Antonio, Texas-based SBC Communications Inc. which has paid $11.5 million. (BellSouth Corp. is ninth overall with $2.15 million.)

Thanks largely to the agency's aggressive enforcement of competition rules and a creative approach to increase fines related to indecent broadcasts, proposed fines and settlements have increased dramatically so far this year, researchers discovered. The average amount proposed per infraction in 2003 was $119,933 compared with $362,282 through June 9.

An organization of state-designated consumer advocates wants federal regulators to force cellular telephone providers to clear up their billing practices.

The National Association of State Utility Consumer Advocates is a group of 44 government officials and consumer advocates in 42 states and the District of Columbia with statutory authority to represent the interests of utility consumers before state and federal regulators and courts.

NASUCA filed a petition with the Federal Communications Commission on March 30, 2004 demanding the FCC to take a more active role in regulating misleading line item charges on monthly wireless bills.

At issue are so-called "federal recovery fees" which are used primarily to pay for costs associated with allowing customers to change providers while keeping their phone numbers. But wireless companies have used the line item to cover all manner of expenses, including marketing and advertising costs.

NASUCA's petition cites a study by the Center for Public Integrity released in October 2003 which detailed the practice. The Center reported that wireless companies had collected $629 million starting in January 2002 for number portability, a service not offered until Nov. 24, 2003.

Since the Center's last report, wireless providers have collected another $308 million, bringing total collections for number portability to $937 million.

New totals show that all the major cell phone providers combined are collecting $94 million per month for number portability – but neither the FCC nor the companies themselves will say how many people have taken advantage of the service.

The Federal Communications Commission has proposed $4.5 million in fines for broadcast indecency since 1990, with more than half the total assessed to stations that aired shock-radio pioneer Howard Stern.

Yesterday, the FCC proposed a $495,000 fine against six Clear Channel Communications Corp. stations that aired Stern's show, prompting the giant radio broadcaster to drop the show from its broadcast lineup permanently. On March 18, the FCC proposed a $27,500 fine against Stern for a broadcast that aired in Detroit on July 26, 2001. Before that action, Stern had not been cited since June 1998.

The FCC has sought $2.5 million in fines from stations that carried the controversial New York-based disc jockey's show since 1990, according to the analysis. The bulk of those fines were for shows broadcast between 1991 and 1993. Five separate actions were settled for a record $1.71 million in 1995.

Using FCC records and LexisNexis legal research, the Center for Public Integrity identified 75 broadcast indecency proceedings instigated by the FCC since 1990. The Center focused on proposed fines, called "notices of apparent liability."

The analysis shows five radio shows were responsible for $3.96 million in proposed fines since 1990, or 87 percent of the total. The top four shows aired on stations owned by Clear Channel Communications Corp. or Viacom Inc.'s Infinity division, the largest and second largest radio broadcasters in the country, respectively.

The Center also identified $152,150 in proposed fines that had been dismissed due to the expiration of the statute of limitations.

Among some of the other findings in the Center's analysis:

Since Federal Communications Commission Chairman Michael Powell promised seven months ago to "substantially reduce" travel funded by outside sources, the agency has accepted $90,000-worth of free trips, according to an analysis by the Center for Public Integrity.

FCC spokesman David Fiske told the Center in February there would be no more industry-funded travel by commissioners and "decision makers" at a "high level."

While travel by the highest-level FCC employees has all but ceased, records obtained through a Freedom of Information request show there have been plenty of industry-funded trips taken by upper-level managers.

For example, the 2004 International Consumer Electronics Show in Las Vegas this past January was attended by five FCC employees, including three deputy chiefs and the chief of the Policy and Rules Division in the Office of Engineering and Technology.

The trips totaled $6,355 and were funded by the Consumer Electronics Association, an industry trade group. But that was a dramatic decrease compared with the previous year when 27 FCC workers, including Powell and commissioners Kathleen Abernathy and Jonathan Adelstein, attended. Total cost to the association was $45,736.

In May 2003, the Center released a report chronicling how FCC officials had accepted nearly $2.8 million in travel and entertainment expenses over the past eight years, most of it from the telecommunications and broadcast industries the agency regulates.

Following the report's release, several unsuccessful attempts have been made in Congress to ban the practice.

On July 25, 2003, Virginia Republican Congressman Frank Wolf, chairman of the House appropriations subcommittee that oversees the FCC's budget, wrote Powell asking his agency to stop accepting such travel.

Since January 2002, the nation's wireless phone companies have been slipping some mysterious new fees in the bills of their 101 million customers.

Those who bothered to ask were told that the fees, which ranged from a nickel to $1.75 per month, were needed primarily to cover the wireless industry's costs for implementing "number portability," a new service that will allow phone users to keep their same number when switching from one wireless company to another.

What the companies didn't say, however, was that they were preemptively collecting fees for a service that would not be available for another 23 months. What's more, the companies were charging the new fees with the full knowledge and approval of the Federal Communications Commission, the government agency that is supposed to look out for the public on telecommunications issues.

The cost to wireless phone customers: $629 million so far, and still climbing.

After nearly eight years of delays and false starts, an FCC-mandated wireless portability initiative is expected to go into effect November 24. Experts say the service could have been up and running years ago had it not been for a steady barrage of legal challenges and other delaying tactics by the wireless industry.

"Consumers are being bilked billions of dollars and there's nothing that they can do about it," said Chris Murray, legal counsel for Consumers Union in Washington, D.C.

A Center for Public Integrity survey of the 10 largest wireless service providers shows that nine of them have been collecting so-called recovery fees.

The Federal Communications Commission knew as far back as 1998 that the way it measured radio markets was deeply flawed and could lead to the creation of behemoths like Clear Channel Communications, but failed to act in the face of industry pressure and bureaucratic inertia.

The result is a radio industry where Clear Channel and other radio broadcast companies own far more radio stations in individual markets across the United States than was intended by Congress, despite years of warnings by the FCC's own staff.

The FCC finally passed rules on June 2, 2003, meant to fix the problem, but only after well-publicized concerns that broadcasters wield near-monopoly power in certain markets that endangers free speech and public safety. What's more, the new rules contain large concessions to industry and face a challenge in Congress.

Radio has been dubbed the "canary in the coal mine" by critics of the FCC's June 2 decision to loosen ownership rules in other forms of media and has become a poster child for what can go wrong when rules restricting media ownership are removed.

The limits

Under federal law, there's a limit to how many stations a radio broadcast company may own in a single market, based on a sliding scale. In the largest cities, with markets of 45 or more stations, one company may own eight stations. On the opposite end of the scale, in a market with 14 or fewer stations, one company may own no more than five stations.