By Karl Bode, Feb 5 2019 | Original Motherboard article here.
The revolving door spins yet again as consumer ally quickly shifts to lobbying for Big Wireless firm, T-Mobile.
Yet another FCC Commissioner has quickly pivoted from representing the public to lobbying on behalf of big telecom.
Recently-departed Democratic FCC Commissioner Mignon Clyburn has been a staunch defender of net neutrality. She also worked extensively at reforming a broken prison telco monopoly that has historically resulted in inmates and their families being ripped off by a rotating crop of often ethically dubious companies.
But a new Politico report states that Clyburn has been hired by T-Mobile to help gain regulatory approval for the company’s $26 billion merger with Sprint, putting the former commissioner on a collision course with consumer groups that have historically seen Clyburn as an ally.
Clyburn told Politico:
“I’m advising T-Mobile and Sprint as it seeks to accelerate the creation of an inclusive nationwide 5G network on how to best build a bridge across the digital divide,”
.Clyburn left her post last year, telling media outlets at the time she would “be a better public servant not serving on the FCC.”
But while T-Mobile and Sprint have repeatedly claimed their looming merger will create untold synergies for American consumers, history (including Canadian history) suggests the reduction of four major wireless competitors to three will inevitably reduce competition, raising rates.
Consumer groups have aggressively lambasted the deal and the growing roster of bipartisan lawmakers who’ve taken money from big telecom while supporting the merger. Motherboard reached out to Fight For the Future, Free Press, and Public Knowledge, but none were willing to specifically comment on Clyburn’s abrupt pivot. Clyburn did not respond to a request for comment made via the FCC, T-Mobile, and Twitter. T-Mobile similarly did not respond to a request for comment by press time.
Despite both T-Mobile and Sprint’s claims that the deal will boost employment totals, Wall Street analysts have predicted the deal could eliminate anywhere between 10,000 and 30,000 jobs as redundant retail, support, and middle management positions are inevitably eliminated over the next several years. Telecom unions have stated up to 28,000 jobs could be lost.
T-Mobile has pulled out all the stops in recent months in a bid to nab regulatory approval, including having executives stay at the Trump hotel in DC, and hiring former Trump campaign manager Corey Lewandowski.
Yet, both state and federal regulators have expressed increased skepticism at the consumer benefits of such a deal. Similar deals, including a 2011 AT&T attempted acquisition of T-Mobile — and a 2014 merger between T-Mobile and Sprint — were blocked by regulators for being potentially harmful to both the health of the market and consumer welfare.
T-Mobile’s consumer-friendly branding and CEO John Legere have helped dull some of the skepticism surrounding this newest deal. And while the company has admittedly brought some much needed competition to the wireless sector, its union busting, opposition to net neutrality, and criticism of groups like the EFF tend to indicate this branding is often skin deep.
Revolving door regulators in the telecom sector are certainly nothing new.
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Current FCC boss Ajit Pai previously worked for Verizon.
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Former FCC Commissioner Meredith Attwell Baker subsequently lobbied for both the wireless sector and Comcast.
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Former FCC boss Michael Powell is now the head of the NCTA, cable industry’s biggest lobbying organization.
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Former FCC Commissioner Robert McDowell was already on T-Mobile’s payroll, telling anybody who’ll listen the megadeal will be “great for America.”
No matter how many allies T-Mobile recruits to its cause, actual consumer advocates aren’t buying it.
Fight For the Future Executive Director Evan Greer told Motherboard:
“This is not that complicated. More centralization and less competition isn't good for anyone except wealthy CEOs of telecom companies,” Greer said. “Telecom lobbyists have a long history of pretending that their policy goals are somehow magically aligned with helping the downtrodden, but it's a lie. This merger will mean more expensive, crappier cell phone plans, and hit the people who can least afford it the hardest."
Studies have shown this type of revolving door unsurprisingly helps companies that take advantage of it, often leading to regulatory capture. While there are some limited state and federal guidelines in place to prohibit such activity, critics say they have too many loopholes to be effective in meaningfully thwarting the practice.
“Existing laws and rules already can bar lawmakers from returning to Congress as lobbyists, or bar FCC commissioners and staff from returning to the agency, at least for a short period of a year or two,” Matt Wood, Vice President of Policy and General Counsel at consumer group Free Press told Motherboard.
Wood added:
“If those individuals sign up to advise companies they recently regulated, but not to formally lobby Congress or the FCC, those kinds of bans don't do much of anything besides impose a relatively short waiting period,”
Senator Elizabeth Warren introduced tighter revolving door lobbying restrictions as part of her Anti-Corruption and Public Integrity Act introduced last year, which would have not only banned former members of Congress from becoming lobbyists, but expanded the definition of lobbyist. The measure failed to gain any serious traction in part due to, wait for it, lobbying.
Former FCC staffer Gigi Sohn told Motherboard:
“There are restrictions on one immediately lobbying the agency they worked for, but I’d guess that there hasn’t been nearly enough public outrage to force Congress’ hand on this. It wouldn’t surprise me if members of Congress are reticent to pass such a law because the next logical step would be preventing them from making googobs of money as lobbyists immediately after leaving Congress.”
T-Mobile, meanwhile, has seriously ramped up its lobbying assault on Washington as skepticism of the deal has heated up. In a letter sent to FCC boss Ajit Pai this week, T-Mobile’s CEO urged Pai to ignore critics of the deal, claiming the majority were “employed by big cable or big telco.” Legere also promised that the company would freeze all price hikes for a period of three years if the merger was approved. But given the recent assault on FCC authority by big telecom (which again, T-Mobile supported) whether the Pai FCC could or would hold T-Mobile to that promise remains anything but clear.
The 4Competition coalition, which represents both consumer groups and smaller cellular carriers, issued a statement claiming the promise was “meaningless,” “riddled with loopholes,” and wouldn’t mitigate the merger’s significant harm to consumers and the wireless market.
“Committing to not raise ‘rate plans’ for three years is an empty promise that does not provide any real price protection for consumers. In fact, T-Mobile’s announcement has confirmed exactly what their own data shows: the merger will eliminate wireless competition and increase prices for consumers.”
Wall Street firms like New Street Research were quick to suggest T-Mobile’s rush toward concessions was a sign that the company was losing the battle to win over regulators.
“Generally when it comes to mergers, the first side to offer concessions is likely to be the side that is losing,” the firm said in a morning research note to investors.