USTA Trying to Build Broader Coalition

Posted March 26, 2004 at 4:58pm

The Baby Bell phone companies and their Washington lobbying group are treating dozens of Congressional staffers to an all-expenses-paid trip to an exclusive Southern California resort in mid-April for a few days of talking about telecommunications policy and lounging on the beach.

But unlike most industry-paid trips, the intended audience for the U.S. Telecom Association excursion to the exclusive Hotel Del Coronado in San Diego is not just the 60 or so Capitol Hill staffers who will sit through more a dozen speeches by executives from wireless firms and telecom-equipment makers.

Instead, the trade group is targeting the speakers themselves.

The trip is the latest step in a campaign by the association to enlist the support of a broad array of telecom companies as they work to build a broad coalition on Capitol Hill to further deregulate the local phone market.

“It is fair to say that the USTA has been reaching out,” said Walter McCormick, the head of the local phone trade association. “We have been reaching out to others who are interested in investing in advanced technology and building out high-tech infrastructure. And we have been discussing the appropriate public policy environment that will encourage innovation and investment.”

For the seminar in San Diego, McCormick reached out to executives from the manufacturing sector that he hopes to recruit to join the Bells’ cause on Capitol Hill.

The National Association of Manufacturers will co-sponsor the April 13-16 conference, while speakers will include executives from NAM, the California Manufacturers and Technology Association and equipment-maker Qualcomm.

McCormick asked the wireless industry’s trade association to co-sponsor the event for $25,000, but the head of the Cellular Telecommunications & Internet Association, former Rep. Steve Largent (R-Okla.), turned down the offer.

The trip is McCormick’s latest effort to expand the association since taking over the trade group three years ago.

Faced with declining U.S. market share and stiff opposition on Capitol Hill, McCormick has aggressively sought to expand the base of the 100-year-old trade association from beyond its three giant Baby Bell companies — BellSouth Corp., SBC Communications and Verizon Communications — and scores of smaller local phone companies.

Two years ago, McCormick quietly felt out Thomas Wheeler, then the head of the wireless lobby, about a merger with CTIA.

Last year, McCormick infuriated the Telecommunications Industry Association by secretly meeting with nine of the group’s largest equipment manufacturers, including Intel, Motorola and Nortel, about forming a lobbying alliance on Capitol Hill.

But his efforts have had little success so far.

Since wireless phone companies face few federal regulations, they are reluctant to team up with the Bells, which face extraordinary oversight from the Federal Communications Commission and 50 sets of state regulators.

Meanwhile, equipment manufacturers are wary of joining the Bells’ press for deregulation because they believe current federal rules have helped to create demand for their phones, routers and switches from AT&T and scores of smaller companies that compete with the Bells in the local phone market.

“We are neutral on most of these things because we have customers in BellSouth and SBC and we have customers in AT&T,” said John Earnhardt, a spokesman for Cisco.

“Clearly there is absolutely no benefit to getting in the middle of those issues. They are both good customers, and we want to do whatever we can to help them without stepping on the toes of other good customers.”

But that has not stopped the telecom association from continuing to reach out to the equipment makers. Association officials believe high-tech manufacturers are natural allies for the industry because the well-heeled Baby Bells will buy billions of dollars worth of their equipment if they are deregulated.

“The manufacturers benefit because we buy more stuff,” said Ed Merlis, U.S. Telecom Association’s top lobbyist.

Tom Amontree, the association’s spokesman, added that the “fact of the matter is that these sectors are linked. We are talking about job creation.”

Of course, the Washington trade group for the telecom-equipment makers disagrees.

“We believe that the TIA serves manufactures in the best possible way,” said Matt Flanigan, the president of the Telecommunications Industry Association. “Our role is to have an open and competitive marketplace.”