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Big Business Rewards California Democrats for Passing Model ALEC Legislation

Posted on Mar 26, 2014

By Bill Boyarsky


A recent California law freeing much of the telephone business from state regulation—and potentially depriving millions of phone users of long-standing consumer protections—illustrates the irrelevancy of party and ideological labels when it comes to helping big corporations.

Mark Toney, executive director of The Utility Reform Network, described the measure as “the most anti-consumer bill ever introduced in California.”

Just how this bill became law points up the importance of state legislatures and local lawmaking bodies, those governmental entities that although increasingly ignored by the media, influence much of the quality of our lives.

That’s where American politics are really at work. If the loud political debate and much of the punditry is to be believed, deregulation is the domain of Republicans and other conservatives. Regulation and consumer protection are Democratic and liberal. But in many crucial cases, that’s not the way it is. Take, for example, mundane but all-important phone calls.

Most were once made through a system of copper wires and switches now known somewhat derisively in the tech world as “plain old telephone service.” Plain old service, generally regulated by state agencies around the country, is rapidly being abandoned in favor of new Internet based technology.

This will not be regulated as a result of the California law, and similar ones in 22 other states and the District of Columbia. They forbid the states to regulate Internet-connected phone service, which will soon constitute the vast majority of calls. 

In the past, phone companies delivering calls over plain old copper wires were required to provide service to everyone who paid their bills, including those living in impoverished, tough neighborhoods and remote rural areas, places where supplying service has been expensive and troublesome.

The new California law, SB 1161, takes away the power of the California Public Utilities Commission to impose these and other regulations on companies that use the Internet for delivering phone service. A CPUC analysis said, “Because virtually all communications service providers use (the Internet) at some point in their networks, SB1161 could … strip the CPUC of jurisdiction over services it now actively regulates.”

Party and ideology didn’t mean a thing when it came to this measure.

It was introduced and steered through the legislature by state Sen. Alex Padilla, a liberal Democrat who represents a working-class area of the San Fernando Valley. Liberal, but business oriented, Gov. Jerry Brown signed it into law.

Padilla, 40, grew up in the Valley area he represents, the son of immigrant parents from Mexico. He went on to graduate from MIT with a degree in mechanical engineering. He maintains his interest in the school and the technology world as a member of the MIT board of trustees. He is now a candidate for California secretary of state.

Padilla told me he introduced the bill to encourage California’s high tech industry. “The tech industry is centered in California and it has the option to move,” he said. “If we want to maximize the job benefit, we have to assure them this is a good place to do business.” He also said, “If this was Detroit, you could be damn sure the Michigan Legislature would do everything to protect the auto industry.”

Padilla acknowledged the measure “raises a lot of concerns, particularly in California with its protection of consumers.” He said the law retains the consumer protections covering wire-carried phone calls. But as for Internet related systems—those in use now and those to be developed in the future—he had “an interest in sending a message to the investor and innovative communities. We wanted them to know that the PUC would not overstep. ...”

The law is similar to “model” legislation that emerged from the American Legislative Exchange Council, best known as ALEC, a conservative, industry-backed organization that sponsors anti-regulatory legislation in statehouses around the country. ALEC also produced the “stand your ground” law that protected the killer of Trayvon Martin in Florida, according to the Center for Media & Democracy. The center said stand your ground was a “model bill” pushed by ALEC in “dozens of other states. ... The bill was brought to ALEC by the National Rifle Association (NRA) and was unanimously approved by an ALEC task force co-chaired by Wal-Mart.”

California’s phone legislation was strongly supported by Silicon Valley powers who are part of TechNet, an organization of technology CEOs, including top officials of Oracle, Cisco, Yahoo, Google and Microsoft.

“I have never met with ALEC, been to their conferences or anything,” Padilla said.

Padilla is well connected to the club of lobbyists and influential lawmakers who run the California Legislature. The telecom industry is a major part of it, having donated $1,986,976 to legislators’ political campaigns from January 2011 through December 2012, according to political data firm MapLight. The industry gave Padilla $39,364 of his total $1,329,743 in campaign contributions from January 2009 through December 2012.


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