Big Business Rewards California Democrats for Passing Model ALEC Legislation

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.In addition, Padilla was the beneficiary of a fundraiser held by Kevin Sloat, a lobbyist whose clientele included telecom firms. Sloat was fined $133,500 for that fundraiser by the state Fair Political Practices Commission, which said the liquor and cigars he gave the guests went beyond what the law allows a lobbyist to give. Derek Cressman, who is running against Padilla for secretary of state, called on Padilla to return money from the event. Rose Kapolczynski, a campaign consultant to Padilla, told the Los Angeles Times, “We take campaign finance laws very seriously and make it a practice to comply fully with both the letter and the spirit of the law. There is no indication from the FPPC that any of the contributions were improper and therefore we do not intend to return them.”

An opponent of the phone law, Sean McLaughlin, executive director of Access Humboldt, told me about attending legislative hearings on the bill.

“It was very interesting to me,” he said. “There were more than 50 well-heeled lobbyists [for the measure] and our ragtag group of public interest people.” Padilla and the other legislators greeted the telecom advocates as friends, McLaughlin said. “It was shocking how that played out,” he said. “To be in that room and see it was incredible. It was shocking to me, how much influence there was and how hard it was to even raise an issue.” He said the telecom lobbyists were not just witnesses for the bill, but “part of the presentation of the bill.” Speaking time for him and other opponents was limited, McLaughlin said.

“The thing that was discouraging to me was there was no media covering it,” he recalled. “There was this overflow crowd, the packed room was uncomfortable. Another dozen lobbyists in the hall. And they celebrated when the bill passed. I took out my little camera and they scattered.”

What separates this from the usual story of legislative misdoing is the impact it will have on us consumers.

McLaughlin talked to me about that. He’s from Eureka, in the farthest northern part of California, and his Access Humboldt project aims to bring broadband and other modern means of Internet communication to those forested, mountainous and lightly populated areas of the state.

At best, weather cuts off phone service there but state regulation of the old copper wire network assures residents of service. Reliance on the Internet makes that shaky, especially to mountain residents who may not be tech adept. With no regulations assuring them of service, they could be hapless in the face of the natural disasters that periodically afflict California.

Being a self-absorbed Californian, I thought about what would have happened to my family and me if our recent earthquake had been 7.4 instead of 4.4. Power might have been cut off. Our phones are connected to the outside world by cable, brought into our house by a router and powered by our electric supply. If the quake had cut off our power, we would have been without television and phone service. Cellphones would have connected us to a distant brother and sister worried about our fate. But only our cars could have kept them charged.

Suppose we were less into technology. Could we have kept those cellphones fired up? And what if we were too poor to afford cellphones?

Would we have understood why all our services were out? And what if one of us were disabled, dependent on power to keep life sustaining devices working? If they failed, how would we call for help? The past regulations promulgated by the California Public Utilities Commission and similar bodies across the nation forced the phone companies to provide answers and remedies for these questions.

That’s ignored amid the telecommunications industry’s glittering promise of jobs and prosperity.