Out in front: Carriers duck behind the scenes as front groups tout their message

Big telephone companies freely disclose their membership in consumer coalitions that push their policy agendas, but they are less upfront about their sizable financial support for those groups. The telecom industry - with its raging battles over the RBOCs' long-distance entry, access to cable systems and other issues - supports dozens of such groups.

Money increasingly drives the political process. Corporations in high-stakes legislative and regulatory battles spend big to sway decision-makers in a variety of ways, say consumer advocates in Washington.

"This is part of the American political system. Money talks. That's the way the game is played," said Mark Cooper, director of research at the Consumer Federation of America.

One common tactic is traditional lobbying. Another is to join and fund coalitions with consumer-friendly names, such as Hands Off the Internet, or HOTI, and Californians for Telecommunications Choice.

With such innocuous names, consumers might believe that the coalitions are independent. Critics say the groups disguise - or at least play down - the role of carriers to give lawmakers and regulators the impression of widespread public support for their positions.

"Money is raised to create the appearance of popular sentiment. It's much more common and subtle than in the past," said Andrew J. Schwartzman, president and CEO of Media Access Project, a public interest law firm.

Carriers deny that they support so-called "front groups" that hide the corporate interests and money that drive their programs. Instead, they say, the groups are legitimate organizations.

"Coalitions are an effective and efficient way to have a presence. You can cut through the noise better," said Link Hoewing, assistant vice president of issues management for Bell Atlantic.

"There's strength in numbers. We are upfront and unapologetic about the fact that we're joining forces with others to pry open the local phone markets to competition," said an AT&T spokeswoman.

The coalitions - typically run by well-known former legislators, public affairs and public relations consultants - advocate a popular cause: increased phone competition that will give consumers more choices and lower prices. Through advertisements, news conferences, press releases, letter writing and research, they get their messages out.

AT&T is or has been a member of as many as 28 state groups, claims Bell Atlantic. AT&T confirmed its membership in only six groups.

"AT&T has been by far the most active. I think it's because AT&T is doing whatever it can to delay the entry of Bell Atlantic into its [long-distance] market," said a Bell Atlantic spokesman.

MCI WorldCom says it joins only coalitions of competitive local exchange carriers (CLECs). It is a member of Breakthrough Massachusetts, the South Eastern Competitive Carriers Association and the Florida Competitive Carriers Association. Press releases list these groups' members as CLECs and CLEC trade associations.

A key issue is disclosure - how open the coalitions are about their membership and funding. The groups usually list their members on press releases and Web sites. But they don't disclose their funding unless asked, and even then, they're less than forthcoming.

"There's no law being broken. There may be some morals being bent," Cooper said.

It's legal not to disclose who pays for ads, which are protected by the First Amendment, Schwartzman added.

HOTI, which formed last summer, advocates an unregulated Internet, including freedom from government-imposed conditions on high-speed Internet access and from e-commerce taxes. "[HOTI] believes that if governments begin to regulate one aspect of the Internet, that will be the start of a never-ending flood of legislation and regulation," reads the organization's mission statement.

A self-described "coalition of Net users," HOTI's diverse members include AT&T, the conservative Americans for Tax Reform, California-based Net.Action, the Small Business Survival Committee and the Iowa Cable Association, according to its Web site. No individuals are listed.

Critics call HOTI a front group for AT&T, which is spending billions to upgrade cable networks for phone service and high-speed Internet access. AT&T also is waging legal battles across the country to prevent courts and local governments from letting competing ISPs access its cable systems.

Though supportive of AT&T's position, HOTI is mainly a consumer-oriented group, said Executive Director Peter Arnold, who helped AT&T lobby on the Internet Tax Freedom Act last year. The coalition's president is Chris Wolf, a Washington lawyer who specializes in high technology.

All corporate members pay fees to support HOTI's activities, which include a Web site, petition drives and ads, Arnold said. He would not disclose the dollar amount or percentage of members' contributions. AT&T said that it's a founding member of HOTI, but did not say how much money it has contributed to this or any other coalition.

On the other side of the cable-access issue, the openNET Coalition is a group of ISPs and high-tech firms "dedicated to promoting the rights of all consumers to obtain affordable, high-speed access to the Internet from the provider of their choice," according to its Web site. The coalition claims to have more than 800 members, including America Online, Cable & Wireless USA and U S West.

The group's Web site, similar to others set up by consumer coalitions, invites users to contact their congressmen, read news releases and articles and sign online petitions. OpenNET Coalition co-chairman Greg Simon, a Washington consultant, could not be reached for comment.

Whether consumer coalitions clarify, confuse or even influence the outcome of telecom issues is hard to tell. The similar-sounding names shed no light. "People in Washington understand what they're all about but not necessarily other people," Schwartzman said.

Pennsylvania residents have witnessed an onslaught of coalitions that have sprung up in response to the state's efforts to promote local phone competition: Pennsylvanians for Local Competition (PLC), Pennsylvanians for TOTAL Competition (PTC) and Telecommunications Choice for Pennsylvania (TCP).

Bell Atlantic, AT&T and other carriers have fought bitterly in Pennsylvania, most recently during protracted negotiations with the state designed to spur local competition and over the proposed Bell Atlantic/GTE merger. The state public utility commission (PUC) issued a decision largely favorable to AT&T in August and approved the merger in November.

The alphabet soup of consumer coalitions began to emerge before PUC negotiations began a year ago. Who is supporting these groups? In short, AT&T backs PLC, Bell Atlantic backs PTC and CLECs back TCP. PLC and PTC accuse each other of being front groups, and each denies that it is one itself.

"If I'm a front group, I'm a front group for the citizens of Pennsylvania who want competition," said David R. Wright, a former state representative who heads PTC. Though PTC advocates all types of telecom competition, its news releases tilt heavily toward Bell Atlantic positions.

Wright said he received an undisclosed amount of funding from Bell Atlantic - in the "five figures," said a company spokesman - to start the 6-month-old coalition, whose 16 members include GTE, the Latino Alliance and the King of Prussia Chamber of Commerce. Only Bell Atlantic and GTE contribute financially, Wright said.

The group has written press releases, speeches, newspaper ads and letters to the editor. Wright gets help from the Philadelphia public relations firm The Tierney Group.

On the other side sits Lehigh Valley, Pa.-based PLC, which aims "to educate legislators on the advantages of local telephone competition," said Executive Director Joe Benish, an executive at The Neiman Group, an advertising and PR firm that is one of 15 PLC members.

Other members include a mix of nonprofits and businesses such as PACE Communications, Boscov's Department Store and the Philadelphia chapter of the NAACP.

PLC has run "issues-oriented" radio, TV and newspaper ads and held press conferences, visited editorial boards and toured the state with spokesman J. William Lincoln, a former state senator. There's no shortage of Bell-bashing in its public pronouncements.

AT&T is the largest PLC member and contributed 85% of PLC's $410,000 budget last year, Benish said. "AT&T and MCI [WorldCom] have been our single largest contributors," although other members have provided money and in-kind contributions, he said. New members are not asked to contribute.

Somewhat above the fray is TCP, a CLEC group run by Stephen Schachman, managing director of Public Affairs Management, a lobbying firm. "We've always described ourselves as a coalition of CLECs interested in accelerating the competitive process in the local exchange market," he said.

The 10 or so members all pay to run TCP, with small carriers' contributions totaling more than that paid by AT&T and MCI WorldCom, Schachman said. He would not disclose specific figures.

But the Pennsylvania coalitions may not have gotten much for their money, time and trouble. Schachman said Telecom reform "has been confusing to consumers. I'm not sure what some of the rhetoric has brought to the issue."