NCTA Calm Amid Trade Group Turmoil

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The United States Telecom Association is holding its October convention — an annual event that attracts phone-industry giants as well as the mom-and-pop carriers that serve rural America — in sun-kissed Arizona.

In a brochure noting the convention's highlights, the USTA announced that Qwest Communications International Inc. chairman and CEO Joseph Nacchio would deliver the keynote address to the expected 1,000 attendees at the Fairmont Scottsdale Princess Hotel near Phoenix.

It looks as if the USTA might need to revise its 18-page brochure. Two weeks ago, Qwest was summarily bounced from the trade group for falling behind on its dues payments. For now, the USTA is saying that Nacchio is still scheduled to give the convention's most important speech.

For the USTA and several other D.C. trade associations, the last year or so has been a period of change — wrenching change, in some cases — as industry fissures spread from corporate boardrooms to the glass boxes on K Street, Washington's lobbying Broadway.

The signs of painful change include the firing of some leaders and the departure of some companies. Although no association heads are indispensable — and substitute players are never in short supply — it is not a simple task for a trade association to replace the dues and prestige from a large company that has vanished.

For its part, Qwest, the 14-state Baby Bell (through its buyout of U S West Inc.), paid USTA about $600,000 a year.

While some trade associations have experienced upheaval, the National Cable & Telecommunications Association has remained largely immune from the turmoil, even though cable consolidation shows no indication of letting up anytime soon.

Since 1999, AT&T Corp. has acquired Tele-Communications Inc. and MediaOne Group Inc., while America Online Inc. has merged with Time Warner Inc. And Comcast Corp. still has a bid on the table to acquire 13 million AT&T Broadband subscribers.

Amid all of this, neither AT&T nor AOL Time Warner has hinted at pulling out of NCTA or demanded that its president, Robert Sachs, and other officials look for new lines of work.

On the contrary, Sachs — who joined NCTA three years ago at $850,000 a year — signed a contract extension two weeks ago through 2004, though financial terms were not disclosed.

But Sachs' job hasn't been pain-free. He's been forced to cope with an AT&T with business interests far broader than those of other cable companies, mainly because Ma Bell has had to protect its long-distance business from incursions by the Baby Bells.

That's the likely explanation for why AT&T has been so adament in its opposition to a House bill that would deregulate the Bells' broadband offerings.

NCTA's position was different. It told the bill's chief sponsor, House Energy and Commerce Committee chairman Billy Tauzin (R-La.), that it was not opposed to the legislation. Hardly a ringing endorsement, but a far cry from AT&T's all-out assault.

"The cable industry has attracted investors and leaders with an entrepreneurial spirit, and a deregulatory outlook has always been a unifying force at NCTA. That keeps people together," said NCTA spokesman David Beckwith.

Another exception to the turnover turmoil is the Motion Picture Association of America, led by Jack Valenti, the feisty defender of Hollywood studios.

Valenti, who turns 80 on Sept. 5, joined MPAA in 1966 from the Johnson White House. Over the last 35 years, Valenti has defied the political actuaries by outlasting 232 U.S. senators, 13 Supreme Court justices and seven presidents, according to a recent profile in Variety.

But for those associations in trouble, politics and business interests seem to drive change.

USTA's move to give Qwest the boot came just a few weeks after Walter McCormick took over as its president. He got the job after the USTA board decided it no longer required the services of Roy Neel, a confidant of former Vice President Al Gore, who left the Clinton White House in late 1993 to head USTA.

For his part, McCormick is said to be close to White House chief of staff Andrew Card.

Had Gore won the presidency instead of George W. Bush, it's unlikely Neel would have left the USTA for anything less than a senior White House position, a Cabinet post, or a choice ambassadorship.

National Association of Broadcasters president Edward O. Fritts also appears to be firmly ensconced. In the job for 19 years, the low-key Fritts is seldom seen and rarely holds a press conference. But he keeps the NAB sharply focused on threats to its industry.

The NAB's most recent lobbying triumph came in July, when the House scuttled campaign reform legislation that could have meant cheap ad rates for political candidates.

"Anybody who understands the business of broadcasting and lobbying understand that the real strength of NAB comes from having stations and general managers in virtually every congressional district in the country," said NAB spokesman Dennis Wharton.

But as Fritts himself noted in April, the broadcast fraternity is splintered.

The NAB suffered a fall in prestige when Fox, NBC and then CBS quit the association, all of them releasing statements or letters highlighting policy differences with its affiliate-dominated TV board.

Only ABC remains in the NAB, but the alphabet network hasn't masked its displeasure with the group's support for rules that allow TV-station owners to also control local newspapers, but resists permitting any single TV-station owner to reach more than 35 percent of TV households. NAB's position on the 35 percent cap drove Fox, NBC, and CBS from the organization.

"It's unfortunate that the networks chose to leave over one single issue. It happened before in 1991 with ABC, but they came back," Wharton said.

The direct-broadcast satellite industry, now dominated by DirecTV Inc. and EchoStar Communications Corp., is also undergoing change. Two weeks ago, the Satellite Broadcasting & Communications Association, the DBS industry's Washington lobbying group, announced that its two senior people were resigning.

Chuck Hewitt, SBCA president since 1986, and Andy Paul, its top lobbyist since 1990, are leaving, owing to the SBCA's stated desire to energize its lobbying and public-relations efforts.

Andy Wright, the SBCA's vice president of government and legal affairs, is serving as acting president until a successor to Hewitt is named. Wright is said to be a leading candidate for the job.

"While transition is always difficult, I think we are very well-positioned to be successful in the future," Wright said.

The SBCA has about two dozen employees. The group once had five DBS carriers as members, but today there are only two. If EchoStar is successful in acquiring DirecTV, the SBCA would be left with just one carrier member.

The SBCA's biggest policy battle is with broadcasters over a legal mandate that DBS providers must carry all local TV stations in any market where they offer local-into-local service.

The SBCA is trying to overturn the regulation, which takes effect Jan. 1, in the U.S. Court of Appeals for the 4th Circuit. Oral arguments are scheduled for Sept. 25 in Richmond, Va.

While EchoStar and DirecTV support the SBCA suit, Pegasus Communication Corp. — an SBCA member and a DBS distributor with 1.5 million rural subscribers in 41 states — has urged the trade group to drop the suit and build partnerships with local TV stations.

DBS industry observers noted that Pegasus owns 10 local TV stations.

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