Telco Trade Group Seeks New Lobbyist

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WASHINGTON -Roy Neel, longtime political confidant of Vice President Al Gore, stepped down last week as president of the United States Telecom Association after spending the last seven years prodding Congress and regulators to emancipate the Baby Bells from regulatory serfdom.

USTA immediately formed a search committee to find a successor. A former USTA leader who helped hire Neel said the organization needed someone who could work with both Republicans and Democrats, especially with the Senate evenly divided for the first time in 120 years.

"With the Senate being like it is, it would definitely be worth taking a long hard look at doing something along that line," said former USTA chairman Bob Boaldin, president and CEO of EPIC TOUCH, a 1,700 access-line phone company in Elkhart, Kan. "I think that would be better-if I were having an input in it-to have somebody that could work both sides of the aisle."

Neel, 55, did not disclose his future plans, but USTA sources said he would try his hand at becoming a TV political pundit, get involved in political consulting or perhaps take an academic post at a prestigious university.

Neel, who earned $1.2 million in 1999, took a leave of absence in September to join the Gore-Lieberman campaign. Gore, for whom Neel worked as a Senate aide for many years, asked him to assemble the people who would fill key posts in a potential administration.

But that role came to an abrupt end Dec. 12, when the U.S. Supreme Court handed the election to Texas Gov. George W. Bush. Gore conceded defeat the next night.

Late last month, acting USTA president Gary Lytle announced that Neel would return to the organization on Feb. 1, but Neel apparently had a change of heart over the last few weeks.

"USTA has a great staff and a great future," Neel said in a prepared statement. "We have won a lot of battles over the past seven years and, I believe, raised the visibility and effectiveness of a major telecom trade association."

Boaldin said he didn't believe Neel resigned because he expected his influence to wane after Gore's defeat.

"I believe people respected Roy for who Roy was. I believe he has some better opportunities and feels like he has done his work for USTA.

"I happened to be on the search team when we hired him and he let us know right up front that USTA was not going to be his permanent home," Boaldin said.

Neel was deputy White House chief of staff when he joined USTA. The move gave the trade group-which represents the four regional Bell operating companies and hundreds of small phone companies-instant clout with Congress as lawmakers began work on a bill that ultimately became the Telecommunications Act of 1996.

Under White House ethics rules that President Clinton repealed Dec. 28, Neel was barred from directly lobbying his former colleagues in the administration for five years. But during that period, he managed to get his message across to the right people by relying on his USTA aides and assorted retainers.

On the surface, the 1996 law looked like a clear victory for the Baby Bells. In exchange for opening their networks to competitors, they were given a road map to enter the long distance business for the first time since the 1984 breakup of AT&T Corp.

It also gave the companies an unimpeded shot at entering the cable business. They had been barred from doing so within their local phone territories since 1984.

But Federal Communications Commission implementation of the law developed into a regulatory and litigation morass for the Bells. The FCC imposed a massive interconnection order on local phone companies-prompting litigation that went all the way to the U.S. Supreme Court-and the agency refused to allow any Bells into long distance until December 1999, when Verizon Communications launched service in New York state.

Only one other long distance application-by SBC Communications Inc. in Texas-has been approved.

In late 1999, the FCC turned up the heat by requiring local phone companies to engage in "line sharing," a regulation which mandated that phone companies lease data competitors only that portion of their bandwidth necessary to provide high-speed Internet access. The impact of the rule was to greatly reduce the line-leasing costs for competitors that had no interest in providing voice service.

The line-sharing order prompted Neel to accuse the FCC of engaging in "market manipulation" bordering on the "nationalization" of incumbent phone carriers.

While Neel managed to get the FCC to clear out some regulatory underbrush that had nettled USTA members for years, he failed to persuade Congress or the FCC to deregulate the Bells' provision of digital-subscriber-line services to level the playing field with cable.

Late last year, USTA thought it was on verge of major victory when Congress voted to repeal the 3 percent excise tax on all local phone bills. But President Clinton-who also fought another favorite among mom-and-pop local phone companies, the inheritance tax-vetoed the measure.

Neel's struggles at the FCC were notable because Gore had a major hand in deciding who would run the agency.

One phone industry executive noted that if Neel had trouble convincing his Democratic friends at the FCC to deregulate the Baby Bells, it was unlikely he would have much luck getting in to see the new crop of Republicans installed by the Bush administration.

With the White House changing political parties, Boaldin said, it was probably best for Neel and USTA to make a fresh start.

"It's great to have the relationship with the power that's in place, but when that power is gone, then you often times have to start over," Boaldin said.

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