TV Ads Try to Shape Network-Access Debate

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In recent months, thousands of people around the nation's capital have watched telecommunications-industry giants attack one another in an unusual attempt to influence a handful of federal regulators.

In frequent television ads airing in Washington and a dozen other cities, Voices for Choices — a coalition led by AT&T Corp. and Sprint Corp. — has been launching missives at SBC Communications Inc.

The Voices ads are designed to counter a lobbying effort by SBC and the other regional Bell operating companies, which are trying to convince federal regulators and state legislatures to change the network-access rules, which allow competing providers low-cost entry to the Baby Bells' local phone networks.

But the spots are so negative in tone that some members of Voices for Choices have decided to distance themselves from the coalition — at least partially out of fear that SBC might sue.

"They claimed they were going under in order to get special favors from the government," an announcer says in one ad that shows a wolf wearing a sheepskin costume. "But now we find out SBC is bragging to Wall Street about huge profits in the billions, while they throw 11,000 of their own employees to the wolves in massive layoffs. So what do we do when the company crying wolf is the wolf?"

The Telecommunications Act of 1996 requires the four regional Bell operating companies — SBC, Qwest Communications International Inc., BellSouth Corp. and Verizon Communications Inc. — to provide their competitors with access to their networks at discounted prices that, in the opinion of the Bells, do not cover maintenance costs.

No incentives

The Federal Communications Commission is in the midst of reviewing its network-access policies and is expected to announce any such changes early next year.

The Bells complain that the current arrangement eliminates the incentive for competitors to invest in their own networks — and for them to deploy new services in rural or underserved communities.

"It's a very negative Catch-22 for the industry and competition in the long-term," said SBC spokesman Selim Bingol.

The companies and groups gathered under the Voices umbrella claim that the Baby Bells are simply afraid of competition, and are trying to consolidate their control of local telephone markets.

"This is not an anti-Bell campaign," said Voices for Choices spokesman Peter Arnold. "SBC is trying to roll back one of the most important planks in federal telecommunications law."

But all four Baby Bells — not just SBC — have urged the FCC to fundamentally change the current rules. So why has Voices for Choices singled out SBC?

The short answer: The coalition thinks SBC makes the easiest target.

Last month, the FCC ruled that SBC had violated competition laws by not fully sharing its local network. The commission ordered it to pay an unprecedented $6 million penalty, and commission chairman Michael Powell blasted the company for its "unlawful, anti-competitive behavior."

Voices for Choices has seized on that as evidence that SBC routinely flouts the law, and the Washington-area TV spots are intended to keep policymakers attuned to the RBOC's legal infractions.

"The more the focus is on the continuing pattern of lawbreaking by SBC, the tougher it is for regulators to say with a straight face that this company can be trusted," Arnold said. "We want to bring the problems — SBC's lawbreaking — to a wide variety of people, including officials on Capitol Hill.

"If they, in turn, want to make their opinions known to the FCC, that's all for the good," he added.

Subtle message

Neither the "wolf ad," nor an earlier Voices for Choices spot that plays on similar themes, explicitly mentions SBC's run-ins with the law. And while the ad campaign is clearly meant to undercut the Baby Bells' lobbying, the ads do not mention any of the policy issues involved.

In Washington, companies and industry associations regularly air ads meant to influence policy decisions. According to the Annenberg Public Policy Center, Voices for Choices spent about $2.25 million on such spots last year, placing it among the top five groups in D.C.

The lobby group blanketed the Washington market with TV and print ads opposing the Tauzin-Dingell bill, which would deregulate some sectors of the telecommunications industry.

"This stuff goes on all the time," said Thomas A. Schatz, president of Citizens Against Government Waste, which is a member of the Voices coalition. "It's not anything unique or out of the ordinary in Washington."

But such ads usually are aimed at lawmakers and the thousands of legislative aides on Capitol Hill. The relatively arcane network-access rules are being reviewed by a small handful of federal regulators, and there is no evidence that the anti-SBC ads are having any effect on them.

"You're talking about an audience of five folks at the FCC and people in the [FCC] enforcement division," said BellSouth director of governmental affairs Bill McCloskey. "We're not talking about influencing Metro subway drivers or anyone else in town. The people they're trying to influence already understand the issues."

FCC commissioners might not be swayed by the ads, but perhaps consumers will be.

While Verizon provides local phone services in the Washington metropolitan area, not SBC — making the ads irrelevant to consumers there — Voices for Choices has also bought in about 12 media markets in SBC territories around the country. In those areas, the spots seem designed to hurt SBC competitively as much as politically, although their effects are hard to gauge.

The effect of the ads on SBC and its allies is clearer: They are furious.

"They're not making a policy point," Bingol said. The ads are "purely designed to impugn, defame and wreck the reputation of this company."

Such statements have fueled rumors among coalition members that SBC might sue Voices for Choices over the spots.

Bingol said he is "not aware" of a planned SBC lawsuit, although he noted that "any time somebody misrepresents a company, I guess that's a possibility."

Whether real or imagined, the possibility of a lawsuit has prompted some groups and companies to distances themselves from Voices for Choices, and its ads. At least one group affiliated with the coalition has asked to have its name removed from Voices' Web site because of the spots' negative tone.

"We're moving toward a more positive approach," said a representative of the group, who asked not to be named. He said an increasing number of groups are trying to avoid the "us versus them" arguments of the Voices ad campaign.

Mudslinging

As a response to the Voices ads, SBC is broadcasting two TV commercials of its own. In one, SBC workers brave bad weather to repair damaged phone lines.

"They just want to sling mud," the announcer says of Voices for Choices. "But that's OK — we've worked through mud before."

The second ad, running more selectively, is probably the most policy-oriented spot aired by either side. It emphasizes how SBC owns and maintains the phone lines used by its competitors. Unlike them, the ad says, SBC is "a real phone company."

In addition, SBC supporters apparently are waging a campaign against groups affiliated with Voices for Choices.

Doug Gray, director of public policy at the Virginia Association of Realtors — a coalition member listed on the Voices for Choices Web site — received an angry phone call in late October from a man who said he was a union member from Texas. Gray said the man, who did not identify his employer, screamed at him for "undermining a good company" and warned that a boycott of coalition members was being planned.

Bingol said SBC was neither orchestrating the phone calls nor planning a boycott, but he said any such move by the company would be "entirely fair."

States News Service

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