AT&T’s Scheme to De-Regulate Lifeline Service

by Paul Hogarth on June 17, 2009

The California Public Utilities Commission is again scheduled to vote tomorrow on an AT&T-backed proposal to de-regulate Lifeline phone service for low-income users. The CPUC keeps delaying the vote, as they hope the seniors, disabled and poor people who have come out to each meeting and spoken against it would just go away. AT&T, however, has its own strategy to push the plan through – by asking non-profits that receive its financial support to speak out in favor. The company also exerts its influence on the Commissioners, by making campaign donations to their immediate family. CPUC President Mike Peevey is the husband of State Senator Carol Liu (D-Pasadena), who has taken over $20,000 from AT&T – and other companies the CPUC regulates. It has long been a thorny issue, and the Los Angeles Times even wrote a long piece about it in 2007. But with some state legislators starting to weigh in against the proposal (along with persistent grass-roots opposition), Lifeline telephone service can be saved.

Lifeline is a state-run program for low-income people to get telephone service. For a flat rate of about $6 per month, customers have an affordable “lifeline” to the outside world. But AT&T has been pushing the CPUC to tie the cost for low-income users to a percentage of the market-rate (while giving customers “vouchers” to use cell phones), with no guarantee that the program would remain affordable. At the last CPUC meeting on June 4th, dozens of senior and disabled tenants spoke out against the proposal – with letters of opposition by State Senator Mark Leno, State Assemblyman Tom Ammiano and Felipe Fuentes (who chairs the Assembly’s Utility Committee.)

But at the same meeting, the Executive Director of a non-profit for the deaf spoke out in favor. Sources say that AT&T has been asking the charities it has given donations to speak out in favor, likely giving them false information that de-regulation would be helpful to their clients. Beyond Chron has reviewed AT&T’s latest filings – which include (a) $18,000 to the Alameda County Food Bank, (b) $30,000 to the San Francisco YMCA, (c) $56,000 to the San Francisco School Alliance Foundation, and (d) $150,000 to the West Contra Costa Unified School District. At a time when non-profits confront state budget cuts and shrinking private funds, AT&T knows that a call from a big donor cannot be ignored.

Public comment can only go so far, however, and ultimately AT&T must convince the CPUC Commissioners that letting phone companies set higher rates for low-income people is appropriate for a state regulatory agency. That’s where the politics comes in, and it gets a little more complicated. AT&T can’t bribe the Commissioners (that would be illegal), nor can they give them campaign contributions – because the CPUC is not an elected body (all five members are appointed by the Governor, and confirmed by the State Senate.) But the Commissioners are politically well connected, and the trick for AT&T is to know who they’re connected with and who influences them.

Michael Peevey, who serves as CPUC President, is not a household name – but he wields a lot of influence in his role. The Sacramento-based Capitol Weekly even ranked him as the seventh most powerful political player in California. And his wife is State Senator Carol Liu, a Democrat from Pasadena.

When Liu ran for the State Senate (after leaving the State Assembly in 2006), the Los Angeles Times devoted a long story about how she was taking contributions from companies who have business in front of the CPUC. As of August 2007, with the State Senate race almost a year away, Liu had already raised $88,783 from such interests – which comprised 26% of her total campaign fund. Liu denied any improper influence, but these industries were far less interested in her political career before 2002, when the Governor appointed Peevey to the CPUC. In 2000, they only constituted 10% of her donations.

By August 2007, Liu had taken $20,325 from AT&T alone. As the Times article noted, “the company has benefited from [CPUC President] Peevey’s successful effort to free phone companies from most rate regulation. Peevey also led the effort to repeal strict consumer protection rules for cell phone users that would have made it harder for telecommunications companies to lock customers into contracts and obscure the terms of the deals.” If de-regulating Lifeline telephone service goes through, watch AT&T continue giving money to further State Senator Carol Liu’s career. After all, it appears that the phone company has figured out how to best use their investment.

The CPUC will consider the proposal tomorrow (Thursday, June 4th) at 10:00 a.m. – in their San Francisco office at 505 Van Ness Avenue. Concerned residents, senior and disabled activists and low-income tenants are urged to speak at public comment (which is the first item on the agenda), and tell the CPUC not to take AT&T’s corrupt scam. Unlike at City Hall, members of the public should show up before the meeting starts – so they can sign up for public comment. TURN is also holding a press conference at 9:30 a.m. on the front steps, along with the Tenderloin Housing Clinic (which publishes Beyond Chron.)

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