Cowboys and Influence
It was no surprise last month when a bill giving state regulators the power to fine phone companies that provide shoddy service breezed through the Colorado House. After all, the measure is backed by consumer groups and, in a rare twist, most of the phone companies who stand to be penalized if they screw up. But House Bill 1060 is apparently doomed to defeat in the state Senate thanks to two cattle-roping buddies from northwestern Colorado with ties to the one big phone company that doesn't like the idea: US West.
US West is represented in the legislature by lobbyist Stan Sours, a native of the town of Rifle who each fall heads to a cattle ranch near Walden to help with the roundup. The man whose cattle he helps punch is his longtime friend, state senator Dave Wattenberg, chairman of the Senate Business Affairs Committee.
The men say their friendship--and the $1,250 Wattenberg got from US West during his 1996 campaign--has nothing to do with Wattenberg's stubborn opposition to HB 1060, which he vows to kill outright or gut before it emerges from his committee. "Yeah, he's my friend, but I'm not going to tell him how to vote on something because he's my friend," says Sours. "My credibility is worth more than any one vote."
Wattenberg notes that he has disagreed with Sours on many issues in the past, and he insists that he's siding with his buddy this time around solely on the merits. "All these big companies are looking for an edge, and the way this bill is now, it gives too much of an edge to MCI," he says of HB 1060.
In fact, the bill was drafted in part by MCI and other long-distance carriers who claim US West is intentionally keeping them from competing for local service in Colorado. Those companies believe US West is doing such a poor job of serving local customers--and of granting fair access to its local markets--that the firm has a lot more to fear from regulators than they do. That's why they've teamed up with consumer groups to push the measure.
"There has to be a referee in these battles, and if the refs can't call a penalty and march off some yards, nobody's going to listen to them," says Ken Reif, director of the state's Office of Consumer Counsel, which is supporting the bill.
HB 1060 details a laundry list of housekeeping measures for the state Public Utilities Commission, but its most significant provision would give the agency the ability to fine phone companies up to $25,000 per day for bad service. What's the definition of bad service? It could mean taking too long to install a phone for a homeowner or not responding to a call for repair service. Or, in US West's case, it could mean failing to grant competitors fair access to the local phone network.
The PUC says it needs the power to levy fines because other methods of control are slipping away in the newly deregulated market. For example, the PUC can now influence US West by exercising control over its rates. "That's a nice big hammer that works very nicely at controlling monopolies," says PUC director Bruce Smith. Over the next few months, however, the PUC plans to eliminate nearly all rate control, an acknowledgment of the fact that local phone service is--technically, at least--no longer a monopoly.
"Once rate control goes away, the emphasis will be on profit, and one of the ways you can increase profit is by cutting back on customer service," says the OCC's Reif. "With fining power, the PUC can make sure none of these big guys forgets about the customer."
Currently, the only way the PUC can fine a phone company is by going to District Court and asking a judge for permission, a process that can drag on for years. HB 1060 would give the PUC the ability to fine companies directly, much as the state's Division of Insurance or banking board can now. Utilities could still appeal those fines, but they would carry the burden of proof in any proceeding.
US West points out that HB 1060 is written in such a way that the PUC would be required to give priority to disputes between phone companies when handing out fines. Under that language, phone companies griping about each other would go to the front of the line--ahead of complaints from consumers. "This is a lot of big, greedy companies fighting it out," says US West lobbyist Micki Hackenberger.
But the OCC's Reif says that in this instance, MCI and consumers are on the same side. "These company issues are the consumer issues," notes Reif, adding that seemingly arcane questions about network access are what will decide whether consumers ever get a real choice in local phone service.
It was that kind of reasoning that helped HB 1060 pass in the House on a vote of 47-18. And several legislators say they've received so many complaints about US West from constituents that they're suspicious when the phone giant starts complaining about regulatory efforts. Paul Schauer, the House sponsor of the measure and a business-oriented Republican from Littleton, uses this analogy: "Why is US West so worried about what the fines will be for speeding if they aren't planning to drive over the speed limit?"
While MCI and AT&T point to Wattenberg and Sours's friendship as a potential conflict of interest, US West says its opponents have their own high-powered connections. US West lobbyists claim that one reason the bill passed so easily in the House was that it was strongly supported by Lola Spradley, the freshman representative from Beulah who once worked as a lobbyist for AT&T.
But Spradley says there's a problem with US West's argument: Though she did work for AT&T, she also worked for US West's predecessor, Mountain Bell, from 1967 to 1984. And because she worked in the business for so long, Spradley adds, she understands why it's so hard for US West to let go of its monopolistic ways. "For US West, this is a major change," notes Spradley, who says she's amused by the phone company's claim that she could wield such power as a first-year legislator. Adds Spradley, "I don't think I have a conflict. I just have knowledge."
US West also claims that MCI and AT&T are attempting to use HB 1060 as a way to keep it from competing for their long-distance service. Under the federal Telecommunications Act of 1996, US West has the legal right to get into the long-distance business, which company public-policy director Jim Gallegos describes as "a bigger pie" than local phone service. But before it can stick its thumb in that pie, US West has to prove it's opened up its local market to real competition. Gallegos says AT&T and MCI want to give the PUC more power in the hopes that they can then convince the agency to take punitive action against his company for freezing them out.
US West is "totally blowing smoke" when it claims that MCI is trying to keep it out of the long-distance business, says Bill Levis, public policy director for MCI in Colorado. And Levis points out that if other phone companies do a bad job on service, they, too, will be subject to fines by the PUC.
One of the more than forty companies that would like to get into the local telephone market is ICG Communications. With 141,000 customers in nine states and $270 million in revenue, ICG is one of the smaller companies trying to compete for local customers. The firm says the main reason it's supporting HB 1060 is its hope that a more powerful PUC would force US West to provide fair access to its network. "US West has control of the bottleneck," says Sue Williams, director of governmental affairs for the Englewood-based company.
The immediate problem for Williams and other bill supporters, however, is the bottleneck at the legislature. And control over that process now rests firmly in the hands of Stan Sours's old friend Dave Wattenberg. The third-generation rancher makes it clear that HB 1060 is one stray he's not going to let get away from him. "I'm not of the ilk to pass that bill," Wattenberg says.
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