Calling the Shots

In the Southwestern Bell and AT&T slugfest over supposed consumer savings, the biggest sucker punch of all is headed your way

Rutan argues that Bell clears $800 million in profits because of an inflated access rate. He also notes that in November a PUC study determined Bell was ringing up $288 million a year in profits that, prior to 1995 deregulation, the PUC would have ordered the company to return to consumers. He multiplies that number by four, one for each year since the 1995 reforms were passed.

"Well," he says, "that's $1.2 billion, and they gave back $400-some million. Maybe they should have been a little more generous."

When Representative Sylvester Turner decides whether to support telecommunications legislation, he considers several factors. The merits of the bill are only one of them.

"Southwestern Bell has taken an aggressive position on wanting to be a community partner, and I put value on that," says the Houston Democrat, whose district is about 50 percent black and includes some low-income neighborhoods such as Acres Homes, where he was raised.

A Harvard law graduate serving his 11th year in the House, Turner is one of the Legislature's most effective champions for Texas's disadvantaged. He also is vice chairman of the House State Affairs Committee, the only African-American on the 15-member panel that has the power to advance or spike telecommunications legislation. After some changes were made to the original bill, Turner came on board as a House Bill 1701 co-sponsor, a triumph for Southwestern Bell. Turner says he believes the bill provides benefits for consumers by lowering access rates and capping the basic residential phone rate.

He also believes Bell is providing benefits to his district and to blacks throughout Texas, a factor that he freely admits has teetered him toward supporting the bill that Bell wants.

"Community partnering is not restricted to Southwestern Bell," he says. "If AT&T wanted to do the same thing and show a greater attachment to the district that I serve and to this state, I am more than willing to evaluate them accordingly and respond to them accordingly. But don't come to the table and ask me to serve you when you are not willing to reach out and become a participant in my district and the state of Texas."

Rutan says AT&T is at a disadvantage by virtue of the fact that it is one-fourth of Bell's size in Texas. "We make major contributions to charitable causes all across the country, but we are present in 50 states."

But in AT&T Turner sees only a company investing tens of billions of dollars to acquire cable and other phone companies. He sees a company spending millions of dollars on TV ads to influence legislators. "All I see is a company headquartered in New Jersey," he says.

In Southwestern Bell Turner says he sees a company committed to hiring, promoting and contracting with African-Americans within his district and across the state. AT&T can talk about a commitment, but Turner sees it in Bell every time a company manager who is black and from Houston pays him a visit to lobby.

Turner denies a persistent rumor, floated by AT&T, that he proffered his support of House Bill 1701 in exchange for Bell's promise to increase its level of contracting with minority-owned businesses.

"No," Turner says with a grin, "but I'm certainly pushing it. Not just with Southwestern Bell. AT&T, too. Any company that's coming out here."

He can see Bell's record on hiring minority contractors without any problem. The company widely distributes that information as part of fact sheets listing Bell's contributions to the Texas and Houston economies. Bell says it has made $301.2 million in payments to minority vendors, $30 million of which has been in Houston.

"I speak very loudly and clearly: Be sensitive to the needs of my district, and you will always, always get a very receptive ear from this legislator," Turner says.

It seemed to make perfect sense at the time. Texas Citizen Action, a consumer group advocating more competition in local phone service, and Luis Wilmot, who has spent his whole life fighting for the little guy, would enter into a coalition with AT&T and small local and long-distance phone companies to challenge Southwestern Bell's outrageously high long-distance access charges.

And thus, the Partnership for a Competitive Texas was born in the summer of 1996. The lady in the clouds became a TV fixture shortly after that.

Coalition members had different interests but a common enemy in Bell. But when AT&T unilaterally entered into a compromise with Bell by signing off on the Senate's telecommunications bill, the question had to be asked: Were the coalition's consumer representatives nothing more than pawns in AT&T's chess game with Bell?

"The partnership came together because every member saw local phone competition as important," says Holbrook-White, Texas Citizen Action's executive director. She inherited the coalition when she took the job last summer. "In retrospect, the partnership backed itself into a corner by making its only public issue access rates."

MCI WorldCom and Sprint already had proven that an interest in lowering access rates wasn't enough to jump on the side of consumers. Those two long-distance companies opted to side with Bell in this fight when it became certain that access rate reductions would be the centerpiece of any telecommunications bill. MCI and Sprint focus primarily on business customers and therefore are harmed far less by the potential dangers of granting Bell broad pricing flexibility in local phone service.

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