Pending Net Neutrality Ruling Seen as Possible Trigger for Q2 Lobbying

Lawmakers introduced many pieces of legislation dealing with the order, either directly or addressing what they consider the order’s effects. In Q1, House Republicans advanced the No Rate Regulation of Broadband Internet Access Act (HR-2666), which drew objections from Hill Democrats and the White House amid its recent House passage. The House also passed the Small Business Broadband Deployment Act (HR-4596) 411-0 this quarter, which would exempt small ISPs from the order’s enhanced transparency requirements. Senate Republicans, including Majority Leader Mitch McConnell, R-Ky., and John Cornyn, R-Texas, back the recently introduced S-2602 to kill the order. Senate Commerce Committee leaders still talk about possible bipartisan net neutrality compromise legislation, despite fewer public mentions of the possibility in recent months. And at the FCC, commissioners spent Q1 focused on the broadband privacy regulation that followed from the order, which attracted attention from Capitol Hill.

Observers told us the D.C. Circuit decision could spur activity on Capitol Hill one way or another, depending on what it says. “It wouldn't be surprising to see an uptick in lobbying activity after the decision,” said New America Open Technology Institute policy counsel Josh Stager, a former Senate staffer who backs the FCC order. “The ISPs have already been laying the groundwork for a legislative response in the event that the D.C. Circuit rules against them. Whether that response takes the form of a standalone bill, an appropriations rider, or something folded into the reauthorization bill remains to be seen.”

“While there has been action around the periphery of the net neutrality rules, when it comes to the meat and potatoes of reclassification, everyone is holding their breath,” said Information Technology and Innovation Foundation analyst Doug Brake. “Depending on what the opinion looks like, a couple different dynamics could be put in play for the rest of 2016. If the court strikes all or part of the order on procedure -- the judges seemed particularly concerned with notice on mobile reclassification at oral argument -- we could possibly see a scramble to cure before the election. Any other outcome sets up a likely appeal -- these issues go to the core of the regulatory scheme, so no matter the outcome it's likely whoever ends up with the short end of the stick will seek cert. And with the Supreme Court taking a renewed interest in the fundamentals of Chevron, they may well take it on. If the court vacates the common carriage classification only on mobile -- a real possibility based on oral argument -- we could see an interesting divergence in lobbying strategy. Either way, the next couple months are set to be busy, with Wheeler sprinting through the tape, and any Tuesday or Friday now things are set to get even busier.”

“I doubt the court's ruling will affect lobbying spending,” Guggenheim Partners analyst Paul Gallant said. “At this point, net neutrality is like a mortgage for telecom companies. They just budget for it every year.”

A search of Q1 lobbying reports, due last week, revealed that 110 of them, among lobbying firms, companies, trade associations and other entities, cited the phrase “net neutrality.” A search for an “open Internet” reference yielded 65 Q1 reports. Most of the lobbying forms don't reveal much detail about their lobbying, and not all stakeholders are traditionally in the telecom space. The California Association of Realtors' Q1 form is one of those mentioning net neutrality, simply noting it commented to the FCC about the rules, and the National Multifamily Housing Council also mentioned it. Facebook, which spent $2.78 million lobbying in Q1, refers to “discussions regarding net neutrality and connectivity” under its Q1 section on copyright issues.

Multiple filings still mention activity on the net neutrality discussion draft offered by Senate Commerce Committee Chairman John Thune, R-S.D., in January 2015. That bill would have codified net neutrality rules while limiting FCC authority. He and ranking member Bill Nelson, D-Fla., sought to find bipartisan consensus over the last year on this measure. USTelecom, which spent $1.09 million lobbying in Q1, mentioned the draft, as did the Competitive Carriers Association, saying it lobbied on that draft “relating to regulatory treatment of mobile broadband.” TwinLogic Strategies lobbyists working for CCA said the same in the report they filed. Shawn Chang, a Wiley Rein lobbyist and ex-Democratic House staffer, also mentioned the Thune draft bill in the Q1 report he filed on behalf of Verizon, which paid Wiley Rein $60,000 for the services.

The Q1 report for Demand Progress showed one lobbyist, Daniel Schuman, who lobbied against HR-2666 and the unintroduced FCC funding bill for FY 2017. The group opposed what it referred to as the “net neutrality provisions," including "transparency provisions.” Hill appropriators are still putting together the FY 2017 funding measures and weighing possible policy riders. The group said its lobbying amounted to less than $5,000. Four lobbyists for Jochum Shore lobbied on behalf of the Internet Freedom Business Alliance “advocating for so-called Net Neutrality rules,” also spending under $5,000. The coalition was formed by Incompas, Etsy, Engine and others to defend the order. Lauren Culbertson, its executive director, also is a lobbyist for other entities on net neutrality. Through her firm, Millennial Bridge Consulting, she received $30,000 in Q1 to lobby on behalf of Twilio about net neutrality and messaging and $20,000 to lobby on net neutrality for Twitter. The issue also appeared on Q1 lobbying registrations. Etsy registered Julie Stitzel as its one lobbyist effective Feb. 1 and cited net neutrality as one of the specific lobbying issues for the company. When net neutrality opponent NCTA picked up three lobbyists from Farragut Partners effective Jan. 1, that registration form also said net neutrality would be a lobbying issue.

Not all net neutrality opponents in the telecom and media policy space spent more. Comcast spending dropped from $4.62 million in 2015’s Q1 to $3.72 million in the latest quarter. CTIA spent $2.9 million this Q1, down from $3.13 million a year ago. NCTA lobbying spending dropped by half a million dollars to $3.28 million. The $1.09 million from USTelecom is somewhat lower than its 2015 Q1 spending of $1.18 million. Sprint is the lone carrier to spend less on lobbying (see 1604200036). T-Mobile had a major spike in lobbying spending, to $1.8 million now from $1.17 million Q1 a year ago. AT&T spent $4.48 million, up from the $4.37 million it spent a year ago. Verizon spent $3.59 million, up from $3.35 million. Charter Communications, despite an acquisition deal pending, didn’t have any big uptick in lobbying spending. It spent $1.15 million, up from $1.14 million last year.

Productivity in Washington was widely expected to drop due to the year’s presidential election, but the lobbying reports name many ongoing policy issues, from set-top box overhaul to the broadcast TV incentive auction. Other ongoing Capitol Hill legislative efforts in both Q1 and the current Q2 include FCC reauthorization, spectrum legislation and FCC process overhaul.