When Cable Executives Turn to the Dark Side
Bob Ryan, vice president of local and government affairs for AT&T Broadband in the Chicago suburbs, never finds himself cooling his heels outside the mayor's office in the village of Clarendon Hills, Ill. Instead, he cools his heels inside the office — because he is
Ryan is among the many cable veterans who are, or have served, on both sides of the negotiating table.
For Ryan, the dual responsibilities have given him unique standing in both the political and cable arenas.
"It gives you credibility. You're part of the fraternity," said Ryan of his acceptance by elected officials in and around his hometown. "From the cable side, it's given me perspective on the depth of some issues."
It also benefits his company, where he can share the insight he's gained from "both sides of the aisles."
But Ryan does not use his position to give himself an easy pass in his role as the cable government-relations liaison for the community — he recuses himself from any vote on cable issues. Nor will he use it to stifle competition. Citing an incident from a few years ago, Ryan said he did not try to influence his colleagues on the village board of trustees when Ameritech New Media came to town proposing a competitive cable overbuild (Ameritech didn't complete the application). The board instead approved a franchise for a competitive wireless data carrier, Metricom.
But he does wield his influence by explaining cable issues, when asked by regional elected officials.
Cable executives who have served in the public sector say the experience has given them greater effectiveness as advocates for the cable industry.
Dennis Mangers, vice president of government affairs at the California Cable Television Association, said that if more cable representatives served in elected capacity, they would no longer ask him why legislators "don't get it."
"If everyone who advocates could be an elected official, they'd understand," said Mangers, who served in the California Assembly from 1976 to 1980. "Legislators are generalists. They are forced to do a lot of work on multiple issues. They tend to find people who are credible and then they tend to trust them."
Mangers learned first-hand about the learning curve needed to move from generalist to specialist. He was invited to work for the CCTA by the late Walter Kaitz, who had met Mangers while lobbying the assemblyman. But he hadn't learned much about the cable business by serving on technology-focused committees, so he put himself in the hands of some of the state's cable pioneers. They sent him on installs and packed him off to some headends in pretty strange places. After that, advocacy came easy.
"I know what influences legislators the most: the ability to express complicated issues in simple terms, to encapsulate in bullet points," Mangers said. "I can do that: before I was a legislator I was an elementary school teacher. Legislators are so busy, the attention span is sometimes similar."
Competitive overbuilders also recognize the value of employees who have ties in the government sector.
At Altrio Communications Inc., an industry startup that's eyeing the Southern California market, the post of vice president for public policy is held down by Brenda Trainor, whose career as a municipal activist began as an access producer at Michigan State University.
Trainor has had plenty of experience in public service. Her career has included a turn on the Austin Cable Commission in Austin, Texas, and a stint as the chief regulator in the Los Angeles Telecommunications Department. She also served as a regional telecom manager for Clark County, Nev., where she handled franchising for Las Vegas and four surrounding communities.
Since last year, Trainor has been helping Altrio navigate the regulatory process as it seeks cable franchises that will allow it to serve 420,000 Southern California homes.
Perhaps the clearest memory from her days in the public sector came when ATC Cable tried to use a provision in the 1984 Cable Act to force a renegotiation of its franchise. It was a case that drew the attention of the entire cable industry.
"We were really testing a city's right to regulate and enforce a franchise," Trainor recalled. "It was one of the things that helped establish a position of us-versus-them. It was what led to an adversarial relationship between the city and the cable company."
Trainor believes that former regulators who cross over to the private sector have to beat the drum for quality service, or risk having their employers tarred with the same brush that has plagued the cable industry for decades.
Industry newcomers must remember that ultimately they will be judged on the basis of the service they deliver, she said. "That will make it easier for us, than it will be for some incumbent to rebuild a reputation."
Another thing a former regulator brings is perspective on how slowly the wheels of local government turn.
By the time a cable franchise comes before the city council, the document can easily have fingerprints from a dozen city agencies all over it. When so many city officials have input, there is more chance for disagreement.
"So you have to be able to provide a depth of understanding about the local government process," Trainor said. "It is much more complicated than the normal executive in the private sector realizes."
She believes that over the years city officials across the country have come to realize that advancing technology has increased a municipal government's responsibility to ensure that its citizens receive the latest telecom services available.
She said the biggest problem some cities have is being flexible enough to encourage competition, while dealing with telecommunications laws that can date back to the days when phone service was first being deployed.
"The difference is that now we're putting in infrastructure that will offer three services instead of one, and each of them receives different regulatory treatment by federal, state and local governments."
FROM DALLAS TO WIN
In Dallas, Eric Kaalund, former director of the Controllers Office for the city of Dallas, thinks it's ironic that he's now responsible for implementing the very cable regulations he helped draft.
But, despite being Western Integrated Network's local vice president and general manager, he remains a believer in the municipal process, and said there are even some similarities between working for the city and for a private operator.
"The [city's] rules were put in for a good reason," said Kaalund, who spent 18-years in local government. "I consider this just another way of serving the people. The bottom line is to protect the citizens of Dallas."
It's his intention to ensure that his successor doesn't have to endure the same headaches he did, including battling with Tele-Communications Inc. — and later AT&T Broadband — over stalled rebuilds and annual rate hikes that routinely saw both sides arguing their case before the Federal Communications Commission.
Kaalund believes the most significant attribute he brings to his post is his knowledge of Dallas. That familiarity allowed him to place WIN's facilities in local enterprise zones, thereby saving money and making the city council happy.
"I knew this was an area that the city wanted to develop, and that it would be cheaper here than in other parts of town," he said.
But in the end, perhaps the biggest thing Kaalund brings to his work is "an attitude toward service."
"If you've worked in local government for 18 years, and did not become a service-oriented person, then you didn't learn much," he said.
Steve Holmes, Charter Communication's vice president for regulatory affairs in Vancouver, Wash., returned to the private sector a year ago after serving almost five years as Seattle's director of cable communications. He made the decision to move on after "hot" issues involving a delayed upgrade of the TCI system in Seattle, and the introduction of @Home high-speed Internet access had been resolved.
"A lot of things came together, so it seemed like a good time," he said.
Life at Charter has been made easier by the MSO's commitment to upgrading the Falcon Cable system it acquired in Oregon and Washington state. As a result, "the interests of the cities and the company are not misaligned."
Holmes said his years of public service have taught him not to criticize the municipal consultants who often take the rap when a city and a cable operator are at odds.
"One of the things I bring to the table is an understanding of the public pressure that cities are under," he said. "Sometimes there is this idea that the consultant is strong-arming the city into doing things that it doesn't want to do, when it's actually public frustration with a certain cable operator."
Local officials moving over to the private sector are not guaranteed a happy ending. Rich Esposto, who headed up the Sacramento Metropolitan Cable TV Commission, is a case in point.
Esposto thought he had left controversy behind when he signed with an overbuilder determined to compete against the city's incumbent operator. Under Esposto, Sacramento became the first local jurisdiction to file for rate regulation.
He also watched as the man who appointed him and the chairman of the board of supervisors were carted off to jail, while a grand jury investigation was launched to look into the relationship between members of the cable commission and Scripps Howard, the city's operator at that time. So it was no surprise that he was looking for a change.
"I was due," he said.
What he didn't count on was discovering that, in his view, his new employer's business model simply wouldn't work. These days Esposto is back doing consulting work. But he doesn't regret making the move.
"Local governments are looking at things in economic development mode," he said. "What I do is try and take what I've learned and educate people in both the private and public sector."
Another state association executive, Susan Bitter Smith, executive director of the Arizona Cable Telecommunications Association, also served at street level. She was a member of the Scottsdale, Ariz., city council from 1988 to 1992, as well as serving on state and regional boards. She's also run for federal office, but has been unsuccessful to date. City council service opened her eyes.
"Local operators don't understand the pressures in a city. It's tough to imagine it unless you've done it, sat there with the 100 pairs of angry eyes looking back at you. You get a better idea of what sells and what doesn't sell," she said.
Bitter Smith has seen "perfectly logical proposals" get "blown out of the water," not based on their drawbacks, but on behind-the-scenes intangibles: the friend of the mayor who lives in a construction zone and doesn't like a plan.
Veterans of both sides of the regulatory table say that the personal contacts that might have helped a company in the past are diminishing. With consolidation comes fewer system managers, fewer local offices and fewer daily contacts with decision-makers.
Mangers relates that the first thing a lot of legislators will ask, when confronted with a pack of cable system lobbyists, is: Which one of you is from my hometown?
"That's who they want to hear from," he said.
By contrast, the number of telephone company representatives is growing, he added. In California, for instance, SBC Communications Inc.'s Pacific Bell has 125 government relations staffers, assigned by region. The parent company's SBC Foundation gives money to elected officials' favorite charities, and SBC also effectively mobilizes specific groups among users — including gays, Hispanics and teachers — to turn out on its behalf on different issues.
SOME ACTIVISM URGED
On the other side, cable no longer has a manager in every town who golfs at the same country club or runs into local councilmen at the PTA meeting.
"Consolidation is weakening our advocacy," Mangers said bluntly.
Operating units of some companies, such as Time Warner Cable systems in Texas, have started programs to urge employees below the rank of system manager to become political contacts in their hometowns.
But Mangers and others don't see a groundswell of support for that kind of political activism. Many companies prefer the political message to come only from corporate, not from front-line employees who may not have access to background on industry issues.
That lack of grass-roots activism is a shame, according to Joe Camicia, vice president of government relations at Charter Communications Inc.'s Western Region.
"Nothing takes the place of face to face," he quipped. "It's a shame, but to a great extent, people in the business aren't interested in politics. But the more you can put your foot in the other camp, the better," he said. Camicia was in the "other camp" from 1987 to 1993, as a city council member in Alameda, Calif.
He offered an example of a small step toward political back scratching. When Charter took over in Glendale-Burbank, a government affairs worker aided in the campaign of a councilman. The cable rep volunteered one day to drive 25 miles in Los Angeles rush hour traffic to pick up the politico's campaign literature.
"That will make you friends for life," he joked.
But, he added more seriously, "If you've been on both sides, you realize those in business do anything they can to make a buck and those in government will do anything to save a buck." With knowledge of both sides, executives believe they have a better shot at satisfying each goal.
Since it is unlikely cable will return to the one city-one manager model, there have been some discussions within the National Cable & Telecommunications Association's ranks whether the industry should lobby for regional regulation. That fits cable's current business model better, some lobbyists believe.
But there has been no consensus yet on whether to take on cities, which one representative predicted will "scream their heads off" if the federal government dilutes their regulatory authority further.
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