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Inquiry of Bells' Meeting Proposed

Rep. John Conyers will ask a House panel to act. Suppliers back away from a lobbying plan.

November 08, 2003|James S. Granelli | Times Staff Writer

The ranking Democrat on the House Judiciary Committee said Friday that he would push for an antitrust inquiry into a dinner meeting that powerful Baby Bell telephone executives held with their suppliers to discuss a $40-million campaign to lobby for an end to government price regulation.

Rep. John Conyers Jr. of Michigan said it was "impossible to know" whether laws had been violated "without some inquiry."

He said he would take the matter up with committee Chairman F. James Sensenbrenner Jr. (R-Wis.) to see whether the Oct. 20 dinner "requires an investigation to assess the facts and determine whether it crosses the line of impermissible activity."

Sensenbrenner, who is planning a hearing soon on telecom antitrust matters, said Thursday that he wasn't troubled by the Bells' meeting with the chief executives of their suppliers.

Meanwhile, the technology suppliers are backing away from joining a massive lobbying effort on behalf of the Bells, said Matt Flanigan, president of the manufacturers' trade group Telecommunications Industry Assn.

At a board meeting this week, there was "unanimous sentiment" that vendors remain neutral, Flanigan said. "It is important to be independent and credible," he said.

Chief executives of Intel Corp., Lucent Technologies Inc., Motorola Inc. and two other trade group board members attended the dinner at the behest of SBC Communications Inc., Verizon Communications Inc., BellSouth Corp. and other companies that own their own local phone networks.

Officials for the U.S. Telecom Assn., the trade group that organized the dinner at the fashionable St. Regis hotel in Washington, have vehemently denied that any laws were broken. They said they were careful not to discuss pricing or other matters that could put them afoul of federal antitrust laws.

"We have a constitutional right to come together to discuss public policy," said Tom Amontree, a U.S. Telecom Assn. vice president. "We have reached out to many groups and sectors of the telecom industry and will continue to do so."

U.S. Telecom President Walter B. McCormick Jr. has said the meeting was geared toward "forward-looking public policy that is aimed at invigorating competition, increasing consumer choice and [encouraging] economic growth."

In a memo prepared for the dinner and obtained by The Times, McCormick detailed a lobbying effort aimed at winning "comprehensive federal legislation to substitute market-based competition for government-managed competition."

The Bells have long argued that current laws and regulations discourage them from upgrading their networks and investing in new equipment for fear of being forced to lease the gear to rivals at regulated wholesale prices that are set below their costs.

The U.S. Supreme Court has ruled that companies may band together to try to influence public policy without violating antitrust laws. But if their actions are a "mere sham" to cover attempts to restrict competitors, they would be subject to enforcement, the court said.

At the dinner, the Bells proposed that each of their suppliers contribute a percentage of their sales -- up to $500,000 a year for three years -- to fund a CEO-level campaign to lobby the White House, Congress and the Federal Communications Commission.

"I am troubled by allegations that the Bells may have banded together to exert collective pressure over supplier companies," Conyers said.

Details of the dinner meeting prompted two dozen Bell competitors, led by Covad Communications Group Inc. of San Jose, to send letters to the House and the Senate judiciary committees asking for an investigation of possible antitrust violations.

Amontree said the meeting of Bell executives with their suppliers "is identical to our opponents coming together and writing a letter that they sent up to Congress."

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