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Bloomberg News 05/23 03:03 By James L. Tyson
Wingate, Maryland, May 23 (Bloomberg) -- During duck hunting season every November, BellSouth Corp. lobbyists Ward White and Wallace Henderson head to a mud-colored trailer in a swamp on Maryland's Eastern Shore.
That's the main lodge of the Long Point Hunt Club, founded by Republican U.S. Representative Billy Tauzin of Louisiana.
Like other club members, White and Henderson don't go there strictly for the hunting or for Cajun-style dinners of gumbo and barbecued rockfish.
They are there to pay homage to Tauzin, the new chairman of the House Energy and Commerce Committee -- and a man on a mission to affect the bottom line of telecom companies all over the U.S.
Tauzin, with plenty of cheering from his lobbyist friends who represent regional Bell companies, is now trying to win passage in the House for a bill that would let BellSouth and the other Bells transmit high-speed Internet data over long-distance broadband networks.
The stakes are about as high as they can get. Revenue from broadband transmission will expand sixfold by 2005 to $14.8 billion, according to Forrester Research Inc.
If the Bells don't get into broadband networks, they can expect just 8 percent annual growth in revenue from their local voice transmission during the same period, according to Gartner Inc.
'Absolutely Crucial' ``It's absolutely crucial for the Bells to get into long-distance broadband networks,'' says Alex Winogradoff, a Gartner telecommunications analyst.
The new legislation could provide a jolt for investors in the Bells' stocks as well. From Jan. 1 until May 22, the Nasdaq Telecommunications Index fell 17.4 percent compared with a 0.8 percent decline for the Standard & Poor's 500 Index.
``The opening up of long-distance data would be a significant catalyst for a jump in the share prices of the regional Bells,'' says Liam Burke, comanager of the Flag Investors Communications Fund.
In pushing his broadband bill, Tauzin has provoked criticism that he uses his post to provide legislative favors for the Bells.
He's ideally positioned to mold telecommunications laws for a Bell or for any other company in the industry. As committee chairman, he oversees the Federal Communications Commission and the design of and prospects for most sector legislation.
``Tauzin has forever been a Bell head,'' says Mark Cooper, research director at the Consumer Federation of America.
'Top Campaign Contributors' The Bells routinely rank among Tauzin's top campaign contributors. During the 1999-to-2000 election cycle, he accepted $13,750 from Verizon Communications Inc., his biggest donor, and $10,250 from SBC Communications Inc., which ranks No. 3.
Billy Tauzin III, Tauzin's son, works as a BellSouth lobbyist in Houma, Louisiana, the heart of his father's congressional district.
Tauzin denies that he favors the Bells. He says he's championing the bill as a way to intensify competition in broadband transmission and reduce costs to consumers.
``I will always fight on the side of any new competitor,'' he says. ``We desperately need consumer choice and competition in broadband if this new, high-tech economy is going to roll.''
More To Come Tauzin says the broadband bill is only his first effort as chairman to loosen federal regulation on telecommunications. Criticizing the FCC for taking a year to review the merger between America Online Inc. and Time Warner Inc., Tauzin backs a bill that would give the commission just 90 days to complete reviews.
He also wants to end a ban on cross-ownership of newspapers and broadcasters in the same city. Michael Powell, FCC chairman since January, says he supports quicker merger reviews, faster entry of the Bells into long distance and other changes proposed by Tauzin. So far, Powell has skirted specifics.
Former FCC Chairman Reed Hundt says that the pledge by Tauzin and Powell to ease regulations has backfired by provoking fears on Wall Street and undercutting telecommunications company stocks.
``Investors no longer know the direction of policy,'' says Hundt, a senior adviser at McKinsey & Co. and an FCC chairman from 1993 to 1997. ``They no longer know what to bet on, so they are taking money off the table.''
Other Issues At Work Other issues are at work here as well. Brian Hayward, manager of the Invesco Telecommunications Fund, says industry stocks have slumped primarily because since 1998, the growth of capital spending in telecommunications has outpaced growth in revenue.
For every dollar of capital spent, telecommunication service companies last year yielded revenue of just 32 cents, or 18 percent less than in 1998, according to Lehman Brothers.
Tauzin portrays the Bells -- born from the breakup of American Telephone & Telegraph Co. in 1984 -- as victims of bullying FCC bureaucrats. Currently, the companies may enter the long-distance market in voice and broadband transmission only after opening up local phone markets enough to satisfy the FCC and state regulators.
Five States So far, the companies have done so in only five states: Verizon in Massachusetts and New York and SBC in Kansas, Oklahoma and Texas. The Bells control 92 percent of local phone service.
Former FCC Chairman William Kennard says that by opening up long-distance broadband transmission, the Tauzin bill would toss away a carrot compelling the Bells to allow competition in local phone service. He says prospects would fade for cheaper local phone rates.
``The bill moves us 180 degrees in the wrong direction,'' says Kennard.
Not true, says William Barr, Verizon's general counsel. He says the bill keeps a carrot in place by not freeing the Bells to transmit voice calls over long distance.
``The prospect of entering the voice market in long distance gives us plenty of incentive to open up our local markets,'' says Barr, who was U.S. attorney general from 1991 to 1993.
Tauzin Could Win House Tauzin has a good chance to win in the House. A version of his bill gained 224 cosponsors in 1999 before former Commerce Committee Chairman Thomas Bliley held it in committee rather than appease the Bells.
Tauzin faces a harder sell in the upper chamber. Like Bliley, veteran senators like Majority Leader Trent Lott of Mississippi and Democrat Ernest Hollings of South Carolina oppose the bill as a giveaway.
Even if his bill fizzles in the Senate, Tauzin says he will speed the expansion of the Bells into broadband networks by streamlining FCC review of their applications to launch long-distance service.
``The incentive for Bell companies to get into long distance is huge,'' says Tauzin. ``This battle will go on.''
Through his combativeness, Tauzin betrays a partiality to the Bells, says Robert Taylor Jr., chief executive of Focal Communications Corp., a Chicago-based provider of local phone service for businesses.
Average Telecom Investor ``If you were to ask the average telecom investor on Wall Street, 99 out of 100 would say Tauzin favors the regional Bells,'' says Taylor, chairman of the Association for Local Telecommunications Services, representing Bell rivals.
Tauzin leans on the Bells at election time. Before the 1998 election, as BellSouth urged Tauzin to introduce the initial version of the broadband bill, Chief Executive F. Duane Ackerman and 40 other company employees each gave up to $1,000 to Tauzin's Bayou Leader political action committee.
BellSouth staff members fill half of a list of Tauzin's top 80 individual donors, as compiled by the Center for Responsive Politics.
For some Bell lobbyists, the entrance to Tauzin's House office could just as well be a revolving door. Jessica Wallace, appointed by Tauzin in January as his committee's telecommunications counsel, lobbied for SBC and BellSouth at Verner Liipfert Bernhard McPherson & Hand from 1998 to 2000.
Disclosure Form A disclosure form she filed in 1999 indicated she flogged the initial broadband bill for Bell Atlantic Corp., now part of Verizon.
Monica Azare, a former chief counsel to Tauzin, joined Verizon Wireless Inc. last year as a lobbyist. Dan Brouillette, Tauzin's legislative director from 1989 to 1996, lobbied for Bell Atlantic at R. Duffy Wall & Associates in 1997 and 1998.
And Henderson, one of Tauzin's hunting friends and a lobbyist at Public Strategies Inc., has repeatedly represented the United States Telecom Association, a trade group for BellSouth and other Bells.
The Louisiana native left Tauzin's office in 1983 after serving three years as chief of staff. No surprise: Tauzin's lobbyist friends say he's no pushover.
Says White, the BellSouth lobbyist and club member, ``Billy won't give us everything we want, and we shouldn't ask him for everything if we're wise.''
Verizon's Barr says he can't think of an instance when Tauzin backed a bill that the Bells opposed.
Swamp Fox While cultivating ties to the Bells, Tauzin has earned the nickname ``Swamp Fox'' for his skill in jockeying within his committee and the GOP.
After helping launch the Blue Dog Coalition of conservative House Democrats in 1995, Tauzin pulled off one of his trickiest moves yet and jumped from Democratic to Republican ranks. He retained his seniority on the Commerce Committee, and his popularity in his district discouraged the Democrats from opposing him in the 1996 election.
Since rising to the chairmanship, Tauzin has fought over turf with Ways and Means Committee Chairman Bill Thomas of California, Financial Services Committee Chairman Michael Oxley of Ohio and other GOP chairmen.
He has claimed committee jurisdiction over headline issues like Medicare, trade, privacy and the environment and even directed the committee to take stands on human cloning and cockfighting -- condemning the former and defending the latter. Bliley, the former chairman, deferred to his peers on Medicare and other issues.
Sleeping Dogs ``Mr. Bliley preferred to let sleeping dogs lie,'' says Henderson, ``but Billy likes to hear them bark.''
Tauzin was born in 1943 in a bed on the dance floor at the former Big Bill's, a zydeco dance hall owned by his sharecropper grandfather in the bayou near Chackbay, Louisiana.
A few years earlier, Tauzin's father -- a truck driver, electrician and jack-of-all-trades -- had raised the roof, reinforced the walls and turned the hall of guitar, accordion and washboard music into a home.
Tauzin grew shallots with his family and worked as an electrician and shipyard hand to pay for study at Nicholls State University and a law degree in 1967 from Louisiana State University.
Powerful Local Post Although both of Tauzin's grandfathers served in the powerful local post of police juror, Tauzin's father begged him not to enter politics for fear of corruption, Tauzin says.
In 1972, he entered the Louisiana House of Representatives anyway and, as a prot'g' of Governor Edwin ``Eddy'' Edwards, saw firsthand the ethical corrosion his father had warned about.
Edwards was dogged by rumors of womanizing and criticism for gambling trips to Las Vegas. He acknowledged in 1976 that his wife had accepted a $10,000 gift from South Korean executive Tongsun Park while he and Park were arranging exports of Louisiana rice to South Korea.
He bobbed in and out of scandal during his next three terms and in January was sentenced to 10 years in prison for extorting payoffs from executives applying for riverboat casino licenses.
'Cajun Ambassador' Tauzin, the self-proclaimed ``Cajun Ambassador to Congress,'' says Edwards inadvertently taught him a big lesson: ``The story of Edwin Edwards is of an incredibly great potential gone awry,'' he says. ``At some point, money and power and other things may have been more important than public service.''
There are no traces of Edwards-style excesses at Tauzin's 230 acres of swampland in Wingate, Maryland. The front porch of his trailer is furnished with two swinging chairs, seven coolers and two Sam Adams beer boxes. A sign at the front door tells club members to ``Wipe Your Paws.''
Alongside a horseshoe pitch, three white plastic chairs circle a campfire site. Near a cypress sapling Tauzin brought up from Louisiana, a yellow Case backhoe tilts in the waterlogged clay. He lures ducks with three ponds and with corn and millet he grows on narrow fields flanked by duck blinds.
The simplicity of Tauzin's ``farm,'' as he calls it, mirrors his humble background. ``People assume I'm putting on some folksy veneer, but it's me,'' Tauzin says. ``I had to learn how to use a fork and knife when I was in high school, I had to learn how to wear shoes and I never had the sophistication that many people come to this job with.''
Still, Tauzin has learned well how to wield the levers of power in Washington. He continues to confound his critics -- and reward his friends. |