The Secret Funding Behind The FCC's Anti-Net Neutrality Talking Points

July 11, 2017

By: Donny Shaw

A key academic paper cited by the Federal Communications Commission (FCC) in their plan to roll back net neutrality was recently revealed to have been secretly funded by an AT&T-backed trade group.

The paper, co-authored by Professors Hal Singer and Gerald Faulhaber and published in the International Journal for Communications, argues that there has been a “curious absence” of rigorous economic analysis at the FCC, and it holds up the Commission’s 2015 decision to enact net neutrality rules as Exhibit A.

Singer and Faulhaber argue that the FCC has eschewed economics and embraced populism as their guiding principle. They note despairingly that the four million public comments submitted to the FCC in favor net neutrality in 2015 were cited by FCC commissioners who voted for net neutrality, not the work of economists.

This claim has been repeatedly echoed by the new FCC Chairman, Ajit Pai (pictured above), as one of the main reasons why the FCC should scrap the 2015 rules. In fact, just five days after Singer and Faulhaber's paper was published, Pai referenced it twice in a speech at the Hudson Institute, calling the net neutrality decision a “great example” of the arguments made in the article.

If the FCC succeeds in reversing net neutrality, AT&T and other Internet service providers will benefit by being able to charge websites and apps for preferential treatment on their networks.

“Information laundering”

As it turns out, the Singer/Faulhaber paper is not in fact an independent, disinterested academic exercise. A new rebuttal by Professors Dwayne Winseck and Jefferson Pooley reveals that the paper was in fact commissioned and funded by a telecommunications industry trade group called CALinnovates.

The paper as originally published in the ICoJ did not disclose that it was funded by CALinnovates. Only after Winseck and Dooley contacted the authors on Twitter did they reveal the source of the funding and add a footnote that discloses the funding. Singer and Faulhaber claim they had withheld the disclosure in order to anonymize the paper for peer review.

CALinnovates appears to have a special connection to AT&T, one of the companies that stands to benefit the most from the FCC’s proposed roll back of net neutrality. AT&T is by far the largest member of CALinnovates (all of the other members are small tech startups), and the group's founder now works for AT&T to advance their policy goals in California. Many of their blog posts and article placements echo AT&T talking points and use language that appears in AT&T’s press materials.

The exact amount of money that AT&T contributes to CALinnovates has not been disclosed, but there is reason to believe it is significant. When CALinnovates launched their campaign against net neutrality in 2015, their budget suddenly tripled from the previous year to $1.7 million. AT&T is the only CALinnovates member company that stands to directly benefit from rolling back net neutrality; the other members are startups that could experience major competitive disadvantages if net neutrality is reversed.

Essentially, it appears that AT&T is conducting stealth lobbying through a corporate sockpuppet and attempting to promote it as scholarly work that is free from political or financial considerations. Or as Winseck and Pooley put it:

“An industry front group funded research that got published in a leading academic journal. Soon it was cited by the country’s top policy maker to justify his industry-friendly regulatory rollbacks. This, we contend, is a case of information laundering.”

Lobbying by any other name… is still lobbying.

Corporate-commissioned research is becoming more common as a tool used by corporations and special interests to influence policymakers. Unlike traditional lobbying, there is no law requiring that the influence-peddling activities or sources of funding for academics and policy researchers must be disclosed. The imprimatur of scholars and think tank “experts” gives them a special kind of trust and influence when when discussing issue with policymakers, despite the fact that their roster of clients may include companies that stand to benefit from directly from the matters being discussed.

The rise in corporate-sponsored academic research—disclosed and undisclosed—correlates with the decline in spending on traditional lobbying that is covered by the Lobbying Disclosure Act. Why attempt to influence the government through registered lobbyists who must disclose their funding and activities when you can do it through other means that may be more effective and have no disclosure requirements at all?

When the Center of Responsive Politics examined this trend in 2012, here’s what they found: “ In the first analysis of this kind, CRP finds that 46 percent of the active 2011 lobbyists who did not report any activity in 2012 are still working for the same employers for whom they lobbied in 2011—supporting the theory that many previously registered lobbyists are not meeting the technical requirement to report or have altered their activities just enough to escape filing.”