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Shills R Us: Organizations That Get AT&T Cash Endorse its Mega-Merger with T-Mobile

A growing number of nonprofits are recipients of AT&T grants; are they violating their IRS nonprofit status by shilling for the company's interests?
 
 
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The first real blood in the fight to derail AT&T’s proposed acquisition of T-Mobile’s wireless business was spilled on Saturday, June 19th, when Jarrett Barrios, president of the Gay & Lesbian Alliance Against Defamation (GLAAD), was forced to resign his position.  This is a remarkable occurrence because it came as a result of the group’s board of directors’ opposition to the merger.

One of the rituals that take place during a Federal Communications Commission (FCC) merger hearing is the introduction of statements of support of the merger by a gaggle of nonprofit organizations.  This is a traditional, rubber-stamp exercise used to present a patina of legitimacy or social benefit to an obvious corporate consolidation grab.   

Amidst the current and well-scripted Noh theater performance now taking place in Washington, DC, over the merger, AT&T has pulled out all the stops.  It has called in the chips from three hundred nonprofit groups, labor unions, trade associations, state and local politicians, and private corporations.  AT&T wants the acquisition to go through.

The action by the GLAAD board joins a growing chorus of public-interest groups and senators raising concerns about the merger.   

Earlier this month, Politico.com reported that GLAAD had received $50,000 from AT&T and was among a long list of nonprofit recipients of AT&T largesse.  GLAAD supported the merger on the spurious grounds that “the merger will increase functionality and speed, thus growing engagement and improving the effectiveness of the online advocacy work that is advancing equality for all.”  While insisting, “we do not make policy decisions based on what’s best for our corporate sponsors,” it nonetheless backed the deal.

Equally troubling for GLAAD, AT&T is one of the staunchest opponents of “net neutrality,” the defining policy that has assured that all Internet data is transported at the same speed.  AT&T, and the other major players of the Communications Trust, wants to end net neutrality and turn the Internet into a toll road benefiting high-volume media companies, thus screwing small publishers and popular democracy.  GLAAD had long backed net neutrality, so its support for the merger surprised many, including board members.

The action by the GLAAD board joins the call by ColorofChange.org, a Black activist organization, and others challenging the AT&T merger. Rashad Robinson, director of Color of Change, noted:

The deal is likely to destroy jobs, raise the price of cellular service, and threaten net neutrality for wireless high-speed Internet. Net neutrality is the principle that prevents large corporations from marginalizing voices they disagree with or that get in the way of their profits. It's critical for groups that challenge the political and corporate status quo to protect net neutrality. Wireless broadband is increasingly important as more and more people use their phones to access the Internet, especially African Americans.

One can only hope that these voices will inspire more nonprofits to question the PR hype pushed by AT&T, along with hat-in-hand senators and an oh-so-compliant FCC, to block the merger.  More critically, long-term, one hopes that this will lead to a call for the divestiture of the telecom conglomerates’ wireless operations.

Remarkably, no one has yet raised a far more troubling question.  Does the hand-and-glove relations between AT&T and the nonprofits it supports violate these groups’ charitable exemption status?  According to the IRS :

To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual. In addition, it may not be an action organization , i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.

The key questions remains: a tax-exempt entity “may not attempt to influence legislation as a substantial part of its activities ...”  Does the active campaign by so many nonprofit recipients of AT&T’s largesse on behalf of an interested party in an FCC deliberation constitute “influence”?   


* * *

The leading telecommunications conglomerates that make up the Communications Trust, and AT&T in particular, are masters at using civil rights and other nonprofit groups as fronts in their public deception campaigns.  We saw the same game played out last year with Comcast’s take over of NBC-Universal.  Comcast co-opted a variety of civil rights groups who were beneficiaries of its corporate largesse, including the League of United Latin American Citizens (LULAC), the National Council of La Raza, the NAACP and the National Association of the Deaf (NAD).  These groups lobbied on behalf of Comcast and NBC.  Last year’s regulatory Noh play was acted out flawlessly and succeeded without a hitch.  This year’s charade is running into a little more turbulence.  

The Communications Trust has built an effective army to wage its consolidation campaigns.  It has united Washington think tanks, high-paid lobbyists, obsequious public relations firms, fictitious “astroturf” organizations, talking-head hucksters and mainstream media spin masters in singing the praises and promoting the special interests of the new American trusts.  Politicians and regulators dutifully roll over.

Most remarkable, all this support comes cheap, involving only empty promises, modest cash grants and pathetic photo-ops.  All-too-many hungry nonprofits will do almost anything for a buck and their actions, sadly, most often negatively affect their core constituencies.  [see “How AT&T, Verizon and the Telecom Giants Have Captured the Regulator Supposed to Control Them ,” Posted on Jan 8, 2011]

This time, things are not working out according to the preordained script, as evident in the fate of GLAAD’s president.  Nevertheless, many other nonprofits have joined the AT&T bandwagon.  Among the 300 or so backing the merger are the American Foundation for the Blind, National Conference of Black Mayors, National Puerto Rican Coalition and United States Hispanic Chamber of Commerce.  The Communications Workers of America and the AFL-CIO as well as Facebook, Oracle and Yahoo support the merger.

AT&T has very, very deep pockets to help its friends and punish its foes.  It is reported that, in 2009, the AT&T Foundation doled out over $60 million to nonprofits and other causes.  In addition, in 2010, AT&T paid out nearly $20 million to influence the political process and legislative decisions; it contributed $3.7 million to America’s two major political parties (56% to Republicans) and another $15.4 million to lobbying activities.  During the first three months of 2011, AT&T spent $6.8 million on lobbyists and in to lawyers related to the T-Mobile deal.  And every penny of this corporate largesse comes out of the over-charges imposed on AT&T’s customers. [Source: Center for Responsive Politics and OpenSecrets]

The NAACP is one of AT&T’s strongest supporters, even though its members pay dearly for AT&T’s services.  In 2009, the century-old civil rights organization received over $1 million and, according to various sources, has benefited even more over the last two years.

“AT&T’s acquisition of T-Mobile has the potential to benefit consumers, communities and workers alike,” proclaimed Hilary O. Shelton, Director, of NAACP’s Washington Bureau and Senior Vice President for Advocacy and Policy.  This assertion, based on no data, was further qualified: “We are hopeful that this acquisition will further advance increased access to affordable and sustainable wireless broadband services and in turn stimulate job creation and civic engagement throughout our country.”  

In an age of post-modern deception, of Orwellian double-speak which a growing number of Americans know is nothing but PR hype, one can only wonder if Shelton knows he is only deceiving himself.  Looking in a mirror, he should ask whether W.E.B. DuBois, one of the NAACP’s founders, would accept such a rationalization.

Still other nonprofit recipients illustrate AT&T’s range of influence:

    National Education Association, the nation’s largest teachers’ union, received $75,000; its president, Dennis Van Roekel, declared: “This merger will have positive and long-lasting effects, and America’s students will be among the biggest winners.”

    Asian Chamber of Commerce urged the FCC to quickly approve the deal, saying that as a group “striving to create bridges between cultures, we look forward to the foundation that this merger will create and the opportunities that it will give the public.”

    Congressional Hispanic Caucus Institute, a front-group of Rep. Joe Baca (D-CA), has collected $220,000 in honorary contributions; an AT&T executive, Jerry Fuentes , also serves on its board.

    In 2010, AT&T donated $125,000 to $249,999 to the National Urban League’s annual convention; South Carolina’s Columbia Urban League received a $25,000 grant and declared: “This deal would help extricate the barriers keeping our members from attaining these benefits, working towards the end of the digital divide.”

One of the great myths repeatedly stated by many nonprofits supporting the merger is that it will lead to new and better jobs.  This myth was put forward by the Communications Workers, who argued that the merger “will create as many as 96,000 new, high-quality jobs, accelerate broadband build out, and improve wireless communications and innovation ….”  What the Communications Workers failed to acknowledge is that, since 2009, AT&T has cut its workforce by 42,500 jobs or 16 percent.  Based on historical experience of telecom industry mergers, one can expect that if the AT&T/T-Mobile merger takes place there will be an initial 5 to 15 percent workforce reduction.

The AT&T Foundation’s $60 million can buy lots of friends.  It should be noted that a number of nonprofits, including the National Black Farmers Association and the Sierra Club, were not recipients of AT&T largesse but wrote the FCC in support of the merger.

 

* * *

In 2010, Lawrence Summers, then head of the President’s National Economic Council, claimed that “each dollar invested in wireless deployment is estimated to result in as much as $7 to $10 higher GDP.”   Going further, he argued that as wireless investment grows, “the benefits for job creation and job improvement are likely to be substantial.”

Summers was the mastermind of the Great Recession, of the vast transfer of wealth from the middle classes to the rich; he orchestrated the restructuring of the American economy in which the rich got more and rest of us got screwed.

Holding one’s nose and accepting Summers’ pronouncements at face value, one has to ask why the telecom trust has failed to fulfill his projections?  One must ask two hard questions:

    Why is the U.S. ranked 15th in the world in broadband, according to Europe’s Organization for Economic Co-operation and Development (OCED)?

    Why is the U.S. ranked 22nd in the world in terms of data speed, according to Akamai, a leading technology services provider?

Answers to these questions reveal to what extent the Communications Trust has taken control of the nation’s telecom systems as well as our political and regulatory systems as well.  Clearly, the needs of customers and the nation come second to profit.

Bruce Kushnick is a telecommunications industry analyst who serves as the broadband and telecommunications expert for Harvard Nieman’s Foundation for Journalism’s Watchdog, and a founding member of Teletruth, a customer advocacy group.  He can be reached at bruce@newnetworks.com.
 
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