AT&T sends in startup shill to shake up Cali's net neutrality safeguards

Analysis A group claiming to represent the interests of California's tech startups has argued that the US state should allow so-called zero rating services, despite the negative impact it would have on tech startups.

Last week, CALinnovates provided Sacramento lawmakers, who are discussing proposed legislation to bring net neutrality protections to the Golden State, with a three-page study [PDF] claiming that the practice of allowing ISPs to offer some services – like video streaming from specific companies – without it impacting subscribers' monthly data caps would save Californians more than $130m a year.

It also argued that zero rating would most benefit the most at-risk citizens. "Low-income and minority Californians enjoy disproportionately greater benefits from zero-rated data," the study argued. "Californians who rely exclusively on a smartphone to access the internet enjoy benefits as high as $30 a month per person from zero-rated data."

The study has been at the center of discussions over the contentious topic of net neutrality and certain outfits' traffic being prioritized over others'. There's only one problem: despite its claims to be "serving as a bridge between the thriving and fast paced technology communities based in California and the slower moving but equally important public policy communities in Sacramento and Washington, DC," CALinnovates is, for all intents and purposes, a front for cable giant AT&T.

This time last year, the organization was at the heart of a huge row in academia over net neutrality when it paid for a paper that dug into the lack of economic analysis at America's comms watchdog the FCC; a paper that was then repeatedly cited by FCC chairman Ajit Pai as justification for tearing up existing net neutrality rules.

Deep ties

That paper then became the focus of an entire article by other academics. They noted that even though the study has been paid for by CALinnovates, its name was removed just prior to publication. They described CALinnovates as an "advocacy group with deep ties to the telecommunications industry."

The organization lists 22 "members," the majority of which are based in California, are tech startups, and you have probably never heard of. Among them however is giant AT&T, which is not based in California, and is not a startup, but a multibillion-dollar multinational corporation. (The other name you would recognize is paragon of ethical corporate behavior, Uber.)

Last year, we asked CALinnovates how much of its budget AT&T provided, and it refused to say. It still refuses to say. However, there are a number of interesting aspects to the "advocacy group."

• It was started by a man called Lane Kasselman who left shortly after to take a job with… AT&T as its director of communications in California.
• It was taken over by Mike Montgomery, who previously worked as a political consultant with AT&T as one of his biggest clients.
• The organization's budget tripled in a single year – 2014 – which coincided with the organization suddenly taking a strong line against net neutrality, despite the fact that tech startups are almost universally in favor of net neutrality.
• According to FCC records, CALinnovates head Montgomery visited FCC chair Ajit Pai to lobby him on net neutrality – and was accompanied by a senior AT&T lawyer who wrote most of AT&T's anti-net neutrality responses.
• Since California took up net neutrality legislation, in an effort to rebuff the FCC's removal of such rules, CALinnovates has consistently pushed the exact same arguments as AT&T.
• CALinnovates recently opened the Twitter account @Internet_4Ever to oppose the current California legislation. The account doesn't actually tweet but spends money on "sponsored" ads to get into other people's Twitter feeds. Among its 15 followers are: AT&T's VP of Comms; an account "sponsored by AT&T"; and at least three accounts attached to the telco industry group CCIA.

Information laundering

Last year, two academics, who took issue with the white paper that CALinnovates paid for and then removed its name from, argued the group largely existed to provide AT&T with "information laundering."

In other words, AT&T's lawyers and lobbyists would create the material and arguments against a specific issue, and then pass them through what looks like an independent third party representing an entirely different group of organizations in order to lend greater credibility to those arguments.

CALinnovates takes the obfuscation one step further by then paying another third party to carry out the work – which it then heavily promotes through its lobbyists.

In this case, Sacramento lawmakers would be well advised to scratch the name "analysis group" from the study claiming enormous financial benefits from zero-rating, and draw in the AT&T logo instead.

So far, California's Senate has passed SB 822, the state's own net neutrality safeguards. Now, it is in the hands of Assembly committees and representatives to mull, approve, or dump. The proposed rules forbid ISPs, such as AT&T from blocking, speeding up, or slowing down content flowing through their pipes so as to prioritize one particular service over another.

In a statement, CALinnovates boss Mike Montgomery said: "While others waffled or took the bait for partial, temporary [net neutrality] protections, CALinnovates consistently insisted on codifying important consumer rights in federal legislation.

"Americans deserve a robust debate about the future of internet regulation that focuses fact, and not rhetoric." ®