CABLE-INTERNET FIGHT TURNS INTO GOLD MINE FOR LOBBYISTS.

Byline: Deborah Sullivan Staff Writer

The cable Internet market, a future gold mine for huge communications firms, is already producing a windfall for city lobbyists and elected officials.

Hundreds of thousands of dollars have rolled into the offices of Los Angeles lobbyists from telephone and Internet companies eager to dominate the high-speed cable market and hoping to sway the public debate over access.

``It's a full employment act for lobbyists,'' said Councilman Mark Ridley-Thomas, chairman of the City Council's Information Technology Committee.

And it's not just lobbyists who are reaping revenue in the open-access battle.

City Council members have received thousands of dollars in contributions through lobbying firms like Rose & Kindel and Spiker & Associates, which speak for AT&T and TCI, the international public relations company Fleishman-Hillard which works for America Online, and heavyweight law firms such as Latham & Watkins, also representing AOL, and Manatt, Phelp & Phillips, an advocate for GTE.

Ridley-Thomas received $6,500 from registered lobbyists representing cable companies or Internet interests during the first 90 days of this year.

His committee vice chairman, Mike Hernandez, got $3,000.

The third committee member, Hal Bernson, received $2,500 from lobbyists for Internet service providers.

And those numbers don't include contributions from legal or public relations firms not registered as lobbyists.

The first wave of lobbying crested early this year, as the council and its Information Technology Committee prepared to vote on the transfer of the Telecommunications Inc. cable-television franchise to AT&T.

They approved the transfer, but left open the question of whether AT&T can keep sole control over the cable modems that deliver high-speed computer access, or whether AT&T must open them to competitors.

Setting the stage

The prize at stake is the right to sell high-speed cable Internet access - 50 to 100 times faster than current dial-up connections - to millions of online customers.

AT&T argues that users must connect through its own Internet service, Home, charging that it's technically impractical to have multiple services splitting the same cable, and that sharing the line would undermine its investment in infrastructure.

But competing Internet service providers like AOL, Earthlink, GTE and Pacific Bell say cable can easily accommodate numerous Internet services, and that consumers deserve the choice.

As the council prepares to hear the issue, setting the national stage for the future of high-speed Internet access, an army of influence traders have jumped into action again over the past month.

Rival communications companies have hired up lobbyists by the dozen, sometimes defensively engaging firms just to keep their competitors from getting them. A source close to the issue said that in some cases individual lobbyists or smaller companies are hired to target a single council person or city staffer.

``We're getting calls from everybody,'' said Greg Nelson, chief deputy to Councilman Joel Wachs. ``If you haven't got a client on this Internet debate, you're nobody. So it's AT&T vs. the world. There's billions, billions involved in this. It's a huge issue.''

With so much at stake, TCI has retained four lobbying firms - including the companies of Democratic strategist Joe Cerrell, former City Chief Legislative Analyst Ken Spiker and former Public Works Commission President Maureen Kindel - to push its position.

In the first quarter of last year, it paid those companies, along with Catalyst Communications, $132,656. Except for Cerrell Associates, those firms delivered more than $13,500 to elected city decision-makers.

Meanwhile, GTE and America Online have lined up behind-the-scenes power hitters like former appointed Charter Reform Commission Chairman George Kieffer, an attorney with the mega-firm Manatt, Phelps & Phillips, and lobbyist George Mihlsten, an attorney with giant Latham & Watkins.

Those firms are bending the ears and padding the political funds of officeholders and candidates as well.

Large donations

During the first quarter of this year, Ridley-Thomas received $4,500 from Rose & Kindel and $1,500 from Ken Spiker & Associates. He also got $500 from Manatt, Phelps & Phillips. Those payments reflect either donations by the lobbying firms themselves, or contributions they deliver on their clients' behalf.

Hernandez, the technology committee's vice chairman, got $500 each from Manatt, Phelp & Phillips and from Lucinda Starrett, a lobbyist with Latham & Watkins. He also took in $1,000 from Ken Spiker & Associates, and $500 each from Catalyst Communications and from Rose & Kindel.

Bernson, the third member of the panel, got $2,000 from Latham & Watkins lobbyists and $500 from Marathon Communications, another Los Angeles firm lobbying on behalf of AOL.

Council members dismiss the significance of the donations, saying political contributions represent a vote of confidence, not a quid-pro-quo demand.

``The law precludes anybody making contributions that can influence a decision,'' Ridley-Thomas said.

``Campaign contributions do not buy decisions,'' Bernson said. ``Decisions are made on behalf of the best interests of the public and the city.''

Many of the lobbyists weighing in on the open access dispute also handle a wide range of other clients with various business before the city, so it's difficult to draw a direct link between a given contribution and a committee or council vote.

But a source close to the issue said the donations represent a kind of ``table stakes'' to play the multimillion-dollar Internet access game. Beyond that, the persuasion is subtler.

High stakes 

Lobbyists on both sides say they are trying to conquer the information superhighway by masterfully using information. They've flooded council offices with streams of reports on their positions, and attempted to regale them with hard arguments on broad-band technology.

``The battle for us has been to make people understand the technical aspects of this, which sometimes are daunting to non-Internet users,'' said Kieffer.

But there has been a softer side to the persuasion efforts, too. AT&T sponsored an opening of the Diego Rivera exhibit at the Los Angeles County Museum of Art, and invited city officials to the fete.

AT&T spokesman James Peterson said there was no connection between that event and the company's cable business before the city.

``We're very pleased to be sponsoring the Diego Rivera show at L.A. County Museum and, like at most of our philanthropic events, we invite community leaders from the city,'' he said.

The open access issue, he said, ``is about policy and issues and facts, not about politics. There's a lot of energy from the other side that's being pushed toward the politics side.''

High tension

Yet observers say the open access issue is among the most politically charged battles in the city. And the fractious atmosphere in City Hall - with tensions between the mayor and council splintering any unified vision or direction - offers openings for lobbyists to ply their trade.

``What's lost in the melee is the public's interest,'' said former Information and Technology Commissioner Robert Duggan, who resigned two weeks ago in protest against a staff report urging the city not to require open access.

``It's these titans fighting each other to get market share,'' Duggan said. ``So the only one left out of the equation was the consumer.''