California tech industry makes itself heard in Legislature
SACRAMENTO — California’s high-tech industry has been flexing its once-little-used state lobbying muscle like never before, capping efforts on a broad range of topics by winning passage of a bill to ban regulation of companies using the Internet to handle phone calls.
The bill, adopted by the Legislature this week, comes as AT&T; Inc., Verizon Communications Inc. and other tech companies increasingly use the Internet to process not only cellphone but land-line calls.
Months of combined efforts by hundreds of companies and dozens of lobbyists persuaded the Legislature to send to the governor the bill prohibiting the California Public Utilities Commission and other agencies from overseeing the use of digital voice networks as well as any form of regulation of the Internet.
The legislation, SB 1161 by Sen. Alex Padilla (D-Pacoima), sailed through both houses with unusually overwhelming bipartisan support. Gov. Jerry Brown, who has not taken a public position, has 30 days to sign or veto the measure.
The easy passage, despite opposition from consumer advocates and the influential AARP senior citizens lobby, underscores the California tech industry’s prestige and its ability to leverage its status as one of the Golden State’s few economic bright spots.
“Democrats and Republicans, north and south, urban and rural, across the board recognized the importance of the technology industry for California and California’s future,” Padilla said. “I think its voice and presence is the strongest I’ve seen in the six years I’ve been in the Legislature.”
California’s economy could have been put “at a significant disadvantage” if lawmakers were not sensitive to Silicon Valley’s call for minimal regulation and the implicit threat to leave the state, he said.
“We’ve seen it in other industries,” such as filmmaking and manufacturing, Padilla said. “I don’t want to see that happen to this tech sector.”
With five days left before they adjourn for the year, lawmakers still have a number of major business bills to handle. They include a potential overhaul of the workers’ compensation insurance system, a change in how corporate income taxes are calculated and an extension of a film production tax credit.
The tech industry’s growing might became more evident early this year when three leading trade groups — TechNet, TechAmerica and the Silicon Valley Leadership Group — spelled out to lawmakers that passing the Padilla bill would send a signal that tech was still welcome in the state.
“It’s our top priority in California this year,” said Robert Callahan, TechAmerica’s California director.
The bill is important, he said, because his membership group of 1,000 companies and their investors need “certainty” that the PUC won’t pass cumbersome or expensive regulations that might hobble development of products and services.
The coordinated push to pass the bill represents a coming of age for tech’s involvement in public policy and politics at the state level, said Dan Schnur, director of the Jesse M. Unruh Institute of Politics at USC.
Schnur, a former political consultant, was an advisor to TechNet when it was created in the early 1990s in Silicon Valley.
“For years, they ignored the political universe, both in Washington and Sacramento, and hoped it would leave them alone,” Schnur recalled. “Then in the ‘90s, they realized the impact that the federal government could have on their work, but didn’t pay much attention to state-level policy. Now you’ve seen Silicon Valley focus its attention on Sacramento too.”
High tech’s growing presence at the statehouse hasn’t come cheap. Spending on lobbying has more than doubled to $16.4 million in the 2009-10 legislative session, from $8 million in 2005-06. Lobbying expenses are on track to hit almost $18 million in the current session, according to reports filed with the secretary of state.
Over the last few years, tech lobbyists have concentrated on bills dealing with taxes, limits on overtime pay for highly compensated software engineers and privacy issues. This year, the Silicon Valley Leadership Group led an effort to rewrite state environmental laws, which stalled this week but will be reintroduced next session.
The industry’s quest to ensure that the PUC never touches the Internet — or telephones that send digital voice signals over the Internet — has many Sacramento observers shaking their heads.
The commission, they note, has long had a hands-off policy toward the Internet and has repeatedly acknowledged that its regulation is the province of the Federal Communications Commission.
That assurance isn’t good enough for tech companies.
“It’s no secret that conversations are going on whether or not the PUC should regulate [Internet-]enabled services,” said TechAmerica’s Callahan. “Whether or not it’s going to is an open question, and we can’t predict the future. That unpredictability creates uncertainty.”
PUC President Michael Peevey doesn’t understand why tech companies are so fearful about “the possibility down the road” of regulation. And PUC Commissioner Michael Florio described the industry’s stance as bordering on paranoia.
“If this were Iran or Russia, it would be a very legitimate fear,” Florio said, “but in this country, I would not imagine it.”
What’s really going on, Florio and consumer groups contend, is an effort by AT&T; and Verizon to piggyback on tech’s worries to make sure the PUC doesn’t try to increase its oversight of Internet-based phone service that ties into the already regulated copper-wire networks.
“It’s a clever political move in California to push the tech people out front,” Florio said. “I just think they were fed a bill of goods by AT&T.;”
Both AT&T; and Verizon declined to respond to Florio’s comments.
But what was clear to Lenny Goldberg, a lobbyist for consumer group the Utility Reform Network, was that AT&T;’s alliance with Silicon Valley created an unstoppable lobbying force.
“When you put the two together, we got rolled,” he said.
