Case Studies & Clients
Transparency Drives an Advocacy Win for Colorado Telecom Companies
On its face, the $100 million federal grant to expand broadband connectivity to Colorado’s underserved schools and public institutions seemed like a good idea. The quasi-governmental entity in Colorado, ultimately known as Eagle-Net, that would manage the money and the program indicated initially that where it made sense, they would partner with telecommunications companies throughout the state rather than deliver duplicate fiber access. Several of these companies, members of the Colorado Telecommunications Association (CTA), expressed support for this U.S. Department of Commerce grant program, one component of the 2010 federal stimulus package.
What emerged was far different. Funds in hand, Eagle-Net set out to create its own independent statewide fiber telecom network pushing into locations in the heart of Denver and rural communities already served by CTA companies. The potential for wasted federal resources was staggering and the risk to CTA members posed by this huge federally-subsidized competitor was significant.
Pete Kirchhof, Executive Vice President for CTA since 2008, led a campaign over an 18 month period beginning in June, 2012 to protect his members’ interests. The campaign had two fundamental components: direct advocacy and media.
“The genie was out of the bottle from the start,” recalls Kirchhof. “We couldn’t disrupt Eagle-Net’s funding. Our goal was to minimize the impact on our private sector telecom companies by creating a political and media environment that might compel Eagle-Net to scale back its scope.” In short, CTA sought to expose the waste, abuse, and uneven playing field inherent in Eagle-Net’s actions.
Media relations was handled by CTA’s Denver-based PR firm, WR Communications. Kirchhof and his members took on the state and federal advocacy efforts.
Kirchhof found a very interested party in Colorado Congressman Cory Gardner. Representative Gardner was concerned about the possibility of overbuilding and wasteful duplicate service driven by this federal grant. He raised the issue in the House Energy & Commerce Committee and in February 2013, Kirchhof and other telecom industry representatives from around the country appeared before the Communications & Technology Subcommittee. Kirchhof asked committee members to “strongly encourage Eagle-Net to negotiate in good faith with local providers to use existing facilities and avoid duplication of existing infrastructure.” He also stated that “Eagle-Net should redeploy remaining funds to areas of the state…where it is badly needed.” Following the hearing the Committee called for a Government Accounting Office investigation of the grant program
Representative Gardner also assisted Kirchhof in obtaining a meeting with the person who headed up the grant program, Lawrence Strickling, Assistant Secretary at the Department of Commerce. Once again, Kirchhof explained how Eagle-Net’s use of the grant funds was inefficient and anti-competitive.
Finally, while the Colorado Governor’s office was not inclined to weigh on this federal matter, Kirchhof found plenty of traction with key members of the General Assembly when he explained that school district funds ultimately would be spent for telecommunication service provided by Eagle-Net. Thus the state had a clear interest in whether Eagle-Net’s service was provided efficiently. The Legislative Audit Committee held a hearing in September, 2013 at which time Eagle-Net disclosed that its goal, was in fact, to create a statewide network, not merely extend broadband to underserved areas.
Inevitably, Eagle-Net quickly spent the federal grant money. But the exposure created by CTA’s political and media outreach resulted in what Kirchhof calls “a credibility problem” for Eagle-Net. School districts and other public entities thought twice about signing on with a company offering duplicate service. When confronted with the option of obtaining broadband access from a CTA member or Eagle-Net, many opted to go with a tried and true Colorado small business rather than the quasi-governmental entity they were reading about in the papers and which was the subject of federal and state legislative hearings.
“The win in this case was transparency,” explains Kirchhof. “The heat and light we generated caused Eagle-Net to change some of their behaviors in ways that minimized the impact on CTA companies. And the legitimate concerns we were able to highlight in Congress, the Obama Administration, the Colorado statehouse, and the media about overbuilding and wasteful spending caused school districts and others to consider options other than Eagle-Net. It’s a shame, we truly wanted to partner with Eagle-Net—we thought it was the perfect opportunity for public-private sector cooperation for the good of Coloradans and American taxpayers. But when Eagle-Net chose a different path, we needed to quickly shift gears to protect our members.
#2 TELECOM REFORM
Persistence is Key to Achieving Telecommunication Regulatory Reform in Colorado
A lot can change in 19 years and that’s probably more true in the world of telephone service and the telecommunication industry than in nearly any other field. Yet, in 2009, the State of Colorado was still regulating the telecom industry based on the provisions of a 1995 statute. Thanks to new technology there was far more competition within the industry by 2009 compared to mid-90s when land lines and telephone operators were the norm.
In 2009, Pete Kirchhof (Executive Vice President of the Colorado Telecommunications Association) and representatives from AT&T and Comcast sketched out a deregulation plan for telecom that reflected the current state of the industry—a plan that allow Colorado to catch up with and even surpass telecom reforms occurring in other states and give Colorado a more competitive business climate.
The group approached recently-elected Colorado State Senator Mark Scheffel and worked with him to further refine the telecom deregulation package into a comprehensive reform bill. The three telecom industry reps began the process of educating legislators about telecommunication technology and trends. Along the way, additional telecom companies joined the effort.
“We put together an omnibus bill that captured all the essential issues,” recalls Kirchhof. “The challenge was that this was an extremely complicated issue and several groups, including rural interests and the Colorado AARP [American Association of Retired Persons] were opposed to reform. They were concerned about consumer protection and felt their constituencies were more tied to land lines and the traditional telecom systems protected by the old regulatory structure.”
The omnibus bill failed to pass in the 2011, 2012 and 2013 sessions, although the industry representatives made considerable progress in educating legislators and rural interests about the benefits of deregulation.
Turning the Tide
“We produced countless White Papers and fact sheets,” explains Kirchhof. “We testified at every opportunity and talked with legislators as often as they would listen.” Slowly but surely the message started getting through that since there was plenty of competition in the industry, nearly all areas of telecom regulation for the sake of consumer protection were outdated or unnecessary.
The telecom industry coalition revised its tactics and split the omnibus bill into two bills in 2013 and ultimately into five bills in 2014. “We still ran the bills as a package, but the substance was much easier to explain and digest in smaller pieces,” says Kirchhof. Opposition from rural legislators began to fade. Governor Hickenlooper got behind telecom deregulation as a part of his effort to promote the state as technology-friendly. The Public Utilities Commission took a neutral position and the bills finally passed during the 2014 session in spite of Colorado AARP’s continued opposition.
It’s not unusual for complex and controversial public affairs issues to take multiple years to gain traction and be accepted. “This package took a lot of negotiation and a lot of give and take on everybody’s part,” explains Kirchhof.
In the end, only three major areas of telecom regulation remained:
The High Cost Fund—a state fund made up of surcharges on consumer phone bills. Previously this money was used to subsidize providers who delivered phone service in rural areas. The deregulation bills maintained the Fund but reallocated a portion to support expanded broadband access in rural areas.
Restrictions on carrier to carrier contracts to ensure equitable access to networks.
The most onerous and outdated portions of the previous regulatory structure were repealed, including rate of return regulations that set profit limits on telecom providers.
“This was a very important and satisfying win for me and my CTA members,” says Kirchhof. “We stuck with it and ultimately achieved bipartisan support. Plus the telecom companies all pulled together for the good of the industry—and the citizens of Colorado.”
#3 Statewide Ballot Initiative Reform:
Battling from Day 1 to Day 120
Colorado Concern, a public interest group representing business and community leaders, has long endorsed a system that would provide objective fiscal impact information for ballot initiatives. The state’s Legislative Counsel performs this type of analysis prior to statewide elections and its information is included in the voter’s guide commonly known as the Blue Book. But Colorado Concern and other groups proposed that this analysis be done, and the results released, even before signatures are gathered.
Leading up to the 70th General Assembly
In 2014, Colorado Concern worked with other interested groups to gather sufficient signatures to put the issue of ballot initiative fiscal transparency to the voters on that year’s November ballot.
At the same time, Governor Hickenlooper was attempting to broker common ground between oil and gas interests and the environmental community over hydraulic fracturing and other energy issues. As part of a “cease-fire” agreement, both sides halted their legislative and initiative efforts. Although ballot initiative reform was not tied uniquely to energy, it was caught up in the agreement and Colorado Concern had to withdraw the initiative.
However, CEO Tamra Ward and its lobbying team of Pete Kirchhof and Erin Silver kept the issue of fiscal transparency for ballot initiatives alive, talking with legislators, interest groups, and the Governor’s staff. Tamra formed a coalition of public groups that backed the issue, including business groups, rural interests, and government reform-minded organizations.
Colorado Concern drafted legislation for the 2015 session that would require the Legislative Council to prepare a fiscal impact statement for every proposed ballot measure. The analysis would be displayed on the front page of the signature petition form.
Pete and Erin carefully identified sponsors from both parties, and the bill (HB15-1057) was introduced on the first day of the session, January 7, with 14 sponsors and co-sponsors. Members of both parties in both houses signed on, including House Minority Leader Brian DelGrosso, Representative Lois Court (a Democrat and long-time advocate of ballot initiative reform), and Senate President Bill Cadman.
When Governor Hickenlooper endorsed the principle of ballot initiative fiscal impact transparency in his State of the State Address on January, 15, Colorado Concern could be reasonably certain he and his staff would seek additional Democrat supporters in the weeks to come.
138 Days in the House
Passing the bill in the House promised to be a significant challenge. Democrats held a 35-30 majority and the Democratic Caucus opposed HR15-1057 on the grounds that fiscal impact considerations should not necessarily take precedence over any other aspects of the issue. Speaker Dickey Lee Hullinghorst assigned the bill to the State Affairs Committee, commonly known to Capitol insiders as the “Kill Committee,” and it languished there for more than two months before it was even discussed.
All the while, Colorado Concern, other proponents, and the Governor’s office sought to gain the support of House Democrats—including at least one from the State Affairs Committee to join with the Republican members to vote the bill out.
Pete and Erin carefully coordinated the involvement and visibility of the coalition members during the bill’s time in the House. Heavy engagement by business groups, and especially those affiliated with oil and gas, could be counterproductive. Instead, public testimony and visible advocacy generally was taken on by other groups, including the Farm Bureau.
During this time, several Democrats offered their support provided certain amendments were included. Some of these amendments were “poison pills” that would have effectively killed the bill. Others represented well-intentioned improvements, and Colorado Concern agreed to an amendment that precluded legislative coercion of the Legislative Council and another that provided recourse for groups who felt the financial impact information was inaccurate.
HB15-1057 finally was passed out of House State Affairs on a 6-5 vote on April 20 with the support of Democrat Max Tyler after it was amended to his satisfaction. The bill subsequently was endorsed by the Executive Committee of the Legislative Council and then the Appropriations Committee. It went to the full House on April 29 and was passed one week later - with two days left in the session.
2 Days in the Senate
The calendar wasn’t the only obstacle proponents faced in the Senate. Even though Republicans held an 18-17 majority, several conservative Republicans opposed the bill, taking the position that nothing should hinder a group’s ability to promote and pass a ballot initiative. Senate leaders supported the bill, though, and it was put on a fast track. The challenge once again was for Pete, Erin, and the Governor’s office to secure the support of moderate Democrats, this time to offset the expected loss of at least three Republican votes.
After quick passage out of the Senate State Affairs and Appropriations committees, the bill arrived on the Senate floor on the last day of the session, May 6. Pete and others confirmed the support of three critical Democratic Senators—Mary Hodge, Cheri Jahn, and Steve Johnston—so an 18-17 victory on the Senate Floor seemed assured.
However, the bill faced an unexpected, heart-stopping hurdle on the floor. One Republican senator who promised a “yes” vote if the vote was needed (and it was), misinterpreted the rollcall and voted “no.” The bill died 18-17. The Senator quickly realized the mistake and called for a Motion to Reconsider. After a few more tense moments and a filibuster by the Democrats, during which they attempted unsuccessfully to secure one more “no” vote, the bill passed.
Looking back on the legislative fight, Pete notes that, “I’ve been involved in other, more difficult battles, but I can’t recall one where it was so hard fought every single day of the session.” He identifies three keys to success:
- Bipartisan sponsorship.
- Governor Hickenlooper’s leadership.
- The ability of Republican leadership to maintain the support of nearly all Republicans in both houses.
Pete adds, “This was a very satisfying win because it proves once again that the right idea and good policy can win out over politics and partisanship if you work hard, have the right people on your side, and know how to work the process.”
Kirchhof Group’s current and past clients include:
Colorado Concern (Strategic Alliance of more than 100 Colorado CEOs)
Denver South Economic Development Partnership (Serving Arapahoe and Douglas County)
Colorado Telecommunications Association (Rural Telecommunications)
Colorado Association of Mechanical and Plumbing Contractors
Mountain West Credit Union Association (Colorado, Wyoming and Arizona)
Satellite and Broadcasters Communications Association (DISH and ViaSat)
Colorado Succeeds (Continuous Improvement of the Education System)
Fantasy Sports Trade Association and DraftKings/FanDuel
Colorado Licensed Beverage Association (Retail Liquor Stores)
Colorado Gaming Association (former)