Friday, July 17, 2009

Following the Money in the Pickering Case

Given the rash of political sex scandals in the last two years -- or even the last two months -- it's natural for the media to focus on the more salacious aspects of the Pickering v Byrd case.

I would draw attention to the public implications instead. Consider this AP story from two years ago, discussing the little-known "Universal Service Fund," which, as I understand it, takes funds generated from a surcharge on telephone charges and, among other things, gives direct subsidies to companies providing cellular coverage in rural areas.

The story explains:

Congress ordered that consumers - including those in "rural, insular and high-cost areas" - have access to telecommunications and information services at rates comparable to those charged in urban areas. That was to be financed by a fee added to long-distance bills. The charge may only be a few dollars per month, but it adds up fast.

In 2006, the fund collected $6.6 billion, money that flows to four programs. About $1.7 billion paid for schools and libraries to connect to the Internet; two smaller funds subsidized telephone service for the poor and rural health care facilities.

The largest chunk - about $4.1 billion [in 2006] - flows to the aptly named "high cost" program, the source of the current controversy. That money is paid directly to telephone companies that do business in mostly rural areas where the cost of delivering service is high.

In the early years of the fund, subsidies went almost exclusively to old-fashioned wired phone companies - large and small - that had served rural areas for decades. To spur competition, Congress wanted to make subsidies available to other carriers.

Initially, the lure of a handout wasn't enough to attract new entrants. But the dramatic growth of the cellular telephone industry changed all that.

Wireless providers discovered that the subsidy - based on what the wired companies were getting per customer - would cover their costs and then some.

* * * *

Of the $2.45 billion that has been paid to competitive carriers from 2003 through April 2007, 75 percent of the cash went to 10 companies, according to AP's analysis.

Alltel, which recently announced the sale of the company, reported a $230 million profit in the first three months of 2007, a total boosted by the $65 million to $70 million in universal service funds the company says it receives each quarter.

"We are the largest wireless recipient of (universal service funding) because we are the largest rural carrier," company spokesman Andrew Moreau told the AP in an e-mailed response to questions.

Next on the list of recipients is AT&T Inc. with $239 million, followed by U.S. Cellular Corp. at $212 million and Mississippi's Cellular South Inc. with $156 million.

* * * *
In Mississippi, the top recipient of cash among cellular providers is Cellular South Inc., a 900-employee private company, whose executives have been prolific in their giving. Officers of the company and its corporate parent have dealt at least $142,550 in contributions to federal campaign committees, according to records.

Favorites include Mississippi Republican Rep. Charles E. "Chip" Pickering and Sen. Trent Lott. Pickering is a former member of Lott's staff and helped shape the 1996 telecommunications law, according to his congressional biography.

The "High Cost Support" Program is alive and well. See

Now, the idea of paying subsidies to companies to provide services in under-served areas makes sense to me. But is it uncomfortable to anyone else that Representative Pickering, as Vice Chair of the House Commerce Committee before his retirement, had jurisdiction over the Universal Service Fund that had paid hundreds of millions of dollars to his alleged mistress' company?


Anonymous said...

Interesting. Are you saying that Pickering was able to steer money to Cellular South?

Anonymous said...

bedroom lobbying

Jim Craig said...

No, I'm not saying that "Rep. Pickering was able to steer money to Cellular South." It was just one of many companies that have benefitted from the high-cost program of the Universal Service Fee. And as I said in my post, the subsidy sounds like a good idea to me as a general proposition. I don't have the savvy to know whether the formula for calculating the subsidies results in an appropriate amount of payments. It may over-compensate the cellular providers, or it may under-compensate them. If the former, that would certainly be an issue. But it would not be limited to Cellular South.

What I am saying is that Rep. Pickering championed a program that benefitted, among others, the company that his alleged lady friend owned. If Leisha Pickering had been a board member of Cellular South, wouldn't that have been disclosed to the public so that they could at least scrutinize the program more carefully?

GrannieEv said...

Read about "The Family" who own that C Street complex where this fine, upstanding government official lived while in DC. The facts about this secretive group should give everyone nightmares.

I think most all of the politicians in office today are less than honest and the only way to cure that is to boot them all out of office and give notice to the newcomers that they'll be booted too if they follow the same path. That won't happen, there's too much money invested in the big guys and there's too much apathy on the part of voters to bother. SAD for our country.

anyyimiss said...

I was waiting for someone to start to tie these threads together. How seriously do you take the story that Pickering was offered Lott's Senate seat by Barbour.?

Seems like he would be next in line at the time.

Do you believe Mrs. Pickering's lawyer was A) unaware of case and resigned once she figured it out, or B) was there to impede Mrs. Pickering's case or C) was pressured by who? to drop the case?

Does Pickering still have gobs of money in his campaign accounts and can he give it out as he sees fit?

Anonymous said...

Yes, I seriously believe Mrs. Pickering when she says the Senator position was offered to Chip by the Governor. She has no reason to state this in her complaint without it being true and her having some proof of this. I suspect his journals back up this along with his desire to be with his mistress as the reason he declined. Also, let me throw something else in this. I am not a lawyer, but what is the possibility that Mrs. Pickering's new lawyers have already seen a copy of the journals/notes?

Anonymous said...

Pickering was also pimping for Mississippi Power and its parent company, The Southern Company(Atlanta), as a co-chairman of the House and Energy and Commerce Committee.

Pickering and Wicker introduced legislation into the 2006 Energy Bill that repealed the depression era 1935 PUHCA(Public Utilities Holding Company Act). The act was enacted to prevent utility companies from investing in the stockmarket.

Pickering also was responsible for introducing legislation into the energy bill that created the Richton Strategic Petroleum Reserve.

But Chip bragged that the $2.2 Billion MP Coal gasification facility in Kemper County was the crowning achievement in his thirteen years in Congress.

Last week, the PSC said that MP cannot raise cusomer rates to pay for its construction. Likely, MP will abandon the project as it did with a like facility in Florida a few years ago.

Anonymous said...

Southern Company cancels its Florida IGCC electric generation plant.

Anonymous said...

Anonymous said...

Barbour and Pickering are fighting over bragging rights for the Richton SPR Salt Dome project.
Miss. Fish & Wildlife says that it'll never happen.

Hmmmmm . . . . . said...

OK lawyers, a few questions. (1) What relevance is there to the allegation that Mr. P. was offered a Senate seat and turned it down? Does the law recognize that a spouse has a recoverable interest in the other spouse's career choices? (2) Is it a defense to this claim to prove Mr. P. would have left his wife irrespective of whether another woman was involved? If so, doesn't that put Mrs. P's conduct at issue, too? (3) Is it possible Mrs. Byrd's ex-husband and/or children will be required to give testimony in this case? Or, for that matter, what about the Pickering children?