During the final months of 2016, AT&T worked closely with McAllen city officials to bring faster internet to cell phones.
Improved internet service requires improved infrastructure, and AT&T had negotiated with the Texas border town to establish a fair price for using street lights, street signs and other city property to build it.
Then the 85th Legislature Session kicked off, and AT&T spent as much as $7.8 million on more than 100 lobbyists, according to a Texas Monitor analysis.
By the end of the session, Texas lawmakers had passed SB 1004, which placed a cap on how much cities could charge the telecommunications company for using public property.
Now, 36 cities across the state have joined McAllen to sue the State of Texas and have the bill declared unconstitutional. Austin filed its own lawsuit in federal court. The Texas Municipal League estimates that cities could lose more than $700 million a year — money that was going to be paid by AT&T.
“That gives you an idea of just how cost-effective lobbying can be,” said Andrew Wheat, research director for Texans for Public Justice. “You can get good bang-for-your-buck working these politicians.”
The numbers suggest AT&T’s executives know that better than anyone.
The world’s largest telecommunications company has also been the biggest lobby force in Texas politics for at least 20 years. In 2017, the company had 108 registered lobbyists, more than any other organization, according to the Texas Ethics Commission.
By comparison, TXU Energy Retail Company came in second place. They had 29 registered lobbyists.
But it’s not just lobbyists that get money from AT&T. The company’s various political action committees have donated $2.2 million directly to Texas politicians since 2007.
Of the 181 members of the Texas House and Senate, AT&T has donated cash to 175. Of the 28 bills supported by the company’s lobbyists, 14 of them — including SB 1004 — became law.
McAllen city officials and watchdog groups agree: It’s difficult to fight against that level of influence.
“They have enough lobbyists to have at least one lobby hand on every lawmaker,” Wheat said.
City officials across the state felt that influence strongly with the passage of SB 1004, he added.
While working with individual cities across the country, AT&T had accepted a fair market rate for installing small cell phone towers, or nodes, on public property. The nodes are designed to improve wireless coverage for AT&T customers.
The average price tag was between $1,500 and $2,500 per node. Then SB 1004, authored by State Sen. Kelly Hancock, capped the price at $250.
AT&T representatives could not be reached for comment, but in a written statement, Hancock said the bill would help Texas improve its infrastructure.
“SB 1004 provides the framework to build a telecom infrastructure that will help our state maintain its status as a global economic leader,” Hancock wrote.
But the problem isn’t that Texas cities are opposed to AT&T using the public right-of-way and improving infrastructure, said Bennett Sandlin, executive director of the Texas Municipal League.
The problem is allowing them to do so without paying a fair price for it, Sandlin said, adding that the $250 cap is an “unconstitutionally low amount of money.”
“It’s mandatory that when private companies want to make a profit using public land that they pay a reasonable rental fee for it,” he said. “Just like if AT&T wanted to run these facilities through our backyard, we wouldn’t let them do it for free.”
The 2017 session was one of the first instances where city officials weren’t even allowed “at the table” to voice their concerns, Sandlin said.
Kevin Pagan, McAllen’s city attorney, agreed. He said the lawsuit allows Texas cities to try and address the issue before other companies repeat AT&T’s strategy of undercutting city government at the state level.
“Our concerns were completely ignored in this legislation,” Pagan said. “There’s just no precedent. Amounts in previous negotiations were reasonable. Now they’re virtually giving away the right-of-way to one little slice of the telecommunications industry. If I were a gas company, an electric company or a cable company, I would come in and say, ‘Hey, you did it for them, why don’t you do it for me?’ ”
So far, the Texas legal system has agreed to hear the cities’ case.
During the lawsuit’s first hearing last month, a district court judge denied the state’s motion to dismiss.
The company now faces a political battle on multiple fronts. Facing government intervention for its proposed merger with Time Warner, AT&T announced bonuses for thousands of employees after President Trump criticized the deal.
The company failed to mention in that announcement that it would also be laying off thousands of employees across the country, prompting lawsuits from several labor unions, including one in Central Texas, where AT&T would be laying off 50 employees in Austin and Bastrop.
Even with the setbacks, the company could still push through the $85 billion deal.