Industry slow to fill campaign coffers

The network industry is donating significantly less money to 2004 presidential and congressional campaigns compared with other industries than it did in the 2002 and 2000 elections, preliminary federal election data shows.

The elimination of so-called soft money contributions, which were favored by high-tech companies, caused the drop in contributions from service providers, telecom equipment vendors, and hardware and software manufacturers.

Soft money refers to contributions made to national parties or campaign committees for voter registration and other activities that stop short of direct advocacy of a candidate for federal office. Until recently, companies could contribute as much soft money as they wanted. Last year’s campaign finance reform law banned most soft money contributions.

Only individuals – but not companies – can give hard money, which is used to directly advocate for an election or defeat of a candidate. Corporations that want to influence the outcome of federal elections now must make contributions through donations from individual employees or political action committees.

The network industry “relied heavily on soft money,” says Larry Noble, executive director of The Center for Responsive Politics, which tracks campaign contributions on its OpenSecrets.org Web site. “They gave twice as much soft money as hard money in 2002 and in 2000. They’ve been less reliant on executives giving hard money than they have on companies giving soft money.”

Noble says the other reasons for the network industry’s decline in campaign contributions are the weakened financial condition of most companies in the sector and a lack of network industry issues being debated on the campaign trail.

“But there are issues that will affect high-tech businesses such as taxes, trade and the exporting of jobs,” Noble says. “One of the things that the high-tech industry learned a number of years ago is that what goes on in Washington does affect them.”

OpenSecrets.org lists the top 100 donors to the 2004 election, and only four of them – BellSouth, Microsoft, SBC and Verizon – are network companies. Taken together, these four companies and their employees have given $3,229,455.

The Web site also tracks three industry segments – computers/Internet, telecom services and telephone utilities – that comprise the network industry. (Federal election data is released quarterly; the Web site’s figures are accurate as of Dec. 31, 2003, and were published in February.)

The computers/Internet segment, which includes Cisco and Microsoft, has given $8.2 million to federal campaigns so far. That level of total campaign-giving ranks 13th among all industry segments, down from eighth in 2000.

The telecom services/equipment segment, which includes Motorola and cellular carriers such as Cingular Wireless, ranks 44th among all industries, down from 25th in 2000. This segment has given $2.7 million so far.

The telephone utilities segment, which includes BellSouth, SBC and Verizon, has given $3.7 million for a ranking of 37th among all industries. In 2000 and 2002, this industry segment was 22nd.

In 2000 – the last year both presidential and congressional elections were held – more than half of the contributions from all three segments were in the form of soft money. The computer/Internet segment contributed $20.4 million in soft money out of a total contribution of $39.6 million. Similarly, $11.3 million of a total contribution of $18.2 million from the telecom services/equipment sector was in soft money contributions, and $8.8 million of a total contribution of $16.7 million from the telephone utilities segment was in soft money contributions.

“We’ve had a reduction in workforce in telecom. People have not received raises, and they haven’t gotten bonuses. Those are some of the reasons for the campaign coffers not getting as full this year,” says Grant Seiffert, vice president of external affairs and global policy for the Telecom Industry Association, a trade group that represents telecom equipment and services companies.

Seiffert says telecom executives are interested in issues such as encouraging broadband deployment, keeping VoIP deregulated and increasing federal research and development support, but so far these issues have not received much attention from presidential or congressional candidates.

Presumptive Democratic nominee Sen. John Kerry (D-Mass.), “has said some things about R&D, and Bush has said some things about the economy. But they haven’t highlighted telecom in their speeches,” Seiffert says. “I imagine this fall you’ll see the parties roll out their platforms, and they each will have something about high-tech and telecom.”

In other trends, it appears the network industry is favoring Republican candidates over Democrats for the 2004 election. The computers/Internet segment has given 55% of its contributions to Republican causes so far, according to OpenSecrets.org. Telecom services/equipment vendors have given 59% to Republicans, and telephone utilities have given 63% to Republicans. In contrast, the computers/Internet and telecom services/equipment sectors favored Democrats in the 2000 election.

These early trends in campaign contributions could shift in the nine months leading to Election Day. Some companies and individuals skip the primaries and wait to contribute when the Democratic and Republican candidates have been selected. Now that Kerry has emerged as the presumptive Democratic candidate, he is likely to gather more donations from network executives.

“The real question is what happens between now and July,” Noble says. “There are people and industries that are sitting on the fence and waiting to see what happens.”