The wealth of tech companies is reshaping the Bay Area, but Silicon Valley is being financially overwhelmed in Washington in one of the biggest political fights of a generation.
The Federal Communications Commission is in the early stages of listening to public input on a proposed rule change that would no longer force Internet service providers to treat all online traffic equally. Tech companies -- from Google to the smallest startup -- oppose the change, and want to preserve what they call net neutrality.
The tech world says that abolishing net neutrality would make it more difficult for disruptive companies to challenge entrenched competitors. Industry leaders fear that the change would create a two-tiered Internet with a fast lane for those who can pay more and a slow lane for everyone else. Customers would wind up footing the bill.
But valley tech firms are a step behind their political opponents -- telecommunications giants including Comcast, Verizon and Time Warner Cable who say that because they built the network they should be able to manage its costs.
Contributions to legislators
During the 2014 election cycle, telecom firms and their supporters have contributed $2.1 million to members of the House and Senate committees overseeing matters related to net neutrality, according to an analysis done for The Chronicle by the nonpartisan Sunlight Foundation.
That's roughly three times the amount contributed by Google and other tech companies that support maintaining net neutrality. A similar disparity was found during the 2012 election cycle.
The reason for the disparity is ingrained in how business gets done in Washington.
Telecommunications and cable interests have spent generations cultivating contacts on Capitol Hill and at the FCC. The head of the deep-pocketed National Cable and Telecommunications Association is Michael Powell, a former FCC chairman. Current FCC Chairman Tom Wheeler is a former president of the same trade group.
Meanwhile, aside from Google, which has developed a strong lobbying arm in Washington, many tech firms have only recently begun turning their attention to the business of political schmoozing.
So it's not surprising that they are also being outgunned by a factor of 3 to 1 when it comes to federal lobbying on the net neutrality issue, according to a Sunlight Foundation analysis. Sunlight, which studies the role of money in politics, arrived at its conclusion by looking at "organizations that mentioned 'net neutrality' or 'network neutrality' most often in their lobbying reports between 2005 and 2013."
Washington insiders and analysts say the telecom industry is also winning in the traditional face-to-face lobbying that's crucial in politics.
"You need (Amazon CEO Jeff) Bezos and (Google Executive Chairman Eric) Schmidt and (Google co-founder) Sergey Brin up in Washington. All the time. Visiting the halls of Congress. Testifying before committees. Speaking to the White House and talking to the FCC," said James Tuthill, formerly Pacific Bell's chief attorney for its matters before the FCC. "I don't see that."
Tuthill, who now teaches telecommunications law at UC Berkeley's School of Law, says Silicon Valley's lobbying efforts lack sophistication compared with the telecoms.
"It surprises me, because their management, their resources are equal and they have the intelligence, but they don't focus on it," he said.
Last month, nearly 150 Internet companies - including Google, Facebook, LinkedIn and Amazon - signed a letter to the FCC calling the proposed changes "a grave threat to the Internet." But those behind the letter said the effort was driven by smaller firms and that many of the larger companies didn't sign on until the last minute.
"All I've seen in terms of real lobbying work, except for signing one lobbying letter, has been little tech - the little guys, which makes sense because they live and die by net neutrality," said Tim Wu, the Columbia University professor who coined the term "net neutrality."
Public interest groups
Among supporters of net neutrality, most of the shoe-leather work - meetings with congressional and FCC staff -- has been done by public interest groups like Public Knowledge and Free Press, not tech companies, according to commission and congressional sources.
Some net neutrality supporters wonder whether the larger tech companies aren't trying harder because they win either way. Larger firms can afford to pay for access on a faster lane on the information superhighway. Those that can't are the startups -- companies that could one day grow into competitors.
If larger tech companies "have to pay higher transaction fees, they'll say, 'Ah, this sucks, but OK, we'll do whatever it takes because my business has got to work,' " said Jonathan Nelson, founder of Hackers and Founders, a networking association based in Silicon Valley with 12,000 engineers and other members locally.
"They're also incumbents at this point. Do they want a whole lot of competition from upstarts? No," said Nelson. "They're kind of the establishment now."
Netflix has given confusing signals on the issue, according to Tim Karr, senior director of strategy for Free Press, an activist group pushing to preserve net neutrality.
The streaming movie company, which sucks up one-third of the Internet's bandwidth during evenings, signed the letter to the FCC, and CEO Reed Hastings has been an outspoken supporter of what he calls "strong net neutrality." But after a court struck down FCC rules protecting net neutrality in January, the company cut a deal with Comcast to ensure that its movies and TV shows reach viewers. In April, it signed one with Verizon. The terms of the agreements have not been disclosed.
Netflix spokeswoman Anne Marie Squeo insists that the deals don't stand in the way of the company's support for net neutrality.
"To clarify, we didn't buy a fast lane," she said. "We are reluctantly paying for access to larger ISP networks in order to ensure our members get the high-quality Netflix experience they expect."
Silicon Valley has never judged itself by Washington's metrics. Measuring clout by the size of a lobbying army or the amount of political contributions is an old-school way of looking at effectiveness, some say.
Startups lack power
The tech industry is united on the issue, according Michael Beckerman, president and CEO of the Internet Association, which represents 27 companies, including Netflix, Google, eBay, Facebook and Uber, on policy issues.
"The Internet Association stands with Internet users to protect a vibrant and free Internet and looks forward to working with the FCC as it continues its rule making process," he said.
While the major tech companies have a voice in Washington, some startups don't have the time or bandwidth to be heard.
Part of the problem, Nelson said, is that people who work at startups -- those who would be hurt most by the rule change - are too busy trying to get their businesses off the ground to pay attention to Washington.
"You get people saying, 'D.C. just sucks, and they don't know what's going on, and we're just going to ignore them,' " Nelson said.
©2014 the San Francisco Chronicle