In 2001, when it hired ex-Senator John Montford as its vice president of external affairs and outgoing Public Utility Commissioner Judy Walsh as its vice president of regulatory policy, Bell had seven former state legislators on its lobby payroll.³ It also was one of the top clients that paid Dan Morales a total of more than $1.1 million in 1999. Although Morales said he did not lobby, this money fueled a scandal because—as state attorney general two years earlier—Morales backed a Southwestern Bell lawsuit that sought entry to long-distance phone markets before Bell complied with a federal mandate to open its local phone network to competition. On Bell’s dime, Morales later backed the company’s Ameritech merger before federal regulators.⁴

Bell’s lobby clout is legendary. A 1999 telecommunications law (SB 560) invited Bell to jack up fees on many services such as caller identification. A provision that Bell did not like, however, required companies that sell advanced telecommunications services to offer these services in rural areas at reasonable rates. In a rare defeat in 2001, Bell lobbyists failed to pass a bill that would have watered down this rural-service mandate—even as it offered state subsidies to comply with it (SB 1783).