After losing round 1, AT&T gears up for next fight to buy T-Mobile
By Cecilia Kang,
Few corporations know their way around Washington — and spend as much money lobbying for their causes — as the nation’s original phone monopoly, AT&T.
So it was a surprising setback for AT&T and its hard-charging top political operative, James W. Cicconi, when the Justice Department sued to block the company’s $39 billion bid for T-Mobile.
Analysts say AT&T’s mistake was to focus on political arguments — that the deal would create jobs and bring wireless Internet access to more Americas. Justice officials brushed aside those claims, ultimately concluding that the merger reduced competition and violated antitrust laws.
But the deal is hardly dead for AT&T as the court challenge gets underway Wednesday, the analysts say.
The company spent $11 million in the first six months of the year on lobbying, more than any individual company except for General Electric. It employs 99 lobbyists, including former Republican senator Trent Lott of Mississippi and former Republican congressman Billy Tauzin of Louisiana, according to data by the Center
for Responsive Politics’ OpenSecrets.org.
Cicconi’s vast operations have also revved up a fresh campaign to win support for the deal.
This week, AT&T launched an advertising blitz in Washington newspapers touting the benefits of the deal while calling rival Sprint Nextel anti-competitive for trying to block the deal.
It is the latest salvo for a company accustomed to herculean legal battles, reaching back to its government-mandated breakup in 1984. Observers say the company won’t easily give up its ambitions to swallow T-Mobile’s customers and become the wireless industry leader with 132 million users.
“AT&T has so many tools at their disposal to try to make their voice heard,” said Michael Beckel, a spokesman for the Center for Responsive Politics. “We still see AT&T fighting hard and bringing a lot of their resources to their merger fight.”
In another sign of AT&T’s reach on Capitol Hill, both Republicans and Democrats sent letters to President Obama in recent days, asking for his Justice appointees to drop their suit and citing benefits the deal would create for the economy.
Gigi Sohn, president of the public interest group Public Knowledge, said AT&T has given $1.1 million to the campaigns of lawmakers who signed those letters.
AT&T didn’t respond to a request for comment about campaign fundraising tied to the letters. Last year, aside from money spent on lobbyists, AT&T gave $4.6 million — one of the biggest sums from a corporation — to candidates in both parties through its political action committee, according to OpenSecrets.org.
On Wednesday, T-Mobile and AT&T are expected to ask Judge Ellen Huvelle of the U.S. District Court of the District of Columbia for an expedited trial. Justice is expected to ask for a hearing during spring 2012.
The two companies are hoping for a compromise that would allow AT&T to buy T-Mobile if it sold off spectrum and wireless customers to its competitors, according to a person familiar with the thinking of company officials. The person spoke on the condition of anonymity because the talks are private. Huvelle has asked both parties to provide an update on any potential agreement.
With $125 billion in annual revenues and sprawling businesses that span the Internet, cable television and wireless services, AT&T will be hard pressed to argue that it should get bigger, some experts say. If it acquires T-Mobile, it would reduce the number of major national carriers from four to three.
AT&T’s long history of entanglements with antitrust officials won’t easily be forgotten in this case, said Shubha Ghosh, a professor at the University of Wisconsin Law School. “There are over 100 years of controversy surrounding AT&T that can’t be overlooked,” he said.
AT&T wouldn’t comment on the court hearing. Cicconi declined to participate for this article.
But the 59-year-old Washington power broker, a Texas native and a former adviser to President George H.W. Bush, is hardly to be underestimated.
His deep connections to lawmakers are an integral part of Cicconi’s ability to convince Washington to see things AT&T’s way, Beckel says.
He is also known for his resolve. In 2009, when Cicconi was fighting against a proposed Federal Communications Commission rule that would dictate how AT&T and other Internet service providers handle traffic on their networks, he sent an e-mail to all 300,000 company employees, asking them to write the agency in protest.
During that fight, he took his staff to Gettysburg, Pa., to learn battlefield tactics. In marathon sessions with senior FCC officials, he brought a “hallway full” of lawyers whom he would consult for legal advice.
“He stays on point, and his strategy can really wear you out,” said a person who had knowledge of the confidential meetings.