But as the reviews at Justice and the FCC got underway, arguments against the deal were beginning to sway other lawmakers on the Hill and, more important, the regulators.
After a Judiciary Committee hearing in May, in which AT&T chief Stephenson testified, Sen. Herb Kohl (D-Wis.) sent a strongly worded letter to regulators urging them to oppose the deal.
“I have concluded that this acquisition, if permitted to proceed, would likely cause substantial harm to competition and consumers, would be contrary to antitrust law and not in the public interest, and therefore should be blocked by your agencies,” he wrote.
Meanwhile, some of AT&T’s aggressive tactics were not having their desired effect.
Hundreds of letters were pouring in to lawmakers’ and regulators’ offices from public-interest groups that seemed unrelated to the deal.
The Virginia Asian Chamber of Commerce, which counts AT&T as a sponsor, told the FCC to approve the deal quickly, arguing that as a group “striving to create bridges between cultures, we look forward to the foundation that this merger will create and the opportunities that it will give the public.” The FCC also received letters from a homeless shelter called the Shreveport-Bossier Rescue Mission, the National Urban League and many other groups that had received financial support from AT&T.
It was all ringing a little false to lawmakers and regulators, who took the mailings as a sign that AT&T could not support the merger on legal grounds alone.
AT&T’s blitzkrieg of ads, which claimed that the promised expansion of broadband would create 100,000 jobs, wasn’t helping, either.
A deal’s impact on jobs is not typically part of an evaluation by antitrust officials, but this time regulators thought AT&T’s campaign had forced them to take a closer look. They found holes. For one, the company refused to divulge how many jobs it would eliminate in the merger.
At the news conference announcing the Justice Department’s suit to block the deal, Deputy Attorney General James M. Cole said doing so would “protect jobs in the economy.”
Incredulous staff members at the FCC also sent a harshly worded letter in the fall saying the company had “produced almost nothing” to prove its job claims. Their skepticism grew when an AT&T lawyer accidently uploaded internal documents to the agency’s Web site that showed the company was planning to expand its broadband network even if the merger didn’t go through.
And on the key question of whether the deal would harm competition, AT&T was unable to sway both agencies. They concluded that the merger would create a troubling near-duopoly, with AT&T and Verizon controlling nearly 80 percent of all cellphone contracts.