The phone call hit like a one-two punch.
Days before Thanksgiving, AT&T's heavyweight lobbying team was busy setting up meetings with antitrust authorities scrutinizing the company’s $39 billion acquisition of T-Mobile.
A graphic look at the state of the wireless maket.
Nov. 25 (Bloomberg) -- A discussion of AT&T's decision to withdraw its Federal Communications Commission application to acquire T-Mobile USA from Deutsche Telekom.
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Julius Genachowski, chairman of the Federal Communications Commission, was on the line for AT&T’s chief executive, Randall Stephenson, and its chief of lobbying, James Cicconi. In a few hours, Genachowski said, he would announce his opposition to the deal. AT&T was stunned.
In a city overrun with lobbyists and corporate interests, AT&T is king of the heap — the bare-knuckled brawler that spares no energy or expense to win any fight. Since 1998, the company has given more money in campaign contributions than any other firm in corporate America. It’s also one of the top 10 corporate spenders on lobbying, according to the Center for Responsive Politics.
And it gets results. In the past 15 years, AT&T has successfully acquired a dozen firms and regularly wins its regulatory battles on Capitol Hill and at the FCC.
With that record, the company was confident it could push through the T-Mobile deal. AT&T, which has been hit with complaints from customers about dropped calls, wanted to improve its broadband coverage to compete with rival behemoth Verizon. This deal, At&T argued, would allow it to do that. Plus, the climate in Washington seemed right. Months before, officials had okayed another blockbuster deal, the $30 billion joint venture between Comcast and NBC. And surely the administration would be on board, AT&T reasoned. In his State of the Union speech, President Obama had deemed expanding broadband access a national priority.
With the company’s biggest bet in years on the line, AT&T’s government operatives, led by Cicconi, a former staffer for George H.W. Bush, relied on the political playbook that has worked for the company countless times. It hired seven former congressional lawmakers to help lobby for the deal. Besides pouring tens of millions into political advertising, the firm had the support of lawmakers whose campaigns it had funded and third-party groups it supports financially, from the NAACP to the Louisiana Ballooning Foundation.
And in its estimated $40 million ad campaign and discussions with government officials, AT&T latched onto an argument it was sure would win over Washington — jobs — saying the merger would put thousands of Americans to work.
So how did one of Washington’s most feared lobbying operations wind up in a losing battle with regulators?
The old playbook backfired, according to dozens of interviews with government officials, lobbyists and consumer groups.
The letters from third-party groups raised eyebrows at government agencies and on the Hill, where people began wondering why groups with no obvious ties to broadband were writing in. News reports emerged showing that many of the groups had financial ties to AT&T.
Then there were the ads that staff members at the FCC said they couldn’t avoid when they opened a newspaper, fired up their iPads or watched TV — all touting the merger’s ability to put thousands of Americans to work. But who had ever heard of a big company merger creating rather than destroying jobs?
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