Sprint’s fierce fighter against the AT&T, T-Mobile merger
By Cecilia Kang,
AT&T introduced Vonya McCann to the cellphone three decades ago.
A group of men came to her office at the Commerce Department to demonstrate how a plastic push-button phone cradled in a hard Samsonite briefcase could place calls without wires.
Now, as the head of Sprint Nextel’s Washington lobbying office, she’s emerged as a leading figure fighting to stop AT&T’s march to dominate the cellphone industry.
Today, there are 302 million mobile phones in the United States, and AT&T is trying to become by far the biggest carrier of those devices with its bid to buy T-Mobile.
But not if McCann can help it. Much is on the line. Some say Sprint is doomed if the merger goes through. But she’s up against the formidable lobbying army of the country’s original phone monopoly, AT&T.
So the 56-year-old telecom veteran, who happens to be married to U.S. District Court Judge Richard Roberts, is on overdrive as she tries to convince regulators at the Federal Communications Commission and the Justice Department that the $39 billion deal is a bad one for her company and consumers.
Her talking points: The merger would make AT&T the biggest U.S. wireless carrier, with about 130 million users, and reduce the number of national carriers to three. With less competition, consumers can expect higher prices and fewer options among service providers for smartphones and tablets.
“Everyone should care about this merger,” McCann said in a recent interview. “It can have direct effects on the pocketbooks of consumers.”
Consumer advocacy groups have sided with Sprint against the deal. Consumers Union said the typical T-Mobile customer paid $50 less per month than an AT&T customer and was happier with the customer service. About 4,000 public comments have poured into the FCC — the majority from consumers asking that the merger be blocked.
In their defense, AT&T and T-Mobile have argued that, combined, they will more quickly spread high-speed mobile access to rural areas. AT&T promises that T-Mobile customers can fulfill their existing contract terms after the merger. But it’s unclear what a new AT&T contract would look like for those customers.
Merger reviews will probably take more than a year. In that time, Sprint will need all the help it can get. From the top down, employees are blasting the merger.
Sprint chief executive Dan Hesse, the guy featured in Sprint’s black-and-white TV commercials, publicly decries the merger, saying it will create a “duopoly,” with AT&T and Verizon Wireless controlling 80 percent of the wireless market. He will testify alongside AT&T and T-Mobile chief executives Wednesday before the Senate antitrust subcommittee.
Behind the scenes, McCann is the quiet operator, working her decades-in-the-making network of telecom industry connections to spread the idea that the deal is bad for consumers.
“I’ve got plans up my sleeve,” she said, “but I’m not ready to reveal them yet.”
McCann is little known outside the telecom circles of Washington but has held several positions of influence in government and the private sector. She is thoughtful in her choice of words. Her office is sparsely decorated except for two sinewy orchid plants near her desk. McCann is described as an amiable but tough-as-nails negotiator.
She was the State Department’s ambassador for communications and technology from 1994 to 1999. In that role, she worked for the Clinton administration and with the Federal Communications Commission to persuade governments to privatize their telecom networks. She succeeded in getting European nations to give up satellite airwaves and turn companies held by their governments into public firms.
“Vonya was going up against world governments. Talk about a tough crowd,” said Ambassador William Kennard, who was FCC chairman at the time. “This merger between AT&T and T-Mobile appears like a small fight in contrast.”
Her style is to use humor and charm, friends and former colleagues said. And then she makes big demands before eventually landing at a compromise.
That approach served her well in her early days in the telecom industry.
In the early 1980s, there were few women, let alone African American women, at the FCC or Commerce Department or in the top levels of business.
“She had to command respect from bureau chiefs, officials and so many others down the chain,” said Tyrone Brown, a former FCC commissioner who hired McCann out of law school in the early 1980s. “And she did.”
The FCC and Justice haven’t blocked any significant deals during the Obama administration. It just blessed Comcast’s joint venture with NBC Universal, creating a cable, Internet service and media behemoth.
But McCann’s diplomatic style could work well in negotiations on conditions of a merger approval, observers said. For instance, he FCC could impose conditions that make AT&T offer lower wireless data prices to users — a potential boon for consumers. It could require AT&T to lower prices for Sprint and other wireless carriers to lease parts of their wire networks to carry calls and transfer Internet data.
McCann’s experience is hardly matched in the industry, observers said.
She has also worked on many sides of federal merger reviews. For Sprint, she’s helped win three (including the albatross of a merger with Nextel) and lost one. And she’s seen empires dismantled. McCann was an aide to Brown at the FCC, which was involved in the long process that broke up the Bell System.
But she also has limited resources.
Her staff of four in the office has turned its focus to lobbying against the merger through comments, meetings and petitions to the FCC, Justice and lawmakers. She’s overseeing efforts to block the deal in states, too. Sprint filed a petition in West Virginia last week to have local utilities commissioners investigate the deal for potential consumer harms.
Sprint joined a rural carriers group and formed a coalition with public interest groups and carriers such as Cellular South to fortify its base. It’s hired attorneys at three firms to help but found that at least two firms it had on retainer had conflicts because AT&T got to them first.
“This is go-for-broke,” she said. “It’s overused, but really this is David going up against Goliath.”
Her counterpart at AT&T, James Cicconi, is mounting his offensive. He is a big figure in Washington. He has been an outspoken presence at FCC debates on net neutrality and arcane telecom rules such as how Ma Bell should be compensated for sharing its copper wire lines with wireless providers to reach more customers. Cicconi has hundreds, if not thousands, of employees (he won’t confirm a number) under his management in global offices, at the company’s philanthropy division and at regulatory lobbying offices in every state. The former deputy chief of staff to President George H.W. Bush took a seat on the stage with AT&T chief executive Randall Stephenson and Rene Obermann, his counter part at T-Mobile’s parent company, Deutsche Telekom, when the deal was announced in March.
The David and Goliath analogy is a shaky one to apply to Sprint, which has 50 million users and, like AT&T, spends about a billion dollars on advertising each year, according to industry experts’ estimates.
The deal, analysts say, could hobble Sprint, the nation’s third-largest carrier, which has struggled to keep up with AT&T’s and Verizon’s dramatic growth and enviable partnerships with Apple for its iPhone. Sprint was rumored to be eyeing T-Mobile, which made sense to investment analysts who said a stronger third competitor would get a nod from federal regulators.
And although Sprint suggests the deal is bad for consumers, it also has a reputation for angering its users. Along with other carrier, Sprint was a target of a class-action suit over expensive fines for customers who ended contracts early. After its merger with Nextel in 2005, Sprint saw an exodus of subscribers who complained about poor customer service.
The company has worked to improve its image, and last week Sprint said it gained more new customers during the first quarter than it had in five years, with the addition of more than 1.1 million total wireless net subscribers.
But observers say the Overland Park, Kan.-based company would have a hard time competing against a fortified AT&T and an already strong Verizon Wireless, which has about 95 million subscribers.
And it can’t really go after the cheapest customers, a demographic that’s already committed to carriers such as Leap and MetroPCS.
“Sprint is in a tricky spot,” said Paul Gallant, an analyst for MF Global, an investment firm. “It could eventually end up in no man’s land.”