AT&T Lobbyist Faces Beltway Test in T-Mobile Deal
By EDWARD WYATT
Washington
IN this covetous town, the delicacies of the Georgetown Cupcake shop stand alone as symbols of wish fulfillment — heaping swirls of luscious confection atop rich, creamy pastry.
Therefore: Operation Cupcake. As the Federal Communications Commission debated final rules last December on how Internet service providers should manage their traffic, AT&T delivered 1,500 of these opulent desserts to the F.C.C.’s headquarters here.
Like many other big corporations, AT&T annually blankets power brokers with token holiday gifts, but the cupcake campaign was notable for its military precision. A three-page spreadsheet, stamped “AT&T Proprietary (Internal Use Only),” detailed how the desserts were to be deployed to each of the 63 commission offices: four dozen were assigned to the enforcement bureau, 10 dozen to the wireless divisions, 12 cupcakes to each of four commissioners, and 18 to the chairman, and so on.
As it turns out, AT&T had begun its $39 billion courting of T-Mobile about the same time. The resulting deal, announced a week ago, would transform the industry if approved. It would narrow the field of major wireless providers to three and vault AT&T into the No. 1 spot, ahead of Verizon; consumer advocates say the combination will lead to higher prices.
As interested parties lobby for and against the merger, one person will be pulling at the levers of power more often and with more influence than anyone else, according to both friends and foes: AT&T’s chief lobbyist, James W. Cicconi. A master strategist, Mr. Cicconi (pronounced si-CONE-ee) internalizes the art of regulatory and legislative war — and Operation Cupcake is but one of the efforts to come out of his shop.
Tutored by James A. Baker III in the ways of politics in the administrations of Ronald ReaganGeorge H. W. Bush, Mr. Cicconi, 58, plays hardball — literally, as a pitcher in an adult baseball league, flinging fastballs toward batters more than a decade younger. and
His roots are in Texas, and he never forgets the lesson of the Alamo: the Texans lost. Other battles have different lessons for him. He once took his staff on an overnight retreat to Gettysburg, Pa., where it toured Cemetery Ridge and Little Round Top and absorbed lessons on battlefield tactics.
In 13 years at AT&T, Mr. Cicconi has helped guide the company through roughly a dozen mergers, large and small, and he has made his share of enemies in Washington. As a testament to his power, however, few of them will criticize him on the record.
“He’s smart, he’s savvy, he’s strategic,” says Gigi B. Sohn, president of Public Knowledge, a media and consumer advocacy group that has often wrestled with him. “I don’t think there’s a lobbyist in town who I disagree with more on the issues, but I have the utmost respect and admiration for the way he does his job. He’s always thinking three steps ahead of the competition.”
MR. CICCONI, senior executive vice president for external and legislative affairs, is not alone, of course, in spreading AT&T’s corporate message. Five other executives rate a similar rank, and four more are group presidents or chief executives, all under AT&T’s chairman and C.E.O., Randall L. Stephenson.
Nor is Mr. Cicconi’s lobbying effort a one-man show. He oversees a division that spent $115 million on lobbying over the last six years, putting it among the top five corporate spenders in the country, according to the Center for Responsive Politics, which tracks lobbying and campaign spending.
AT&T employs an army of outside lobbyists, including at least six prominent former members of Congress, including the former Senate majority leader Trent Lott, a Mississippi Republican, and former Senator John Breaux, a Louisiana Democrat.
Over the last two decades, AT&T employees and its political action committees have pumped more campaign contributions into federal politics than any other American corporation, the Center for Responsive Politics reports. In the last election cycle, AT&T contributions found their way to 390 representatives and 70 senators.
“They are a behemoth,” says Dave Levinthal, editor of Opensecrets.org, the center’s online lobbying database. “When you have dozens of former federal officials doing your bidding in Washington with a detailed knowledge of how Washington works, it is exponentially easier to grease the skids of government.”
As Congress discusses the merger, Republicans and Democrats will duel over the balance of market forces and regulatory intervention. The White House will strive to balance the president’s campaign promises to get tough on antitrust issues while trying to prove he is not anti-business.
In advocating for the T-Mobile merger, AT&T and Mr. Cicconi have their work cut out for them. The Justice Department’s antitrust unit will aim to determine whether the deal will substantially limit consumers’ choices. After the merger, AT&T and Verizon would together control nearly 80 percent of the cellular market, with Sprint a distant third.
(Verizon declined to comment on Mr. Cicconi or on AT&T’s deal to acquire T-Mobile.)
And the F.C.C., which along with Justice must approve the merger, wants to reapportion the scarce broadcast wavelengths on which wireless broadband operates. The T-mobile deal would result in fewer potential bidders in its airwave auctions.
Still, “it seems hard for me to believe that a $40 billion deal like this would be pushing forward if somebody like Jim Cicconi didn’t feel that they had it in the bag already,” says Craig Aaron, managing director of Free Press, a nonprofit group that often advocates for consumers on media and telecommunications issues.
MR. CICCONI is technically not a lobbyist; as a corporate executive, he is not required to register as one. And, he said in an interview, he does not consider himself particularly powerful in the telecommunications business.
He allows that he does his best “to represent the shareholders of AT&T, and we’ve got a very talented group of people here who help us do that.” Certainly the company has won its share of battles, but “we’ve had our share of things where we come up short,” he says.
Consumer and public interest groups, however, say AT&T is formidable in its ability to mobilize platoons of letter writers and members of Congress to support its aims.
They point to the fall of 2009, when the recently installed F.C.C. chairman, Julius Genachowski, proposed regulations that would restrict how companies that offer Internet connections to consumers manage their networks.
Shortly after Mr. Genachowski made the proposal, the F.C.C. received more than 400 letters in three days opposing the plan. They came from small-business owners, state and federal legislators and a significant number of organizations representing African-American, Hispanic and other minority groups.
Among the letters was one signed by 72 Democratic members of Congress who urged Mr. Genachowski “to carefully consider the full range of potential consequences” of his proposal.
“These letters were from groups that had never weighed in on these issues before,” Mr. Aaron says. He called the effort an “Astroturf,” or fake grass-roots, campaign. AT&T declined to comment on that assertion.
The F.C.C. in December approved a set of regulations that generally prevent Internet service providers from blocking or slowing one form of content in favor of another, but AT&T won some concessions. Those regulations are being challenged in court by Verizon and others.
Presumably, the F.C.C. will be receiving plenty of letters in support of the T-Mobile acquisition, too. The deal is of huge strategic importance in that it would give AT&T the rights to additional bands of wireless spectrum on which wireless broadband and mobile phones operate.
The agency has authority over those licenses and must determine whether their transfer is in the public interest. The agency has usually approved mergers of wireless carriers, but often requires them to give up licenses in markets where there would be little competition among carriers. Most likely, those would be in smaller markets.
AT&T officials have said that while the company believes that no such divestitures are necessary, it is prepared to consider the commission’s recommendations. That seems to indicate that the company is willing to do what it takes to get the deal done. Its interest is primarily in securing T-Mobile’s licenses in cities, where wireless broadband traffic is heaviest and where AT&T has had the most trouble keeping up with demand from iPhone users.
Officials at the F.C.C. bristle at the notion that AT&T’s lobbying prowess will carry any special weight there or give it extra access to the chairman.
“This proposed transaction raises significant issues,” said an F.C.C. official, who requested anonymity because the agency is not commenting publicly on the merger before making a decision. “We are gearing up to conduct a very intensive review.”
That AT&T is undergoing such diligent antitrust scrutiny is odd in some ways, given the company’s origins. In 1984, as a result of a landmark antitrust lawsuit, American Telephone & Telegraph broke itself up into seven regional Bell operating companies and a much smaller AT&T, which provided long-distance service.
For much of the 1990s, AT&T fought on the same side as consumer advocates against the regional Bell companies, trying to end their control of local telephone service. One of those companies, SBC Communications, formerly Southwestern Bell, bought AT&T in 2005.
By that time, SBC had already built a large cellphone business, mainly through acquisitions, a trend that accelerated after it acquired AT&T and adopted the historic company name. Now, although AT&T still provides local and long-distance wired telephone service, it considers its primary business to be wireless service.
Representative Edward J. Markey, a Massachusetts Democrat who has worked on telecommunications issues in Congress for 35 years, said Mr. Cicconi and AT&T are formidable, both as opponents and when all of them work on the same side.
“He has done a very good job in representing AT&T as it was reconstituted,” Mr. Markey said. “He has been able to move AT&T to a middle ground on some issues,” including recent F.C.C. Internet regulations. “That is to his credit, because it has created some good will.”
DELICIOUS cupcakes create good will, of course, something that Mr. Cicconi recognizes.
After Public Knowledge posted the company’s cupcake battle plans online, AT&T sent the organization its own box of goodies.
“We try not to take ourselves too seriously or to make any permanent enemies over any one argument,” Mr. Cicconi said. “There are some people who like me and some who don’t. That’s the price of trying to be effective.”
