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Sugar Daddy Drinks as AT&T Chases Airwaves Aid of Senator

Lobbyists for Verizon Wireless and AT&T (T) Inc. can sip $11 Sugar Daddy cocktails tonight to help Senator John Thune, a lawmaker with influence over one of their top priorities: getting more airwaves.

The fundraiser for Thune’s political action committee at Del Frisco’s Grille is one way the two largest wireless carriers can help a fellow opponent of Democratic plans to help Sprint Nextel Corp. (S) and T-Mobile (TMUS) US Inc. win airwaves at a U.S. auction next year.

As the top Republican on the Commerce Committee, which oversees communications policy, Thune, of South Dakota, is in a position to hold up legislation or block President Barack Obama’s nominees to the Federal Communications Commission, which will run the auction.

“You have two of the biggest players on spectrum talking to a member of Congress who has some influence over the issue,” Bill Allison, editorial director of the Sunlight Foundation, a Washington-based group that promotes government transparency, said in an interview. “That’s why they’re holding the event, so they can reach out and touch him.”

Washington Rules

Lobbying surrounding the airwaves sale shows how rules are crafted in Washington, where companies with competing interests use fundraisers and ply longstanding relationships with regulators, lawmakers and their staffs. U.S. wireless companies want more airwaves, and the Justice Department has called for restricting large carriers during the spectrum auction.

Photographer: Bill Clark/CQ Roll Call via Getty Images

As the new top Republican on the Commerce Committee that oversees communications policy, U.S. Senator John Thune, a Republican from South Dakota, is in a position to lead congressional objections. Close

As the new top Republican on the Commerce Committee that oversees communications... Read More

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Photographer: Bill Clark/CQ Roll Call via Getty Images

As the new top Republican on the Commerce Committee that oversees communications policy, U.S. Senator John Thune, a Republican from South Dakota, is in a position to lead congressional objections.

“The way this ought to operate, to maximize the return on the auction, is to allow everybody to compete,” Thune said in an interview. “There shouldn’t be all these conditions imposed from on top, which is kind of what the administration is trying to do.”

Diners at Del Frisco’s, on Pennsylvania Avenue between the White House and the Capitol, may start with the Sugar Daddy (featuring tequila, lime juice and guava juice). They can talk airwaves over crab cakes with tomato, basil & Cajun lobster sauce, priced on the menu at $36, or a $29 New York strip steak with fresh tomato-basil salsa and aged balsamic reduction.

Those with endurance can move on to dessert with an Adult Milkshake made of walnut and creme de cacao liqueurs, and vanilla ice cream.

AT&T, Verizon

The prices are small compared to what’s at stake for wireless companies. The FCC’s auction is to be the largest since a 2008 sale drew bids totaling $19.6 billion -- with more than 80 percent coming from AT&T and Verizon. The 2014 sale may reap $15.2 billion, according to the Congressional Budget Office.

The airwaves planned for auction travel far and penetrate buildings, making them particularly suitable for smartphones. The U.S. hasn’t scheduled any similar sales.

If the auction aims to raise as much money as possible, it would be “a big gamble” to inhibit some companies in the hope that others bid for airwaves, AT&T Chief Executive Officer Randall Stephenson said during a discussion today at the Brookings Institution, a Washington-based research group that analyzes public policy.

T-Mobile has argued otherwise, saying in a June 5 blog posting that limits can encourage more companies to take part, “and likely would bring in more revenue for U.S. taxpayers than the lopsided auction AT&T favors.”

‘Last Train’

“It’s the last train for the really good spectrum,” Harold Feld, senior vice president of the Washington-based policy group Public Knowledge, said in an interview. “This is the last chance for Sprint and T-Mobile and anyone else who wants to be competitive to get the good stuff.”

The prospect has driven lobbying by large and small wireless companies -- and sharpened tongues.

The Justice Department in an April 11 filing to the FCC backed rules restricting the largest buyers. That would amount to unlawfully “rigging spectrum auctions to favor Sprint and T-Mobile,” Wayne Watts, AT&T’s general counsel, said in an April 24 filing.

Not so, according to Steven Berry, president of the Competitive Carriers Association, a Washington-based trade group with members including Sprint and T-Mobile.

Without restrictions, “your auction rules really become, let the big dog eat and let him eat as much as he wants,” Berry said in an interview. “You need rules limiting how much any one carrier can get in a market.”

Partisan Lines

Reactions to the Justice Department position have run along partisan lines -- as have political contributions from mobile carriers. Republicans who have attracted more donations from AT&T and Verizon criticized auction limits, and Democrats getting funding from Sprint and T-Mobile defended them.

Six House Republicans, led by Representative Fred Upton of Michigan, chairman of the Energy and Commerce Committee, told the FCC in an April 19 letter the agency “should not pick winners and losers” because that may reduce auction revenue. Upton received $5,000 donations from the AT&T and Verizon PACs three weeks before he sent the letter. Sean Bonyun, a spokesman for Upton, declined to comment.

The six Republicans received $45,000 from the AT&T and Verizon PACs this year, Federal Election Commission records show. The PACs of Sprint and T-Mobile gave $15,000.

Michael Balmoris, a spokesman for Dallas-based AT&T, and Ed McFadden, a spokesman for Verizon, declined to comment.

Democratic Stance

Democrats responded in a May 16 letter. Six lawmakers led by Representative Henry Waxman of California, the commerce committee’s top Democrat, said the FCC may restrict bidding in the auction. Only one of those lawmakers, Representative Doris Matsui of California, received a AT&T PAC contribution this year -- $2,000. None received support from Verizon.

The six Democrats received a total of $27,000 so far this year from PACs run by Sprint and T-Mobile.

Timothy O’Regan, a T-Mobile spokesman, and John Taylor, a Sprint spokesman, declined to comment.

AT&T’s PAC contributed $730,700 to campaigns from January to April. That’s three times the amount donated to members by the PACs of Bellevue, Washington-based T-Mobile and Sprint, of Overland Park, Kansas, combined. New York-based Verizon won’t file its first 2013 report until July.

Tonight’s dinner at Del Frisco’s is benefiting Thune’s Heartland Values PAC, according to an invitation to the event posted on the website of the Sunlight Foundation. An event organizer, Paula Dukes, declined to comment.

Carve Outs

Thune said he had attracted contributions from people on both sides of the issue. He said one approach may be to carve out discrete geographic areas for bidding, to give a chance to smaller companies that can’t afford to bid on large swathes with millions of subscribers.

Leadership PACs like Heartland Value provide a way for interest groups to give lawmakers money outside regular campaign contributions. The money can be used for travel around the country and contributing to colleagues’ campaigns.

In addition to the AT&T and Verizon PACs, other groups hosting the event include the PACs of two Washington-based trade groups that include AT&T and Verizon as members: US Telecom, representing wired communications companies, and CTIA-The Wireless Association. Sprint and T-Mobile are also members of the wireless association.

Acting FCC Chairwoman Mignon Clyburn encouraged “all stakeholders to engage constructively” in an e-mailed statement as the agency with a Democratic majority sets rules.

Clyburn is running the agency while the Senate considers Obama’s nomination of Tom Wheeler, a former industry lobbyist, as the permanent chairman. A commission position reserved for a Republican is also vacant, leaving the FCC with three members.

To contact the reporters on this story: Todd Shields in Washington at tshields3@bloomberg.net; Jonathan D. Salant in Washington at jsalant@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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