AT&T Chief Fills GOP Accounts after Democrats Hit His
AT&T Inc. (T) Chairman Randall Stephenson lost $2.08 million in bonus pay after Democrats killed his bid to build the biggest mobile provider. Six weeks after the deal collapsed, he made his largest campaign donation in more than two decades of giving to Republicans.
Stephenson’s $30,800 contribution to the Republican National Committee punctuated months of sniping between the biggest U.S. telephone company and the Democratic-controlled Federal Communications Commission.
Stephenson and FCC Chairman Julius Genachowski, a Democrat, have disagreed over spectrum policies and whether killing AT&T’s proposed $39 billion merger with T-Mobile USA Inc. led to price increases.
“There’s still a lot of ill will from the T-Mobile deal,” Christopher King, a Baltimore-based analyst with Stifel Nicolaus & Co., said in an interview. “The risk is you tick off regulators and they don’t like to see themselves trashed every time they turned around. They have to be careful in terms of going too far.”
For Stephenson, the merger’s demise Dec. 19 had personal and business effects.
His short- and long-term bonuses were reduced due to the failed takeover, according to a Feb. 21 AT&T filing that also said the transaction “reinforced the need for policymakers to make essential spectrum available” to relieve pressure from soaring smartphone demand.
Stephenson made his $30,800 donation, the legal maximum, on Feb. 6, according to the Center for Responsive Politics, a Washington-based research group that tracks campaign donations. The Republican committee is trying to defeat President Barack Obama, a Democrat, in the November U.S. election.
Stephenson’s largest previous donation in records back to 1990 was $5,000, according to the center.
AT&T doesn’t comment on personal political contributions, Brad Burns, an AT&T spokesman, said in an e-mail.
Stephenson is “disappointed by the actions of the FCC, and he’s letting them know it,” Roger Entner, an analyst with Recon Analytics in Dedham, Massachusetts, said in an interview.
Sixty-five percent of donations from AT&T employees and their families are going to Republicans for the 2012 elections, according to the Center for Responsive Politics. That’s up from 55 percent in 2010, when the Democrats were in charge of both houses of Congress and the presidency, and is the highest percentage since the center began keeping records in 1990.
Republicans got 63 percent of the AT&T donations when they controlled the White House and Congress in 2006.
Stephenson, 52, trained as an accountant, has been chief of AT&T since 2007. He reached the post after 23 years mainly in financial positions with SBC Communications, which purchased AT&T in 2005.
The failed T-Mobile deal was a rare defeat on his watch after AT&T had spent the past 16 years amassing $204.3 billion in acquisitions. Its demise after FCC opposition and a Justice Department lawsuit, on the basis it would reduce wireless competition and raise prices, cost AT&T $4 billion in fees and airwaves given to T-Mobile’s parent, Bonn-based Deutsche Telekom AG. (DTE)
AT&T raised prices for some data plans in January, and Stephenson before and after the increase said the merger’s failure would bring higher prices for consumers.
Genachowski Hits Back
Genachowski in a May 8 speech rejected the link and said the agency under his leadership has approved “hundreds” of wireless transactions. Stephenson two days later repeated to Bloomberg News reporters his criticism that the agency is slow to free airwaves for commercial use.
“We wouldn’t expect any single stakeholder to agree with us on everything,” Genachowski said during a press conference May 24 when asked about AT&T. “I think the relationships are good.
‘‘But our job isn’t to maximize for relationships. It’s to maximize for promoting innovation, promoting job growth, promoting consumer benefits.”
AT&T has areas of agreement and disagreement with the FCC, said Jim Cicconi, the company’s top Washington executive.
“There are always some in Washington who try to over- dramatize any policy dispute,” Cicconi said in an e-mail. “All agreements and disagreements are on public display at any given time. There is nothing unusual in that.”
AT&T on its policy blog Dec. 1 called the FCC’s analysis of the T-Mobile deal “obviously one-sided.” In an earnings call with investors Jan. 26, Stephenson called spectrum availability the most important issue for his company’s future.
“Unfortunately even the smallest and most routine spectrum deals are receiving intense scrutiny from this FCC,” he said.
News of T-Mobile closing seven call centers was greeted with a March 23 posting holding the government responsible.
“The price of a bad decision is too often paid by someone else,” Cicconi, senior executive vice president of external and legislative affairs, said in the posting.
AT&T’s own internal documents had forecast job losses from the merger, Neil Grace, an FCC spokesman, said in an e-mail that day. He declined to comment for this story.
The company has commended the FCC for encouraging flexible pricing for high-speed Internet service, and for examining ways to convert satellite airwaves to mobile data use.
Criticism aside, AT&T needs the FCC on its side, as it must get commission approval of airwaves purchases. Stephenson on the Jan. 26 call said the company will seek smaller deals.
AT&T is “using the FCC as a punching bag and softening them up for when the next big issue comes up -- which is who gets what spectrum,” Sohn, who opposed the merger, said in an interview.
The FCC under Genachowski has declined to declare that the U.S. wireless market is competitive, and it said Philip Falcone’s LightSquared Inc., which filed for bankruptcy protection May 14, needs agency permission to sell its airwaves to the top two wireless carriers.
Those stances, and limitations placed on past auctions, lead AT&T to believe it may face barriers to obtaining more airwaves, Bob Quinn, AT&T senior vice president-federal regulatory and chief privacy officer, said in a Jan. 12 blog post.
Dallas-based AT&T may think it doesn’t have much more to lose by continuing its criticism, Entner said. He said the phone company in December distributed cupcakes to contacts in Washington including FCC officials.
“AT&T tried to make nice,” Entner said. “They even gave them cupcakes and that didn’t work.”
To contact the editor responsible for this story: Bernard Kohn at email@example.com