AT&T Merger Plan Touches On User Loyalty
John Taylor, a Sprint spokesman, said there are three items he never leaves home without — wallet, keys and cellphone.
Americans’ attachment to their mobile phones, and by extension their service providers, may be the key to whether Sprint can muster sufficient opposition to halt AT&T’s increasing dominance of the cellphone market with its proposed purchase of T-Mobile.
The chief executives for AT&T, T-Mobile and Sprint are scheduled to appear Wednesday before the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights. It is the first of what are expected to be several Congressional hearings on the deal that must be approved by the Federal Communications Commission and the Justice Department.
But while lawmakers and administrators debate the legalities of the transaction with the help of an army of professional lobbyists, consumers are already weighing in with more personal sentiments about their cellphone options.
Tmonews.com, which bills itself as the “unofficial T-Mobile blog,” ran a poll this week in which 77 percent of its participants opposed the sale. That is up from 50 percent in a survey taken by the blog just after the sale was announced,
David Beren, a 31-year-old Boca Raton, Fla., resident who edits the blog, characterized the attitude of his readers as “the AT&T Death Star coming to take our company.” Beren said that his blog followers prefer the “smaller feel you get with T-Mobile.”
“T-Mobile goes the extra mile to help customers,” he said. “AT&T has bottom-of-the-barrel customer service.”
Since the proposed sale was announced in March the Federal Communications Commission has received more than 4,800 comments, many from T-Mobile customers critical of the deal that they complain will result in higher prices and inferior service.
“So far T-Mobile rates are the only ones I can afford,” wrote Kathleen Heilgeist. “If these mergers continue, the only people able to afford their products will be the rich.”
“I thought we already broke up the telecom monopoly years ago,” wrote Chris Reiter. “I believe the AT&T and T-Mobile merger is bad for consumers, bad for business and irresponsible.”
And Rosanne Connally described how she had “time and money wasted on trying to meet up with a friend who had an AT&T phone,” which didn’t receive her calls and texts.
However, in his testimony before the Senate panel, AT&T CEO Randall Stephenson is expected to argue that his company’s purchase of T-Mobile from Deutsche Telekom will improve quality of service as well as expand network capacity, and keep prices competitive.
“It’s about giving consumers what they expect — fewer dropped calls, faster speeds and access to state-of-the art mobile broadband Internet service — whether they live in a large city, a small town or out in rural areas,” Stephenson will testify, according to a copy of his written statement provided by the company.
AT&T officials note that other cases before the FCC, notably the recent Comcast/NBC merger, have also drawn a high volume of public comments.
AT&T is counting on allies with their own grass-roots networks, including the Communications Workers of America, to support the merger.
The union leadership has argued that AT&T is best-positioned to expand a national broadband network and has a better record of working with organized labor. AT&T employs about 43,000 CWA workers.
George Kohl, the union’s senior director, said AT&T respects workers’ right to organize.
“Sprint would not,” he said.
Kohl said Sprint has fought unions and contracted with an outside telecom gear maker, Ericsson, which outsources work to India.
Taylor, the Sprint spokesman, rejected the contention his company is anti-union.
“Our view is we support our employees’ right to organize,” he said. “So far our employees have rejected union representation.”
Sprint has joined with public interest groups and other companies that oppose the sale to spearhead a grass-roots effort to gin up opposition to the deal. The No Takeover Project, unveiled at a press conference Tuesday, includes a website that directs people to contact lawmakers and the FCC as well as tweet officials.
In the battle to sway Congress and the federal agencies, AT&T is poised to vastly outspend Sprint. The company shelled out more than $6.8 million on lobbying in the first quarter of this year, compared with $583,000 by Sprint, according to filings with the Senate.
In the first three months of this year, AT&T’s political action committee has contributed $694,000 to political candidates and parties. Sprint’s PAC has made $39,000 in political contributions during the same period.
But Sprint has increased its Washington presence, tapping three lobbying shops in recent months to help make its case. The new hires include the Fritts Group and Franklin Square Group, which represents high-tech companies. Sprint has also contracted with Thorsen French Advocacy, whose principals are Alec French, former counsel to the House Judiciary Committee, and Carl Thorsen, once an aide to then-House Majority Leader Tom DeLay (R-Texas).
AT&T has also added to its lobbying roster, bringing on Peck, Madigan, Jones & Stewart, the Capitol City Group and Roberti Associates. According to his biography on the firm website, Vincent Roberti, a principal in the Roberti Group, “is credited as being instrumental in shepherding through the $67 billion merger of AT&T and BellSouth.”
Both AT&T and Sprint have purchased ads in inside-the-Beltway publications to reach lawmakers.
The coming months will test whether consumer brand loyalty can translate into political strength and overcome the momentum of the merger. Even Beren, who edits the T-Mobile blog, said he is preparing for the possibility of the sale being approved.
“I have already purchased a number of AT&T domain names,” he said.