As DOJ reviews legality of merger, it’s AT&T versus Sprint

Amanda Carey Contributor
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Staff attorneys at the Department of Justice (DOJ) and Federal Communications Commission (FCC) are busy reviewing the legality of the proposed merger between giant wireless carriers AT&T and T-Mobile.

In the meantime, AT&T and its biggest antagonist, Sprint, are waging full-fledged campaigns around the country to garner support for their respective sides.

“Clearly, purely, we want to win and block the merger,” Sprint CEO Dan Hesse said in a recent interview with Bloomberg. In short, his company is on a mission, and it is courting not only other companies to fight the transaction, but also media-reform groups, state regulators and legislatures. And according to a source close to the merger proceeding, Hesse has also reached out to a number of high-tech firms for support.

Sprint is also fighting in the court of public opinion, having bought national newspaper ads and launching an anti-merger website.

It hasn’t always paid off, however. (New documents detail Justice’s reasons for releasing Marxist bomber)

The National Black Church Initiative (NBCI), for example, was courted by Sprint, evidenced by a rather lengthy letter the group included in their FCC filing. But in the end, the NBCI decided to support AT&T and the merger.

The Daily Caller also obtained a copy of a letter Sprint sent to the Utah state legislature, complete with a fact sheet giving reasons to block the bid. Sprint’s arguments include claims that the merger would create a duopoly, stifle innovation, and hurt economic growth.

“Sprint urges you to oppose the transaction and contact your congressional delegation, the FCC and the DOJ, and inform them of your opposition,” the Utah letter reads.

TheDC also obtained a letter that was sent by Sprint to Alaska Gov. Sean Parnell.

“On behalf of Sprint, I am writing to inform you of the negative consequences in your state resulting from the announced takeover of T-Mobile by AT&T,” reads the letter to Parnell. “The proposed takeover would change the wireless communication market from one where innovation and competition flourish, to one dominated by a wireless duopoloy of two firms.”

Both letters were sent at the beginning of June; neither Parnell nor the Utah legislature have weighed in. But so far, a large number of Parnell’s fellow governors have publicly announced support for the merger. (Fox announces new show to replace Beck’s primetime slot)

A total of 24 Democrat and Republican governors have endorsed the AT&T acquisition of T-Mobile in their own FCC filings; zero have gone on record opposing the deal. Republican supporters include Govs. Bobby Jindal of Louisiana, Nikki Haley of South Carolina, Rick Perry of Texas and Nathan Deal of Georgia.

Democrat governors supporting the merger include Steve Beshear of Kentucky, Beverly Perdue of North Carolina, Martin O’Malley of Maryland, and Peter Shumlin of Vermont.

Another source familiar with the transaction who did not wish to be identified, said Sprint is targeting California, Louisiana and West Virginia because the company believes the state governments will impose tough restrictions on a post-merger AT&T’s competing in their states.

AT&T also has the support of companies like Facebook, Qualcomm, Microsoft, Oracle, and Yahoo, in addition to several venture capitalist firms and the AFL-CIO. Overall, its lineup of support is impressive by any means. But in response, Sprint simply points to the tens of thousands of public comments on  the FCC’s docket for the proposed merger.

“When more than 40,000 public comments have been filed with the FCC and more than 90 percent are against the takeover, we think it’s a pretty good indication of the level of opposition against this transaction,” Tom Johnson, a Managing Director at the communications firm Abernathy MacGregor, told TheDC.

“In addition to tens of thousands of consumers, industry groups, consumer groups, politicians, Attorneys General and government officials across the country have asked regulators to block this deal,” Johnson added. “The FCC will ultimately make its determination based on what’s in the public interest, and we don’t think that kind of public sentiment can be ignored.”

Even so, AT&T continues to maintain that its transaction enjoys broad support – much more than Sprint and its campaign to stop the merger. Moreover, in print at least, both sides have traded jabs at the other’s support level.

Although a spokesperson at AT&T respectfully declined to comment on the record, the company’s blog has published posts describing Sprint’s support as “a few other wireless competitors, along with the same inside-the-beltway special interest groups that reflexively oppose all mergers.”

And one Sprint supporter, in an interview with Bloomberg, dismissed AT&T’s support, saying they “are full of hot air,” and “many of them have no background in telecommunications.”

For now, both Sprint and AT&T must wait for the DOJ to complete it’s investigation. If it is determined that a merger of this magnitude does not violate federal anti-trust laws, it will move forward.