House Letter Offers Some Political Cover for AT&T/T-Mobile at FCC, DOJ

House Commerce Committee member G.K. Butterfield, D-N.C., sent the letter Friday to FCC Chairman Julius Genachowski and Attorney General Eric Holder. Four Commerce Committee Democrats signed on, and none were heavy hitters on telecom issues. A key House Democrat missing from the letter is Communications Subcommittee Ranking Member Anna Eshoo, D-Calif. She’s “continuing to evaluate the proposed merger, and is hopeful that the subcommittee will convene a hearing on this issue to talk to all of the key stakeholders, including wireless companies and consumers groups,” her office said. Frank Pallone of New Jersey, John Barrow of Georgia and Donna Christensen of the Virgin Islands are the only other Commerce Democrats who signed the letter. The letter does include a cross-section of members from across the country.

"This merger represents an opportunity to deliver a better wireless product that will benefit all, including those in rural areas,” Butterfield said in a statement late Friday. “We are encouraging the FCC and the DOJ to consider a number of important factors during the review process, including the proposed increases in coverage to those living in rural and underserved areas."

The letter could prove important for both the FCC and Department of Justice as they look more closely at the deal, said MF Global analyst Paul Gallant. “This is a good development for AT&T because it helps cover the agencies if they decide to clear the deal,” he said. “But remember that the Live Nation-Ticketmaster merger was unanimously opposed in Congress and still got approved, so there are limits to merger politics.”

"The picture we see emerging is one of a Federal Communications Commission and a Department of Justice uncomfortable with an AT&T/T-Mobile union,” Medley Global Advisors analyst Jeff Silva said Friday in a research note. But those agencies are “potentially hemmed in by powerful political forces flowing from AT&T’s ability to tap deep into the Democratic base for broad-based support that also includes nearly two dozen governors, high-tech companies, venture capital firms and now a significant number of House Democrats,” he added.

Free State Foundation President Randolph May said the letter could prove significant. “While letters like this aren’t dispositive of competitive concerns that might be raised, they are significant in the consideration of the public benefits of the merger, especially at the FCC with its broader public interest focus,” he said. “The fact that so many Democrats sign a letter that, in essence, is supportive of the merger certainly makes it difficult to turn the merger into a partisan issue."

Nothing about the letter was surprising to Andrew Schwartzman, senior vice president of Media Access Project, he said. “AT&T has ‘flooded the zone’ with inaccurate information, lobbyists and cash, and this letter is one predictable result,” Schwartzman said. “It may sound naive to say this, but the merits matter a lot more than letters that credulously recite palpably incorrect AT&T talking points. AT&T’s claim that it will bring 4G coverage to 97 percent of the country if and only the deal is approved is just as false no matter how many times it is repeated."

"I think the letter will be seen for what it is -- a pure play to support the CWA … position,” said Rural Cellular Association President Steve Berry. “It will be difficult for most members to justify support for the deal when 4,000-5,000 non-union jobs will be lost and less than 2,000 union jobs protected. The math doesn’t work for most members of Congress.” Public Knowledge President Gigi Sohn thinks it’s “unfortunate that proponents of the merger have been able to mislead so many Members of Congress,” she said in a written statement. “Nothing is to be gained from this deal except that a major competitor to AT&T will be removed from the market, resulting in higher consumer prices and less innovation."

Members shouldn’t have signed the letter, said Free Press Action Fund Research Director Derek Turner. “This letter cites promises from AT&T to bring wireless broadband to 97 percent of the country, including areas where it claims Americans may not otherwise see the benefits of broadband,” he said. “But the truth is that it won’t take a merger to get next-generation mobile broadband to rural and underserved communities. AT&T has already publicly committed to expanding its 4G coverage to the same 97 percent by 2012 without the merger, and Verizon has done the same."

"This is typical of the merger opponents,” said a supporter of the deal. “After first saying ‘well, they don’t have any Hill support,’ they are then confronted with 77 Democrats, 40 percent of their caucus, urging the FCC and DOJ to specifically consider the benefits of the merger in the review process, so of course their only recourse is to downplay its importance.”