AT&T spared no expense in 2011 when it sought government approval of its $39 billion deal to acquire T-Mobile. The merger would have created a duopoly, leaving AT&T and Verizon in control of nearly 80 percent of the wireless market.
AT&T would then have been able to set higher prices, at a cost to people on modest incomes who depend on their cell phones to connect with work, family, and the details of modern life.
The poor and people of color would have been hard-hit. The National Hispanic Media Coalition, for example, said the merger would increase the cost of wireless services for Latinos. And the Center for Media Justice noted that the merger would have resulted in “fewer options and higher prices” for people of color, who disproportionately depend on access to the Internet through mobile devices.
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Knowing there would be opposition to this deal, AT&T began doling out money in Washington, D.C. The company spent $16 million on lobbying during the first nine months of 2011 in its drive to pass the merger, dished out $2 million in campaign contributions to both Democratic and Republican members of Congress, and spent $40 million on advertisements promoting the deal.
So it wasn’t surprising to see many Wall Street analysts predict that the merger would sail to approval.
But the establishment was wrong. Despite AT&T’s massive political influence, the Department of Justice filed an antitrust lawsuit in August to block the merger. Days before Thanksgiving, the FCC announced its opposition. By Christmas, the deal was dead.
Amplifying the People’s Voices
How did a giant corporation like AT&T fail to win approval of its merger?
Much of it had to do with nonprofit organizations like Free Press, the largest media reform group in the country (and my employer). Despite having only a fraction of AT&T’s vast resources, these groups effectively mobilized public opposition to the merger. They took advantage of mistakes AT&T made, and tapped into growing concern about corporate wrongdoing.
“Fortunately, there were public advocates out there who refused to accept that this was a done deal just because AT&T was involved,” said Free Press President and CEO Craig Aaron.
A coalition of public interest groups and wireless companies—including Public Knowledge, the New America Foundation’s Open Technology Initiative, the Future of Music Coalition, the Media Access Project, Sprint and Cricket—worked to block the merger.
Several groups pored over confidential filings that AT&T submitted to the FCC and found that AT&T misrepresented the merger’s benefits, including the statement that it would create 96,000 new jobs.
AT&T also boasted about its support from well-established nonprofit and civil rights organizations.
But gay journalists and bloggers like John Aravosis and Dan Savage played a key role in exposing AT&T’s corporate influence over nonprofit groups supporting the merger, like the Gay & Lesbian Alliance Against Defamation (GLAAD), which received $50,000 in donations from AT&T.
The GLAAD controversy prompted other journalists to take a closer look at the merger. Editorials in The Boston Globe and The New York Times questioned whether other civil rights groups and nonprofits supported the merger because of their close financial ties to AT&T.
“The embarrassment for AT&T, already seeing its merger beginning to teeter for various other reasons, only helped to escalate the problems, bringing attention to how the company was buying off civil rights groups,” wrote journalist Michelangelo Signorile.
AT&T’s true motives for pursuing the merger were revealed in August, when the company mistakenly released unredacted confidential documents it filed with the FCC. The information revealed the company had rejected a plan to build out its 4G network to serve 97 percent of the population at a cost of $3.8 billion. It wasn’t profitable enough to make that investment. Instead, AT&T decided it was better business to spend $39 billion—10 times as much—to take out a competitor.
This undermined AT&T’s main public argument for seeking approval of the merger—that it needed to acquire T-Mobile to build out its 4G network.
These blunders, as well as a growing national dissatisfaction with corporate influence over politics, magnified public support for groups working against the merger. Free Press submitted more than 100,000 signatures from its members, joined by more than 50,000 members of ColorOfChange.org, all calling on the FCC to block the takeover.
Protecting Media Diversity
The government’s rejection of the AT&T/T-Mobile deal is an important reminder that the little guy can win in Washington. And the fight for a just cause is possible only with a broad base of public support.
That kind of support, for example, has been critical in pushing back attempts to loosen media ownership rules. Indeed, there are few media policy issues that galvanize as much widespread public opposition as media consolidation.
People understand that greater corporate control over our media system means that big media companies will place maximizing profit over making sure the news and informational needs of local communities are met. It means the public can expect more infotainment in their daily paper or on their local newscast rather than news that informs them about their community and the world they live in.
In 2003, the Bush administration’s FCC proposed massive deregulation that would have allowed big media companies to get even bigger. Nearly 3 million people contacted the FCC and Congress with 99 percent of them opposed. The FCC approved relaxing ownership rules anyway, but in 2004 a federal appeals court overturned that decision.
In 2007, the Bush FCC attempted, once again, to relax ownership rules. But last July, the same court that rejected the 2003 rules threw the new ones out, too.
Despite the struggle to prevent further consolidation, the commission still hasn’t learned its lesson. Just before Christmas, the Obama FCC introduced essentially the same rule to lift the cross-ownership ban that Democrats—including then-Senator Obama—rejected in 2007 during the Bush Administration. Free Press and other organizations are mobilizing activists to protect—and strengthen—existing ownership limits.
Protecting Net Neutrality
Public interest groups and media justice organizations have also waged a spirited campaign to prevent a corporate takeover of the Internet. Free Press’ SavetheInternet.com coalition has more than 2 million net neutrality supporters who have called on the government to protect our right to communicate freely online.
Companies like AT&T and Comcast want the power to interfere with Web traffic so they can decide which sites and applications go fast and which go slow. And the cable and phone companies, along with their trade association, spend about $70 million annually on lobbying to achieve their ambition.
During his 2008 presidential campaign, Obama said he would take a back seat to no one in his support of net neutrality. But his FCC chairman, Julius Genachowski, took a back seat to AT&T in December 2010, when he brokered a compromise with the telecom giant to strip most network neutrality protections for wireless users.
The agency’s net neutrality rules, which went into effect in November 2011, created two Internets, by providing protection for wired users but omitting most protections for people connecting via wireless devices like smartphones. The rules open the door to discriminatory behavior from internet service providers.
While this compromise was a setback, the passage of net neutrality rules protecting wired Internet users still represents a victory that likely would not have occurred if the public had not demanded Internet freedom.
Yet this partial victory is still under attack. Verizon and MetroPCS are suing the FCC to have the new rules thrown out. Last year, Republican lawmakers passed a measure in the House to overturn the net neutrality rules, but public outcry helped defeat the measure in the Senate.
Better Media, Better Democracy
A Magna Carta Moment
for Internet Freedom
Video: Why we must fight for our online rights—before they’re sold, legislated, and programmed away.
The public interest community and media justice organizations continue to fight for policies that will create a more democratic media system. We need policies that decentralize control of our media system and allow the voices of ordinary people to be heard rather than giving greater power to corporate gatekeepers.
This is critically important for people of color. We have seen the damage caused to our communities when other people tell our stories—they often get it wrong.
Our victories on AT&T and net neutrality come at a time when the Occupy movement is challenging the conventional wisdom that we can’t stand up to corporations. For too long, many people have felt hopeless about the prospect of holding politicians and lawmakers accountable and making them serve the interests of everyday people.
But the structural issues that allowed corporations to run roughshod over our economy and media system won’t change unless people organize and work together to fight back and be heard.
Their voices can make a difference.
Just ask AT&T.
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