Wading through the bulging file of comments at the Federal Communications Commission website reveals some strange and unusual testimonials from groups one would think would have much better things to do with their time and resources than advocate for a multi-billion dollar super merger between AT&T and T-Mobile.  But integrity means little next to a big fat check from AT&T, and many so-called “charities” really do believe it begins at home in their own bank accounts.  So with their hands out, groups like Wisconsin Coalition for Consumer Choice and the Urban League, and politicians like Bobby Jindal become dollar-a-holler advocates for AT&T’s agenda, offering the flimsiest reasons around to push for the merger’s approval.

Among the least savory are groups purporting to represent income-challenged minority communities who advocate for a merger that will promote higher prices for less service.  Such advocacy would taint any group and calls into question whether contributions are really helping those in need or just those who claim to represent them.

As we suspected, after reviewing dozens of submissions favoring the merger, virtually every last supporter either had direct financial ties to AT&T, had AT&T personnel in leadership positions, or were run by Washington, DC lobbying firms that have a past history of doing work on behalf of AT&T.  Ordinary consumers, and there were thousands, submitted comments opposing the merger — citing reduced competition, higher prices, fewer choices, and offering few benefits or improved service.  At least some live in the reality-based community, not AT&T’s field of overpriced dreams and broken promises.

A Sampling:

Wisconsin Coalition for Consumer Choice

Here’s a “group” purporting to represent the interests of consumers, but they’re nowhere to be found.  George Klaetsch, executive director, claims AT&T’s merger will “immediately increase consumer choices and access to quality broadband and mobile services. Thousands of new cell sites will become available, the nation’s broadband footprint will be significantly expanded, and most importantly, more than 46 million more customers will gain instant access to 4G LTE technology – many of them right here in Wisconsin.”

Why if you approve this merger, there will be free candy for everyone, too.

The group’s website offers an unwelcome introduction with a series of technical faults, perhaps a testament to how few consumers ever bother to visit it, and carries an earnest disclaimer:

[…] We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.

Good to know.

Klaetsch’s letter forgets to mention he’s a registered lobbyist for Public Affairs Strategies, Inc.  When he’s not fronting AT&T’s agenda, he also represents the interests of AstraZeneca Pharmaceuticals, the Elevator Industry Work Preservation Fund, and the creepy-sounding Funeral Service & Cremation Alliance of Wisconsin, among other groups.

Wellington Area Chamber of Commerce

This well-meaning local chapter of the Chamber, who counts AT&T as a member, has fallen hook, line, and sinker for AT&T’s promise to deliver 4G service to “97 percent of the country,” assuming the merger gets approved.  Of course, AT&T will upgrade to 4G with or without the merger, and this particular Chamber’s executive director apparently does not realize T-Mobile’s contribution to improving service in rural America is less than robust.  When an active member of a civic or business group happens to be AT&T, getting a letter written on behalf of the company’s agenda comes as soon as the talking points can be handed out at the next Chamber meeting.

Unfortunately for the people of Wellington, losing one more competitor guarantees rural America fewer competitive choices, higher prices, and less service, not more.

United Way of Northwest Florida

Some residents in northwest Florida could reconsider their future contributions to “charitable groups” who increasingly spend their time and attention involving themselves in big corporate mergers, meeting the needs of some of their biggest donors.  No better example of this comes from the United Way of Northwest Florida, who accepted a $9,000 contribution from AT&T in one hand, while banging out this letter of support for AT&T’s merger with the other.  It’s classic dollar-a-holler advocacy.

While this chapter believes the interests of cell phone users will be best served by an AT&T – T-Mobile merger, we’re wondering what actual charitable endeavors go unserved while its leadership wastes time and resources filing comments with the FCC on a billion dollar telecom deal.

Urban League of New Orleans

This chapter of the Urban League “firmly believes that the greater New Orleans area we serve would greatly benefit by added broadband connectivity. Studies show that the underserved, urban communities with the greatest access to broadband Internet see the strongest economic growth. With high-speed Internet, residents can more easily access important resources online, from educational resources for schools to job opportunities for those who are out of work or seeking to update their skills. High-speed Internet enables greater connectivity between all stakeholders, more able to respond effectively and efficiently to the needs of our city.”

Somehow, for those noble reasons, they are supporting AT&T’s and T-Mobile’s merger.  AT&T is the company that pitches some of the most expensive and most limited wireless broadband plans in the country.  How this benefits urban New Orleans may escape you.

What didn’t escape us was the fact AT&T Louisiana president Sonia Perez is the group’s 2011 Annual Gala Chairperson.  She’s also a participant on the group’s governing board.

Gov. Bobby Jindal of Louisiana

Gov. Jindal is a big supporter of AT&T’s merger with T-Mobile.  The Washington Post notes he is joined by 13 other governors writing the FCC to push for approval.  Jindal is honoring Louisiana’s time-tested notoriety for questionable political dealings.  Perhaps it is just a coincidence his wife runs the Supriya Jindal Foundation, who counts among its key sponsors… you guessed it, AT&T.  Before one assumes Jindal has a legitimate interest promoting AT&T, which invests money in Louisiana, consider this: Jindal has written only one letter to the FCC on a telecommunications issue since the agency’s electronic filing system was inaugurated in 1992. This one.  Maybe he was busy on those other days.  Then again, maybe he wasn’t.

Jindal closes his letter with these words: “I am confident that this merger will benefit the people of Louisiana.”  That’s true, if you define “people” as his immediate family and the corporate executives of AT&T and T-Mobile who work and live in his state.  Everyone else doesn’t matter.

United States Hispanic Leadership Institute

After reviewing dozens of submissions from charities and non-profit groups, the comments from USHLI really stood out above the others.  Dr. Juan Andrade, president of the group is a downright feisty guy, singing paragraphs of praise for AT&T as a “model corporate citizen”:

“Like you, I too have heard that the merger will have a devastating impact on consumers, promote anti-competitive behavior, and result in higher prices; that the merger will be bad for business, bad for innovation and bad for workers. We’ve heard this all before – when SBC was acquiring Ameritech, when AT&T was merging with SBC, and so forth. And what have we seen? We’ve seen just the opposite. The Federal Communications Commission’s own data show that these concerns proved unfounded as consumers benefited from tremendous innovation and competition in the wireless space, all while seeing wireless voice and data prices drop. This “sky is falling” attitude is replaying itself as AT&T seeks approval to merge with T-Mobile. But the facts speak for themselves. The United States Hispanic Leadership Institute (USHLI) believes the Federal Communications Commission should rise above the skepticism, above the unsubstantiated claims, and above the impractical requisitions.”

What the FCC also needs to rise above is the considerable support Dr. Andrade’s group gets from AT&T.  Undisclosed in Andrade’s spirited defense of one of the worst mergers in telecommunications history is the fact AT&T is the “honorary co-chair” and sponsor of the group’s 2011 fundraising efforts.  It’s the public policy equivalent of “My Dinner With AT&T.”  More wine?

Andrade conveniently ignores the fact AT&T is raising prices on wireless data products with punitive usage caps and overlimit fees.  It’s not the sky falling, Dr. Andrade, it’s your credibility to speak as an independent observer while also enjoying AT&T’s largesse.  When you engage in dollar-a-holler advocacy, American consumers have more than a right to be skeptical.

AT&T, one of the country’s most profligate spenders on public policy lobbying, has pulled out all the stops pushing for Washington approval of its proposed merger with T-Mobile.

Bloomberg Government reports AT&T spent $6.8 million during the first quarter of 2011, more than 11 times more than its rival Sprint, which opposes the merger deal.  In fact, AT&T was the nation’s second biggest spender in lobbying dollars, just behind defense contractor Honeywell, which is trying to avoid Pentagon spending cuts.

Sprint’s much smaller lobbying effort had to make do with a budget of just $583,000 during the same period to push back against the telecom giant.

Also raising questions are reports from Bloomberg that AT&T CEO Randall Stephenson direct dialed Federal Communications Commission Chairman Julius Genachowski the weekend before the deal went public.  At the same time, former FCC Chairman Richard Wiley, today a lobbyist for T-Mobile, spoke directly with four of the five FCC Commissioners to directly lobby for the merger’s approval.

Sprint has been trying to beef up its own lobbying star power, recently adding Eddie Fritz, former head of the National Association of Broadcasters as one of their lobbyists.  Sprint has also hired several former high-level Congressional staffers and mid-level employees at the Justice Department, expected to help Team Sprint know how to apply the right pressure to the right people inside the FCC and Justice Department to reject the deal.  The merger hinges on the approval of both agencies.

Left off the speed dial — consumers, who cannot pick up the phone and reach FCC Chairman Genachowski while lounging in his backyard or enjoy lucrative employment opportunities open to government workers in the private lobbying sector.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/Bloomberg ATT Lobbying 5-24-11.mp4[/flv]

Bloomberg News breaks down AT&T’s lobbying and strategy for getting its merger deal with T-Mobile approved in Washington.  (2 minutes)

The Wall Street Journal is reporting this afternoon that Republican FCC Commissioner Meredith Atwell Baker, nominated to the FCC in mid-2009, is preparing to leave her duties to take a job with Comcast Corporation, just four months after voting for the controversial merger between NBC-Universal and the nation’s largest cable company — her new employer.

The newspaper reports Baker is expected to announce her departure as soon as this week for an unknown position at the Philadelphia-based cable giant. Comcast declined to comment, a company spokeswoman told the Journal.

This is the latest example of the revolving door that rotates people to and from the industries they regulate as government employees.  Baker was expected to be renominated for another term at the FCC.

Baker’s performance on the Commission was decidedly business-friendly, although at several points she seemed confused about the issues involved.  At a Tech Policy Summit held in January 2010, Baker suggested consumers paying for roaming while using mobile broadband would be an effective solution to ease congestion on wireless data networks.

Verizon Communications formally closed its acquisition of Alltel in January 2009, but some former customers are only now feeling the impact as they transition to… AT&T.

That’s right, AT&T.

Although Verizon acquired the bulk of Alltel’s national customer base, the federal government ordered Verizon to sell off its future Alltel customers in communities where the company would likely be the overwhelmingly dominant player.  Verizon sold off most of these orphaned customers, numbering over a million, especially in the Mountain Time Zone, to AT&T.

The transition from Alltel to AT&T would be a bumpy one because the two companies use different wireless technologies, meaning every customer would have to be provided with a new phone.  Alltel’s customers remaining with Verizon didn’t experience this, because both companies use CDMA technology.

AT&T agreed, as part of the deal, to supply every one of its new postpaid/contract Alltel customers with brand new GSM phones (although AT&T was unwilling to provide free advanced smartphones like Apple’s iPhone).  Prepaid customers were less lucky — they only received discounts off new phones.

Stop the Cap! has talked with more than a dozen affected customers in Arizona, New Mexico, Michigan, Utah, Wyoming, Iowa and Colorado about their experiences as they transition to AT&T service.  With AT&T now proposing to merge with T-Mobile, which could also mean some new phones for T-Mobile customers, we wanted to learn what customers thought about being moved from one carrier to another, what their experience was before the transition and after, and whether they intend to stay with AT&T.

Our panel included a young man from Utah who used his phone at home and outside of the state as he performed mission work for the Mormon Church in rural Florida.  We also spoke with a retired couple living in Arizona who chose Alltel because of their unlimited calling circle option to stay in touch with friends and family in Minnesota.  Also participating: a travel agent in Michigan, a realtor in New Mexico, a self-employed contractor in Colorado, a farmer in Iowa, and several others who shared their stories with us in e-mail.  By mutual agreement, we’re keeping their last names private because some have pending disputes with AT&T.

Breaking the News: Alltel Sells Out Their Customers to Verizon

When Karen, a realtor from New Mexico first heard word that Alltel was selling out to Verizon, she wasn’t sure exactly what that meant.  There was considerable confusion in her part of southern New Mexico mostly because the local media does a poor job of covering telecommunications stories.

“In New Mexico, everything in the media is centered around what is going on in Albuquerque and everything else is given little attention, except in the local newspaper,” Karen says.  “But whether you are in Las Cruces or Roswell, the quality of the story depends on the quality of the poorly paid reporter.”

Karen was not worried about the sale at first, because she was aware Verizon had a good reputation for cell phone service.  She had originally selected Alltel because they had good rates and friendly customer service.

“If I ever had a problem with my phone, Alltel would always fix it, even if it was out of warranty,” Karen explains.  “That meant a lot to me because they didn’t have to do that, but it was why I always renewed my contract.”

Heath, who runs a home-based contracting business in southern Colorado, didn’t like what he was hearing from the start.  Neither did Marion and Will, a retired couple living outside of Phoenix.

“We had our dealings with Verizon back in Minnesota when we lived there and we never liked them because they cost too much,” Will says.  “Alltel was a great choice for us because they had a calling circle plan that let you make unlimited calls to certain numbers, and we talked with our daughter back in Minnesota daily using our cell phone.”

Confusion about the deal only got worse when Alltel (and in some cases Verizon) notified our panel members they would not be Verizon customers after all — they were being sold off to another cell phone company.

Alltel -> Verizon -> AT&T -> Frustration

Micah, our reader in Utah first contacted us more than a year ago to express his confusion about why he was not only losing his Alltel account, but now he was somehow ending up as a customer of AT&T, a carrier he definitely wants nothing to do with.

“I figured I could at least live with Verizon because they are everywhere, but as I started performing my mission work for the church in rural central Florida, I learned from my parents I was actually going to end up a customer of AT&T, something I definitely never wanted,” Micah says.  “AT&T is terrible in Utah and worse here — nobody wants AT&T unless you are in Orlando or Daytona Beach.”

“At first we thought, cool, new phones for everyone,” Shanie told Stop the Cap! from her home in Muskegon, Mich. “AT&T has been promising major expansion of service here in western Michigan since they notified us they were taking over for Alltel, but then we started learning the details.”

While Shanie’s family of four would be given four new phones, their choices of new phones were limited, although AT&T called them “comparable.”  Many of AT&T’s smartphones were not covered, even if families already owned smartphones purchased from Alltel.

“We also discovered if you wanted one of these advanced phones, it meant a new two-year contract with AT&T, effectively forcing us to stay with them longer,” Shanie says.

Jed, a farmer outside of Sioux City, Iowa says AT&T did a poor job keeping him informed.  Jed stopped receiving all communication from Alltel (other than a bill) and never heard a word from AT&T.  Instead, one of his neighbors warned him that his Alltel phone was going to quit working by the middle of May.  Jed was upset because the deadline for him to choose a new free phone had passed and he never had the opportunity to make a choice, never having been notified about any of the changes.

“The newspaper might have said something about it, but we don’t get the paper here and nobody has much time to spend watching television,” Jed shared.  “We would have thought AT&T would have notified us, but they apparently forgot we were here.”

Last week, a new phone arrived from AT&T in the mail, unsolicited.

“What a way of doing business — we thought at first it was some sort of fraudulent purchase and we almost didn’t accept it from the driver,” Jed said.

AT&T has been sending out new phones all month to customers across several states, encouraging them to call and activate them on AT&T’s network.  Once customers do that, their old Alltel phones will quit working.  That was a problem for Shanie’s daughter at college in Grand Rapids.  When mom activated her phone, the primary one on the account, her daughter’s Alltel phone stopped working.

“AT&T has you call a toll-free number to activate the phone, but first they require y0u to accept the terms and conditions for doing business with AT&T, which can include contract extensions for some people,” Shanie said.  “I had no idea activating my phone would end service on all of the other Alltel phones on the account.”

Alltel customers in these states had new AT&T phones shipped to them on this schedule.  The second date refers to the service transition cutoff date:

Arizona	January 27, 2011	February 10, 2011
Southern New Mexico	February 7-8, 2011	March 2-3, 2011
Michigan and Montana	February 16-21, 2011	April 6-12, 2011
Colorado, Northern New Mexico	February 23-28, 2011	April 13-18, 2011
Iowa and South Dakota	March 4-14, 2011	April 19-28, 2011
North Dakota	March 15-21, 2011	April 29-May 5, 2011
Utah and Wyoming	April 1-6, 2011	May 9-12, 2011

Bailing Out for Alternatives

Jody, a soon-to-be-ex AT&T customer in New Mexico, says there was plenty of fine print to wade through when he prepared for the switch from Alltel, and he didn’t like what he saw.

“AT&T is very tricky about how they handle customers who want to depart Alltel and avoid becoming an AT&T customer,” Jody says.  “You cannot cancel your Alltel contract and avoid an early termination fee, but you can cancel AT&T within 30 days of switching and escape a hefty exit fee.”

Indeed, AT&T’s transition website says Alltel customers who want to switch providers will face an early exit penalty as long as their Alltel phones remain active.  Those who switch and activate their new AT&T phones get a 30 day window to drop AT&T and avoid an ETF:

If, after moving to AT&T service, you choose to discontinue your AT&T service, you will have a 30-day period to opt out of your AT&T contract without an ETF. After that 30-day period, standard AT&T terms apply including any applicable ETF.

Jody got his new phone and promptly canceled his AT&T service.  He switched to CellularOne, a company with a legacy name but a very local network.  It has its own cell towers only in northern Arizona and parts of New Mexico.  For everywhere else, it depends on a roaming agreement with… AT&T.

Jody’s CellularOne plan still offers completely unlimited calling, texting, and data for around $80 a month, and that includes AT&T’s nationwide network.

“CellularOne offers a much better deal than AT&T, but you can only choose from three lower end smartphones — no iPhone to be had here,” Jody says.

Heath in Colorado wants out of AT&T as well.

“They drop calls all the time and their network strength is awful in my neighborhood, and I depend on my cell phone and don’t have a landline,” Heath says.  “I don’t know why we had to be stuck with AT&T who apparently de-commissioned Alltel’s towers, which used to deliver a rock solid signal here.”

But not everyone is heading for other carriers.  Sam in Farmington, New Mexico says AT&T is bringing 3G to his community and mobile broadband speeds have been much faster than what Alltel used to deliver.

“AT&T’s data plans are overpriced, but if you can hang onto your existing Alltel plan but use it on AT&T’s network, it’s not so bad,” Sam says.  “Unfortunately, you cannot upgrade to an iPhone and keep Alltel’s plans — you have to pick one of AT&T’s.”

The Future for T-Mobile Customers

Although T-Mobile shares the same GSM network technology AT&T uses, the two companies have different frequency allocations for their respective networks.  T-Mobile customers seeking access to AT&T’s network will probably need new phones to access it. While AT&T claims T-Mobile’s own largely urban network will supplement AT&T’s own coverage, customers may need new equipment for that to be true as well, unless AT&T co-locates their own cell antennas on T-Mobile towers.

Former Alltel customers tell Stop the Cap! AT&T didn’t offer the latest and most popular phones for their swap, and some customers too far away from an AT&T store had to get a new phone without being able to try it.  AT&T allowed customers to exchange phones within 30 days, which helped some of our readers, but most felt the entire idea of being forced to switch to AT&T an inconvenience.  Most were also disturbed that one of the competitors in their area was disappearing, and considering Alltel served largely small cities and rural areas, there was already a lack of choice for most.  In total, three of our readers are staying with AT&T, two left for CellularOne, one chose to switch to a prepaid plan, and the rest went with Verizon after all.  If Alltel were still around, every customer we talked with for this piece would have stayed with them.

Sprint CEO Dan Hesse has declared war on the proposed merger of AT&T and T-Mobile, suggesting it would result in a nationwide cell phone duopoly that will stifle innovation and eliminate competition.

“If AT&T is allowed to swallow T-Mobile, competition will be stifled, growth will be stifled and wireless innovation will be jeopardized,” Hesse told attendees at the Commonwealth Club of California Friday.

Sprint’s announced opposition to the proposed merger came during a speech that was supposed to be about the company’s environmental initiatives, but Hesse opened his remarks warning of the dire implications should the nation’s second largest wireless carrier absorb the fourth — T-Mobile.

Sprint CEO Dan Hesse delivers remarks at the Commonwealth Club of California – Friday, April 15, 2011. This edited clip covers Hesse’s remarks regarding the proposed merger of AT&T and T-Mobile. (12 minutes)
You must remain on this page to hear the clip, or you can download the clip and listen later.

Sprint has signaled it is willing to spend lobbying dollars to fight the merger in Washington, where it faces a review by the Justice Department and the FCC.  The declaration of war by Sprint did not go over well at AT&T, where the company’s top lobbyist Jim Cicconi trotted out Hesse’s prior statements to use against him in a company blog post:

As recently as last October, Mr. Hesse said the wireless industry is ‘hyper competitive‘.  The month prior, his CFO talked about how ‘tough‘ retail competition is in the wireless market, citing at least six major competitors.  In February of last year, Mr. Hesse said, “M&A is absolutely a way to get the growth in the industry, if a particular transaction makes sense for anybody.”  He went on to say, “I think consolidation will be healthy for the industry, some consolidation. It is, needless to say, very competitive.”  And in January of last year at a Citi Global Conference, Mr. Hesse said, “Well, there is no question that we have an extremely competitive wireless industry in this country and that the pricing is getting much more aggressive.”

Given that Sprint is a major competitor to AT&T in the hyper competitive wireless market Mr. Hesse describes, no one should be surprised that they would oppose this merger.  But it is self-serving for them to argue that the highly competitive wireless market they cited only months ago is now threatened by the very type of transaction they seemed prepared to defend previously.

Sprint was reportedly interested in pursuing a merger with T-Mobile before AT&T sealed their own deal with the German telecommunications company.

Cicconi’s remarks about a “hyper-competitive” marketplace conflict with marketplace reality:

• A combined AT&T/T-Mobile enterprise would control 42 percent of the American wireless marketplace;
• Verizon Wireless would control 32 percent;
• Sprint would maintain third place with a distant 17 percent;
• Every other carrier combined (Cricket, MetroPCS, Alltel, and other regional players) would have just 9 percent.

In fact, after Sprint, other carriers AT&T routinely cites as “serious competition” individually have just three percent or less of the American market.

Hesse told his audience that besides concerns about innovation and price, also-ran carriers other than AT&T and Verizon are likely going to get stuck with less advanced handsets and face little or no access to latest generation iPhone and Android smartphones, often made available exclusively to larger carriers.

“Whoever the supplier is, you can say, ‘Hey, I’ll take all of your production,'” Hesse said. “They could restrict our access to some of the cool devices.”

Hesse predicts his company will ultimately not be the only one opposing the merger.  But smaller carriers have had little to say since the merger was announced.