AT&T’s Words on Time Warner Deal Say ‘Underdog.’ Its Actions Speak Otherwise.


“Antitrust officials may have a hard time buying AT&T’s argument that it will expand broadband competition and not seek to harm competitors if they find the company is actively working to block new broadband players from entering the markets AT&T already dominates,” said Gene Kimmelman, the president of Public Knowledge, a consumer group, and a former senior antitrust official at the Justice Department, who opposes the merger.

AT&T said it was not being hypocritical. It said its local activities were aimed at fighting misguided and potentially illegal regulations and that it was seeking to protect jobs and the quality of its service. Its rivals, including Google Fiber, have also lobbied to influence city and state leaders to break into new markets, AT&T said.

“Any suggestion that this is about impeding competition, rather than protecting our customers and our network, is flatly wrong,” an AT&T spokesman said in a statement.

AT&T’s bid for Time Warner, announced in October, is the Trump administration’s first big test on corporate mergers. During the election campaign last year, President Trump made a populist promise to block the megamerger. His disdain for CNN, the cable network owned by Time Warner, has also loomed over the transaction.

More recently, Mr. Trump has appeared to moderate his views on the deal. His pick to lead antitrust enforcement at the Department of Justice, Makan Delrahim, is expected to take a more permissive view on mergers than officials in the Obama administration. Mr. Delrahim’s confirmation hearing is scheduled for Wednesday.

AT&T said it expected the merger review to be complete by the end of the year.

To get the deal approved, AT&T has begun a major lobbying and marketing effort. The company recently hired lobbyists close to Vice President Mike Pence and others in the administration. It increased its lobbying expenses to $3.7 million in 2016’s fourth quarter, up 6 percent from a year earlier. AT&T was one of the top donors to Mr. Trump’s inauguration.

Almost immediately after unveiling its plans to merge with Time Warner, AT&T began to shape its image as an underdog. In a Senate hearing in December, AT&T’s chief executive, Randall Stephenson, said AT&T and Time Warner together could bring new competition to “big cable.”

“Cable still enjoys key advantages in the marketplace,” such as its dominance in cable television and broadband, Mr. Stephenson said at the hearing. “Our Time Warner transaction will enable us to offset those advantages with better, more innovative video offerings.”

Members of Congress and their staff said AT&T’s lobbyists had argued in meetings that it would be difficult to compete with cable firms like Comcast without owning Time Warner’s television and movie content, which it wants to stream to its mobile customers.

Photo

Google Fiber struggled to gain access to utility poles in Nashville. AT&T owns many of the poles.

Credit
Kyle Dean Reinford for The New York Times

Yet even as AT&T was spreading that message on Capitol Hill, the company was acting like a powerhouse in Nashville by fighting against new competitors on several fronts, city officials said. One of those rivals was Google Fiber, the broadband service provider begun in 2010 and owned by Alphabet.

For about two years, Google Fiber has been trying to expand its business in Nashville but has been unable to quickly connect its broadband lines to utility poles. AT&T owns 20 percent of the city’s poles, with the rest owned by the local electricity provider. Google has attached its lines to only about three dozen of the city’s 10,000 utility poles.

“For every month they delay, that’s one more month they have 90 percent of the market and not 50 percent of the market,” John Burchett, Google Fiber’s director of public policy, said on a panel in December hosted by the trade group Incompas. He called it an “absurdity” that incumbents like AT&T “get to decide when and how a new entrant enters their market.”

After hearing Google’s complaints, a Nashville City Council member, Anthony Davis, proposed legislation that would accelerate the attachment process, which was approved in September. Weeks later, AT&T sued to knock it down. Comcast followed with its own lawsuit.

AT&T, which had filed a lawsuit in Louisville against similar local legislation, argued that the new laws on pole attachment violated its property rights and could affect the quality of service.

“We have opposed these efforts because we are concerned that such unilateral action could potentially result in service outages for our own customers,” AT&T said in a statement.

The company added that Google had exaggerated the delay times for pole attachments and that it supported the Federal Communications Commission’s efforts to create pole attachment rules to take the place of a patchwork of local laws.

Google declined to comment.

AT&T’s suits in Nashville and Louisville are pending. If Nashville’s law is overturned, Mr. Davis said, residents would suffer. “Now consumers are hurting because of AT&T’s suit to protect their position,” he said.

AT&T has also fought for legislation in Tennessee, North Carolina and several other states to thwart municipal broadband providers. Last year, AT&T had the most lobbyists in Tennessee, with 14 full-time lobbyists and additional outside lobbyists hired to contest several bills in the state legislature that considered permissions for publicly run broadband networks.

The proposals, AT&T argued, unfairly pit private broadband companies against city broadband providers that may have access to public funding and tax breaks. Most of the bills were defeated, with one currently under consideration by the legislature.

While lobbying does not violate antitrust law, AT&T’s actions have drawn criticism from some consumer interest groups and Democratic lawmakers who have pressured regulators to strongly scrutinize the Time Warner deal.

“AT&T consistently supports a legislative agenda that would eliminate consumer choice and deny competitors the ability to invest in broadband that could bring more choice,” said Todd O’Boyle, a director of Common Cause, a consumer group that supports municipal broadband networks.

In San Francisco, AT&T’s DirecTV belongs to a trade group that in February petitioned the Federal Communications Commission to overturn a city ordinance that prohibits exclusive deals for access to wiring inside buildings with multiple dwelling units. AT&T and other broadband providers would have benefited from exclusive rights to wiring within apartment buildings. They say the city is violating their property rights to wiring they own in the buildings.

Mark Farrell, a member of San Francisco’s Board of Supervisors, said the rule was intended to open up competition to companies like Webpass, a subsidiary of Google Fiber, and SonicNet, which have struggled for access to the wiring of apartment buildings. Mr. Farrell has said residents have complained of few options for broadband in the city.

So far, San Francisco has upheld the new rules.

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