AT&T merger bid puts Obama in a bind

AT&T Inc.'s proposed $39-billion purchase of T-Mobile USA puts the Obama administration in a bind as it tries to mend fences with a business community still upset over healthcare and financial regulatory overhauls.

President Obama has tried to be more friendly to corporate America as he urges companies to boost their hiring to reduce the high unemployment rate. He also wants wireless Internet to be expanded to far-flung rural areas, something the acquisition could foster. But the Obama administration is facing pressure from fellow Democrats and public interest groups to reject the deal, which would create a wireless behemoth and result in two companies — AT&T and Verizon Wireless — controlling 70% of the cellular telephone market.

AT&T, one of the nation's most politically influential companies, is poised for battle. Its political action committee and employees have contributed $46 million to federal candidates over the last two decades, more than any other company, according to the nonpartisan Center for Responsive Politics. AT&T spent $15.4 million lobbying Washington last year, the eighth-highest of all corporations. And it has ties to the White House — Obama's chief of staff, William Daley, is a former president of SBC Communications Inc., which bought AT&T in 2005, creating the current telecom giant.

"AT&T is the most aggressive, most hard-nosed player in the political realm of communications," said Andrew Jay Schwartzman, policy director of the Media Access Project, a public interest law firm. "They will make it difficult for the Obama administration."

AT&T has demonstrated its political savvy already. Unlike T-Mobile, AT&T is largely unionized and has support for the deal from the Communications Workers of America and the AFL-CIO, two influential Democratic constituencies. And AT&T said that as part of the deal, it would expand its next-generation wireless service, known as 4G, to 46.5 million more customers than planned — among them, T-Mobile's 34 million subscribers. The service would reach 95% of the U.S. population, including rural communities and small towns, thus helping achieve goals set by Obama and Federal Communications Commission to connect "every part of America to the digital age," AT&T said. "They're saying, 'You let us buy T-Mobile, and we'll provide faster wireless to 95% of the U.S., including rural America — isn't that great?'" said Kevin Roe, a technology analyst at Roe Equity Research. To counter concerns about the merger, AT&T also is predicting better wireless service for its customers.