WASHINGTON-While technology is seemingly off the political radar screen this election year, some candidates are pushing agendas that could indirectly impact industry and possibly even a blockbuster AT&T Wireless Services Inc. deal.
The dynamics change in an election year, especially one in which the White House is up for grabs.
Though experts expect an AT&T Wireless merger to win approval from government antitrust and regulatory officials, given the crowded mobile-phone market and financial pressures, pursing a high-profile business transaction-valued at $30 billion or more-during a presidential year opens up plenty of opportunities for roadblocks, mischief and missteps.
Here are just a few possibilities.
AT&T Wireless, the No. 3 mobile phone carrier in the United States, supposedly is being courted by American and foreign wireless carriers alike. The U.S. suitor mentioned most in recent weeks is Cingular Wireless L.L.C., the second-largest wireless operator and co-owed by SBC Communications Inc. and BellSouth Corp.
Adam Thierer, director of telecom studies at the Cato Institute, said an AT&T Wireless takeover would sail through. At the same time, he pointed out, what is to prevent a lawmaker or a special interest group from objecting on the grounds that Baby Bell telephone companies have become bigger and more dominant since the passage of the 1996 telecom act designed to foster competition. Even though wireless and wireline markets are as different as night and day, Thierer said that kind of criticism could arise, especially in a highly charged political atmosphere where Democratic presidential candidates accuse President Bush of being too chummy with big business.
That said, another possibility is that Federal Communications Commission members, who evaluate antitrust and public interest implications of mergers, could condition their approval of an AT&T Wireless merger to extract concessions unrelated to the deal but relevant to other policy objectives. Such a tack-which Thierer describes as “antitrust regulatory extortion” was used in the agency’s approval of the AOL-Time Warner deal and in others before that.
“There’s a responsibility issue we cannot ignore here,” said Thierer.
Two of the overseas firms reportedly in the hunt for AT&T Wireless are Japan’s NTT DoCoMo, which holds a nearly 20 percent interest in the Redmond, Wash., mobile-phone operator. How might a foreign takeover play with voters and by extension politicians in an election year where the economy and post-9/11 security are major issues?
“I think it’s a non-issue,” said Lawrence Orb, a national security expert at the Council on Foreign Relations and a former assistant secretary of defense in the Reagan administration. “We’re sharing intelligence with these countries and catching terrorists,” he said.
Yet, a purchase of AT&T Wireless by an overseas firm could require an FCC waiver of foreign ownership limits (prohibiting overseas firms more than 25-percent owned by foreign governments from acquiring American telecom carriers) and trigger a security review by a Department of Treasury-led inter-agency group.
“I don’t see any principled argument for not waiving it,” said Robert Cranial, a telecom scholar at the Broodings Institution. “If it was a Syrian company that would be different, but not a Japanese or British company,” he said.
Indeed, Japan and Britain supported President Bush’s decision to go to war against Iraq.
Germany, whose Deutsche Telecom owns another possible AT&T Wireless buyer (T-Mobile USA Inc.), did not. Government officials, after fierce opposition from Sen. Ernest Hollings (D-S.C.), allowed DT to buy then-VoiceStream Wireless, of Bellevue, Wash., a few years ago.
The loss of U.S. jobs to overseas workers and the corrosion of America’s manufacturing base are becoming top election year issues.
In a new report, the Bush administration has recommended reforms and new strategies to shore up U.S. manufacturing. Commerce Secretary Donald Evans unveiled the report in a Jan. 16 speech in Ohio, a key electoral state.
Last week, the Senate passed a $328 billion omnibus spending bill that includes a provision forbidding offshore outsourcing by government contractors in certain cases, a move that could hurt wireless and technology firms that do business with some federal agencies.
The outsourcing amendment, championed by Sens. George Voinovich (R-Ohio) and Craig Thomas (R-Wyo.), is limited to the departments of treasury and transportation and other government agencies. The outsourcing restriction applies only to public-private competition, and is valid only through fiscal 2004 fiscal, which ends Sept. 30.
Outsourcing, including both manufacturing and services, has become an election issue as U.S. jobs-particularly those in the tech sector-increasingly move overseas where labor is cheaper and regulations governing worker rights, health and safety, and environmental protection are less stringent than in the U.S. “You’ve got concerns about employment, but you cannot wall off government from the global technology base,” Stan Soloway, president of the Professional Services Council. PSC represents high-tech government contractors.
Sens. John Kerry (D-Mass.) and John Edwards (D-N.C.), who hope to parlay their finishes in the Iowa caucuses to the New Hampshire primary, have pledged to take steps to curb job migration overseas.
