WASHINGTON-Aggressive industry lobbying and strong bipartisan backing by the Washington state congressional delegation in this election season of giving helped win removal of a measure that would have killed the VoiceStream Wireless Inc.-Deutsche Telekom AG merger in the final days of the 106th Congress.
Sen. Ernest Hollings (D-S.C.), author of the now-defunct initiative, conceded defeat last Thursday but signaled the battle was far from over.
“As I have said from the beginning, I believe the existing laws that govern these transactions are clear, and the FCC cannot waive them. Regardless, I’m glad I raised the issue and advanced an important discussion about privatization worldwide,” said Hollings. “Telecommunications companies with international ambitions must privatize if we are going to have a truly competitive global telecommunications marketplace. Until that time, I will continue to oppose efforts to allow government-owned companies to purchase U.S. telecommunications assets and compete in our deregulated market. While this provision has been removed, the issue certainly has not.”
Congressional leaders last week eviscerated an appropriations rider that would have forbidden the Federal Communications Commission from approving any merger in the next 12 months involving the acquisition of a U.S. telecom firm by an overseas company more than 25-percent owned by a foreign government.
Current law already prohibits such transactions, but the FCC can waive the 25-percent foreign-ownership limit. Indeed, the FCC is expected to do just that with the VoiceStream-Deutsche Telekom deal.
Because Deutsche Telekom is more than 50-percent owned by the German government, the Hollings measure would have scotched the VoiceStream-DT transaction. The German government, hoping to assuage lawmakers, recently pledged to eventually reduce its stake in DT.
Hollings argued that state-owned DT should not have access to a U.S. telecom market composed of firms not subsidized by the government. Early on, the merger also prompted concerns about national security.
Brian O’Connor, vice president of legislative and regulatory affairs for Bellevue, Wash.-based Voice-Stream, said the Washington state delegation-including Sens. Slade Gorton (D-Wash.) and Patty Murray (D-Wash.) and Rep. Norman Dicks (D-Wash.)-played a big role in gutting the Hollings amendment from the Commerce-Justice-State spending bill.
Deutsche Telekom, for its part, hired the Washington, D.C., law firm of Wilmer, Cutler & Pickering to do its bidding on Capitol Hill.
The Senate was poised to vote on the Commerce appropriations bill last Thursday.
Gorton, a senior member of the Senate Commerce Committee, is given credit for helping convince Senate Majority Leader Trent Lott (R-Miss.) to withdraw his support for a Hollings initiative that once boasted backing by one-third of the Senate.
Gorton is knotted in a tight and expensive race with former congresswoman Maria Cantwell for a Senate seat in Washington state. Cantwell was one of the many Democrats to lose seats in the 1994 mid-term election victory engineered by former House Speaker Newt Gingrich (R-Ga.).
After being defeated, Cantwell signed on with startup RealNetworks Inc., of Seattle, where she made millions of dollars that are now going toward her campaign. Cantwell, unlike Gorton, is not taking money from telecom and high-tech political action committees. She is accepting contributions from people employed by high-tech companies, however.
Not surprisingly, a good chunk of campaign financial support for Gorton and Cantwell come from high-tech firms in and outside of a state that is home to VoiceStream, Microsoft Corp., wireless billionaire Craig McCaw and others.
VoiceStream CEO John Stanton has contributed to the Gorton campaign.
The pricy Gorton-Cantwell race, and others like it for congressional seats and the presidency, has prompted an outcry from a leading government watchdog.
“Both parties are calling in all of their chits with loyal donors,” said Larry Makinson, executive director of the Center for Responsive Politics. “In an election in which control of the White House, the House of Representatives, and perhaps the Senate are up for grabs, each party is doing everything it can to establish a fund-raising advantage-or at least its own fund-raising deficit.”
In its new report, “Who’s Paying for this Election?” the Center lists AT&T Corp. (No. 1, $4.32 million), Microsoft Corp. (No. 4, $3.45 million), Communications Workers of America (No. 5, $3.13 million), Verizon Communications (No. 8, $2.76 million), SBC Communications Inc. (No. 11, $2.51 million) and BellSouth Corp. (No. 25, $1.88 million) among the 50 largest donors to federal candidates and political parties in the 1999-2000 election cycle.
Telecom and high-tech firms tend to give to both major parties, but favor Republicans in total dollars given. In contrast, organized labor gives almost entirely to Democrats.
While the Hollings foreign-ownership amendment was dropped from the Commerce-Justice-State appropriations bill, that spending bill could remain in play until the very end because of a White House veto threat involving immigration legislation sought by Democrats.
The Clinton administration opposed the Hollings legislation, but it is unclear whether the president would have vetoed the Commerce appropriations bill on the basis of the foreign-ownership issue alone.
VoiceStream and Deutsche Telekom were concerned about the possibility of having foreign-ownership language inserted by Hollings into the appropriations conference report, but it appears no such language is included in the bill.
As such, there’s now the prospect of the powerful South Carolina Democrat raising the foreign ownership issue again next year at a time when the DT-VoiceStream merger may still be under active review by the FCC and a Treasury Department-led committee that scrutinizes foreign acquisitions for national security implications.
Such a scenario could take on an even more serious hue if the leading advocates of foreign-ownership restrictions become chairmen of key House and Senate committees after next month’s elections.
While a bit of a long shot, a Democratic takeover of the Senate would reinstate Hollings as chairman of the Commerce Committee, which has oversight of the FCC and presidential nominations to the agency.
A more likely possibility, in which the Democrats regain control of the House, would return Rep. John Dingell (D-Mich.) to the chair of the House Commerce Committee and Rep. Edward Markey (D-Markey) to the chair of the House telecommunications subcommittee. Dingell and Markey sponsored companion legislation that mirrors the Hollings legislation.
