AT&T rolls out big guns to stall BT wedding plan

America's biggest telephone group is gearing up its lobbying machine, writes David Usborne in New York

AT&T, America's biggest phone company, is gearing up its awesome lobbying machine to stall British Telecom's proposed pounds 13bn merger with MCI, the second-largest long-distance carrier in the US. The deal, the largest to involve a British company, threatens AT&T's number one spot in the US telecommunications business.

That AT&T would not sit back and watch the BT-MCI marriage sail through was obvious from the first words uttered on the affair by the chief executive, Robert Allen. Pardon me, he said, but had not the US government better first establish that the British market is open before giving BT its MCI plum?

The translation is clear: AT&T will be doing all it can to persuade US regulators, starting with the Federal Communications Commission (FCC), to subject the agreement to the most rigorous of scrutiny. It would like best of all to have it knocked down dead. That is over-ambitious. But AT&T can hope to use the proposed merger to gain improved market leverage in Britain.

"AT&T is going to be pulling out all the stops and doing everything it can to at least slow the imminent merger and to help clear the hurdles that remain for them in the United Kingdom," Jeffrey Kagan, of Kagan Telecom Associates, said yesterday. And AT&T is no lobbying amateur. "They are used to getting what they want - their stalling ability is legendary."

AT&T is diligent in currying favour with Washington's powerful. During the Chicago Democratic Convention in August, for instance, the company invited delegates to a "Party of Champions" in the restaurant owned by basketball legend Michael Jordan. The chairman of the Democratic National Committee, Donald Fowler, was treated to a breakfast cruise on the lake. A similar cruise was offered to Republican leaders at their San Diego convention.

Less conspicuous, but much more potent, is the network of lobbyists that AT&T has working for it in Washington. It is a roster made up largely of former members of Congress that was deployed most recently ahead of the passage last February of the Telecommunications Deregulation Bill, which tore down competitive barriers between long-distance and local carriers in the US.

Those in AT&T's pay include such figures as Robert Strauss, a former Democrat cabinet appointee and George Bush's ambassador in Washington, and Vin Weber, who represented his Minnesota district in the House of Representatives for 12 years before setting up as a consultant in 1995.

Mr Weber was a co-chair of Bob Dole's doomed presidential campaign and is perhaps the oldest political friend of Newt Gingrich. When the telecoms reform debate was at its peak, Mr Weber was able one day to walk Mr Allen into the Speaker's office.

In his statement, Mr Allen insisted that Washington should "condition any approval of the merger on the complete and unqualified opening of the telecom market in the United Kingdom".

He went on: "BT still controls more than 90 per cent of all local telephone connections [in Britain] and equal access to customers and telephone providers simply does not exist."

AT&T is likely to have a sympathetic ear, meanwhile, in Reed Hundt, chairman of the FCC. In a visit to London only in September, Mr Hundt criticised European countries for moving too slowly to dilute the grip of monopoly carriers, including BT.

"In the US we are very lucky that AT&T was broken up. Yet nowhere else... do we see a repetition of our clearly successful experiment with demonopolisation." Fancy a cruise, Mr Hundt?