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DoJ targets AT&T: The story behind the story [Updated]

Updated below…

Today it was announced that the Department of Justice will attempt to block AT&T’s acquisition of T-Mobile. The deal is needed for technical and regulatory reasons to allow AT&T to compete in the 4G wireless market with Verizon, Sprint/Clearwire, and with the upcoming competitor LightSquared. So why is the Department of Justice calling it bad for competition?

Enter R. Gerard Salemme. It’s not a well-known name, but it’s been an important one in the Obama administration. It’s also a name that often comes up in the ventures of one Craig McCaw. Craig McCaw is an equal opportunity donor who gives to anyone who looks likely to win, including Gore 2000, Bush 2004, and both sides in 2008.

That $2,300 donation to Obama sure is paying off.

There’s a complicated web here, but I’ll do my best to explain it. R. Gerard Salemme is a man who has moved from one company to another in recent years, co-founding Eagle River, and working at XO, Clearwire, and now ICO Global Communications. What those firms all have in common is that they’re also firms invested in or founded by Craig McCaw, who’s Salemme’s business partner at Eagle River, and has often taken leadership roles in these firms. In particular, McCaw founded Clearwire, which operates a 4G wireless network.

Craig McCaw also took over Nextel, shaped it up, and sold it off to Sprint. Sprint Nextel currently owns a majority of Clearwire.

Where does Obama come in? In 2009, Salemme took time off from his job at Clearwire to join the Barack Obama transition team. One project of his was digital television transition issues, where he promoted the famous delay in the DTV transition. You see, the longer the DTV delay took, the longer it would be before Verizon Wireless could get its hands on the “C Block” of spectrum to aid its own 4G rollout, in order to compete with Clearwire’s network.

So the Obama administration took action, dragging its feet on DTV, in a way that hindered 4G competition. Salemme’s employer stood to benefit. Big surprise!

The time has now come for Clearwire’s 4G competition to be expanded further, as AT&T seeks to get ahold of T-Mobile’s spectrum, to allow it to roll out 4G wireless to over 95% of Americans. So naturally, the Obama DoJ is seeking to stop that from happening.

Ladies and gentlemen, enjoy your Hope and Change in the new Culture of Corruption.

Update: It is suggested to me that the DTV delay ended up being not as bad as portrayed in the above link. I’ll be up front: I wasn’t following regulatory policy back then, so my personal memories of the issue are not particularly useful, and I relied on my research in the writing. Judge for yourself.

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