The Blog

I meant it when I said I’m focused on a new project these days.  I’m spending all my non-teaching and non-book-revising time learning about open government efforts around the world.  The DOJ announcement yesterday was just such a big moment – really, the first big positive telecom competition policy moment since, I don’t know, the 1996 Act [don't shoot me] – that I couldn’t resist writing about it.

But even that announcement was all about open government.  Did you see AT&T’s response?  It was breathtaking:

We are surprised and disappointed by today’s action particularly since we have met with the DOJ and there was no indication from the DOJ that such an action was being contemplated.

If anyone in AT&T’s ginormous communications/PR shop had known the story of J.P. Morgan’s meeting with TRoosevelt, they would have canned that statement.  Because that’s exactly what Morgan said when Roosevelt’s Attorney General sued his railroad trust under the Sherman Act.

Here’s the back story:

Roosevelt was irritated by a trust that had been formed by J.P. Morgan, James J. Hill, and E.H. Harriman to allow the Northern Pacific and Great Northern railways to cooperate. Under Morgan’s plan, stockholders of the Northern Pacific and Great Northern companies, railways that together controlled traffic from Chicago to Seattle, were invited to exchange their stock for trust securities in the Northern Securities Company – the largest combination in the world next to US Steel.  Most stockholders did, and the holding company gradually held about nine-tenths of the Northern Pacific stock and more than three-quarters of Great Northern – and controlled all but 40,000 miles of track in the U.S. The constituent companies stopped competing; their actions were coordinated by the holding company.

In 1902, Roosevelt ordered his Attorney General, Philander Knox, to bring suit under the 1890 Sherman Antitrust Act – prohibiting any combination “in the form of trust or otherwise that was in restraint of trade or commerce” – against the Northern Securities Company. The suit was a surprise to Morgan and the other plutocrats, and the market swooned. Morgan shored up the stock exchange with an infusion of cash and then went to visit the President. Roosevelt reported later that Morgan had seemed puzzled. According to Edmund Morris, Roosevelt’s biographer, the following exchange ensued:

MORGAN:  If we have done anything wrong, send your man to my man and they can fix it up.
ROOSEVELT:  That can’t be done.
KNOX:  We don’t want to fix it up, we want to stop it.

J. Pierpont Morgan thought of government as just another combination owner – someone with whom a deal could be done, an equal, a peer. Roosevelt knew that the moguls should not be the government’s equal, and stubbornly moved ahead with a multi-year effort to ensure that the privately-operated railroads were subject to appropriate constraints that would serve the public interest.

In March 1904, the Supreme Court found by a bare majority that by combining the shares of the Great Northern and Northern Pacific railroads into a single entity, and thus aligning the interests of their stockholders, the Northern Securities Company had suppressed competition and violated the Sherman Act. Roosevelt’s win was perceived by many Americans as a ringing victory for the cause of competition and the role of the national government.

So – AT&T is very very comfortable with FCC-world, in which meetings happen, warm relationships are formed over decades, and nothing surprising ever takes place. When you’ve got a single-industry agency, and the industry has all the information, it’s relatively easy to keep things under control. AT&T apparently thought that it had the DOJ taped; I’m sure it was carrying out man-on-man (woman-on-woman) lobbying, leaving no one untouched. All the politics were in place, all the governors had been signed up, all the anxieties about the 2012 election had been carefully assessed.

But that’s not how a real law enforcement agency like the DOJ works. We don’t want to fix it up, we want to stop it. That’s what AAG Sharis Pozen said yesterday. Openly.