AT&T strategist learns lessons of battlefield

This is the last in a series of profiles that look at how the tech industry is working with the federal government.

WASHINGTON, D.C.--In October 2006 Jim Cicconi, a senior executive vice president at AT&T who heads up legislative affairs, took his team of top regulatory lawyers to Gettysburg to teach them battlefield strategy.

For two days, 15 senior AT&T managers stood on the very spot where more than 50,000 men had died during one of the greatest battles in the Civil War, and they listened to a former West Point history professor dissect the three-day battle, paying particular attention to the decisions made by the Confederate and Union generals.

They discussed General Sickles and his move toward Peach Orchard. They heard about Lee's attack on Cemetery Ridge and Pickett's Charge, which resulted in severe casualties. And they analyzed the Union's defense of Little Roundtop, a strategic position that the federals held during the battle and a battle that helped seal the North's victory in Gettysburg.

While a "field trip" to Gettysburg may seem like a strange choice for a corporate team-building exercise, it is precisely the type of outing that Cicconi finds valuable. Cicconi, who has served in the White House under two U.S. presidents, is a huge history buff.

But as a student of history, the point of the trip to Gettysburg was not just a history lesson, but it was a lesson in strategic thinking, a lesson that could be applied to the regulatory and legislative battles that are going on in Washington, D.C., today.

"It was a very instructive exercise for understanding how Jim approaches things," said Bob Quinn, a senior vice president at AT&T who works on Cicconi's regulatory affairs team, and who attended the Gettysburg trip. "Jim is very good at figuring out the right context in which to have a particular regulatory argument to achieve victory."

Cicconi's political prowess and ability to understand what motivates his opponents has helped put AT&T ahead of many companies on the regulatory and legislative front when it comes to technology issues. And to know something about Cicconi is to better understand how AT&T approaches important issues, such as Net neutrality, wireless spectrum reallocation, and reforming the universal service fund.

Applying histories lessons in the present
Cicconi has tried to instill his strategic thought process in the rest of his staff. And the key theme from the Gettysburg trip that Cicconi wanted to emphasize to his management team was that if you are going to engage in any kind of battle, it is crucial to pick the terrain on which that fight is fought. At the end of the day, the Union army won the battle of Gettysburg because it was better situated on the battlefield. The Union picked the good ground and forced the Confederate army to attack them from a much less desirable position.

It is this same strategy that AT&T is employing in its fight against Net neutrality regulation. AT&T and other network providers have opposed the adoption of official regulation that will establish rules against blocking or discriminating against Internet traffic on their network. AT&T, which has been at the forefront of the battle, believes that no new rules are needed and official regulation is unnecessary.

On the opposite side of the debate are consumer groups, such as Public Knowledge and Free Press, as well as Internet companies, namely Google. These groups are united in their quest to bring official regulation and rules of the road to the Internet to ensure that Internet service providers don't favor certain players at the expense of others.

The debate has heated up and cooled down over the past couple of years. But with a Democratic FCC now in power, it's almost certain that some regulation will be drafted by the FCC in the coming months. Cicconi recognizes this, and he has shifted his strategy to reshaping the fight to ensure regulations don't go too far.

"Net neutrality is an important issue to us but not in the sense you might think," Cicconi said. "The FCC's open Internet principles have done a good job preserving Net neutrality. There's been one complaint in four or five years and it was handled. So the question going forward is can the FCC find a sweet spot where they can provide the reassurance that some groups need that abuses won't occur, while making certain it doesn't prohibit us from managing our networks or offering certain services."

Using this idea of choosing the terrain for the battle, AT&T earlier this year sent a letter to the FCC accusing Google, its biggest rival in the Net neutrality battle, of violating the very principles it has been fighting to make regulation. In its letter to the FCC, AT&T accused Google of hypocrisy for blocking some phone calls on its free Google Voice product.

Google has argued that Net neutrality principles don't apply to its service because it doesn't own the underlying infrastructure.

"We were careful to choose an example where we could talk about how the Net neutrality principles and network openness should apply throughout the entire Internet ecosystem rather than focusing simply on certain network providers," Quinn said "The goal was to find a situation where Google would have a difficult time defending its decision to block calls."

Politics and public service
One of the things that you notice when you walk into Cicconi's office on the 10th floor of the old AT&T building on 20th Street, NW in Washington, D.C., are the pictures behind his desk of him shaking hands with Presidents George H.W. Bush and George W. Bush. There are also a few U.S. Navy Aircraft carrier hats lined up on another table. Cicconi, who has served two presidents during his career, says that the years spent in public service were very fulfilling, but also very stressful and taxing.

Still, he said the experience has made him sympathetic to those now serving in the FCC or in Congress.

"Working in the White House was the hardest job I ever had," he said. "Making important decisions in a constant sleep-deprived state was a sobering experience. So I understand that these are hard jobs. I know what it's like to serve in public office with the pressure and demands."

Cicconi got his start in Washington, D.C., at the behest of James Baker, the former chief of staff for President Ronald Reagan. Cicconi, who met Baker while he was still in law school at the University of Texas, joined the White House as special assistant to Reagan in 1981. And he kept the position for four years.

He then went to work at the Washington, D.C., law practice of Akin, Gump, Strauss, Hauer & Feld. When President George H.W. Bush was elected in 1988, Cicconi left the private sector to return to the White House for two more years, this time as deputy chief of staff.

He went back to his law firm as a partner and worked with AT&T. In 1998, Cicconi went to work for AT&T as the executive vice president of law and government affairs. A few months later he was named general counsel.

The early years that Cicconi spent with AT&T were mainly dealing with fallout from the breakup of the monopoly Bell phone system in 1984 and the subsequent 1996 Telecommunications Act, which was supposed to force competition into the market.

As the market evolved, AT&T a long-distance phone company, saw opportunity in competing in the local phone market. And local phone providers, such as SBC which had been prevented from operating a long-distance network, wanted to get into that that business, too.

For eight years, Cicconi fought SBC and other former local phone companies at the FCC and in court over sharing elements of their voice networks to allow AT&T to compete with them. In retrospect, Cicconi says that he and everyone else at AT&T knew that forcing competition in this market was not a viable long-term strategy. But at the time it was the only option AT&T had, since building its own local phone network would have been expensive.

"Network sharing is very counterproductive," Cicconi said. "What I didn't see at the time was that capital investment in building new infrastructure dropped dramatically during that period. But the clarification from the FCC on regulations, helped unleash a lot of growth in broadband deployment. Verizon launched Fios. And AT&T started our U-Verse service. The cable companies started upgrading to Docsis 3.0."

In 2004, Cicconi said that the writing was already on the wall for AT&T. In March of that year, AT&T and other companies like it, were dealt the final blow. The U.S. Appeals Court for the D.C. circuit overturned the FCC's regulations that forced phone companies to share their voice infrastructure with companies such as AT&T.

Quinn said: "Those were some tough times. We were fighting for the future of the company. And it all happened pretty suddenly and people were really dragging for a while. But Jim said, 'Look, we have lost the battle, but we haven't lost the war yet.'"

AT&T decided to get out of the local phone business. It cut its workforce and began concentrating its efforts on its business customers. Within months, AT&T had struck a deal with local phone company SBC Communications, and AT&T was sold in 2005 for about $16 billion.

After nearly a decade of intense legal battles, Cicconi switched sides. His ability to out-maneuver his opponents is a major reason he was asked to stay with the new AT&T.

According to corporate folklore, then SBC CEO and Chairman Ed Whitacre said of Jim Cicconi that he needed to have the guy on his team who cost him $4 billion in legal bills. And so he offered Cicconi the opportunity to continue running the show for the new AT&T in Washington, D.C.

Sitting in his sound-proof office, a relic left over from the old AT&T, which was paranoid that "spies" from MCI were eavesdropping from their offices literally across the street, Cicconi acknowledges the old battles are over. The competitors are different. And the issues have changed.

"The industry has changed pretty dramatically since the days of the old AT&T," he said. "And the issues the industry fought over in the past are not the fights of the future."

But for Cicconi the strategy of fighting the new battles remains the same.