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With Business in Front of F.C.C., AT&T Sends Gift of 1,500 Cupcakes

Who ate the cupcake?

2:42 PM, Mar 31, 2011 • By DANIEL HALPER
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Bureaucrats, like all of us, love cupcakes. But is it always appropriate for them to accept cupcakes, especially when the gift-givers clearly want to curry favor? The notion that someone could sway millions – and perhaps billions – of dollars worth of business in their favor simply by delivering a bunch of cupcakes to bureaucrats might seem preposterous, but that’s exactly what happened last December. In a little noticed piece from over the weekend, the New York Times reported:

IN this covetous town, the delicacies of the Georgetown Cupcake shop stand alone as symbols of wish fulfillment — heaping swirls of luscious confection atop rich, creamy pastry.

Therefore: Operation Cupcake. As the Federal Communications Commission debated final rules last December on how Internet service providers should manage their traffic, AT&T delivered 1,500 of these opulent desserts to the F.C.C.’s headquarters here.

AT&T, as the article clearly explains, has business in front of the Federal Communications Commission (F.C.C.). Big business. As of now, the second-largest wireless carrier in America is in merger talks with the fourth-largest, T-Mobile. It’s a $39 billion deal that would create the largest wireless carrier in America—and AT&T will need the help of the F.C.C. to pull it off. And as the Times reported, “consumer advocates say the combination [of AT&T and T-Mobile] will lead to higher prices.”

But the obvious question—though not obvious enough for the paper of record even to broach it, apparently—is whether this act is legal. And, if it is legal, is it ethical? The cost of 1,500 cupcakes from the boutique bakery Georgetown Cupcakes would be $3,625, according to a price list on the bakery’s website. It’s as if AT&T sent a $3,625 gift to the F.C.C., to be divided between the government organization’s employees.

“It’s in the New York Times – and it’s not even April Fool’s day,” a Democratic lawyer who works on F.C.C. issues told me. “The notion that this would be helpful and not viewed as heavy-handed is silly – even if it’s legal, it’s ill advised. It’s silly and demeaning.” 

 AT&T is considered a prohibited source by the Obama administration, the lawyer explained to me. That means F.C.C. employees who have been appointed would not be able to accept gifts from AT&T, according to the rules the Obama administration set for itself. (For career employees of the F.C.C. it might be acceptable, since the cupcakes’ cost is under a certain denomination. But business insiders tell me it would not be appropriate for even a career employee to accept the cupcake since the sender had business pending before the F.C.C.)

According to a document first obtained by Public Knowledge, cupcakes were indeed delivered to political appointees – including 18 to F.C.C. chairman Julius Genachowski. Genachowski is a personal friend of President Obama. The two have known each other since their days together at Harvard Law School.

I reached out to the F.C.C. for comment. Sharon Kelly, a member of F.C.C.’s legal team, first said, when I asked if this delivery had been received, that she wasn’t in the office and was telecommuting—and so she couldn’t confirm if cupcakes had been delivered. But Kelly mentioned how unfortunate it was to have missed the cupcakes. When I then asked whether it was legal—and even ethical—Kelly said she, or someone from her office, would get back to me. I haven't heard back.

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