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Easy Street

AT&T and T-Mobile: The Popping of the Cupcake Bubble?

Heidi Moore Sep 1, 2011

Since the Justice Department put the smackdown on AT&T’s proposed acquisition of T-Mobile, financial pundits have been hashing out the implications: what does this mean for mergers? What does it mean for the wireless phone business? What does it mean for jobs?

But there’s another question, one perhaps not as pressing but still intriguing: what does this mean for cupcakes?

The AT&T deal may be an inflection point for the frosted confections, which may suffer the first blow to their burgeoning and sweet reputations: cupcakes may, sadly, be fruitless in political lobbying.

AT&T has depended on cupcakes for years to woo its regulators and the press every Christmas, to the tune of $3,700-worth, or 127 dozen.

The Federal Communications Commission, AT&T’s primary regulator, has never resisted these sugary blandishments. “We are pro-open Internet and pro-cupcake,” an FCC spokeswoman told the Wall Street Journal about “cupcake-gate” in December.

The New York Times’ Edward Wyatt did fine investigative-pastry work this spring on the “military precision” of AT&T’s cupcake offensive – aka Operation Cupcake – to win over the Federal Communications Commission in particular:

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.

Like many other big corporations, AT&T annually blankets power brokers with token holiday gifts, but the cupcake campaign was notable for its military precision. A three-page spreadsheet, stamped “AT&T Proprietary (Internal Use Only),” detailed how the desserts were to be deployed to each of the 63 commission offices: four dozen were assigned to the enforcement bureau, 10 dozen to the wireless divisions, 12 cupcakes to each of four commissioners, and 18 to the chairman, and so on.

As it turns out, AT&T had begun its $39 billion courting of T-Mobile about the same time.

There is more evidence that cupcakes have reached a saturation point in the wider culture ever since Carrie Bradshaw bit into a Magnolia confection on Sex and the City.

Cupcakes have become an in-joke in intelligence circles: There was also another Operation Cupcake this summer, when the British intelligence service MI-6 hacked into an Al-Qaeda network to replace bomb-making instructions with an extensive list of America’s best cupcakes.

**Cupcakes are omnipresent: ** Georgetown Cupcake has its own reality show. New York City is proliferating with cupcake shops, ranging from Magnolia to Buttercup. In the dark labor-market days of 2010, cupcake shops were among the few businesses that were adding jobs.

Wall Street has embraced the cupcake frothiness: Becoming a cupcake baker has become a cliche for out-of-work Wall Streetersof pet-rock proportions. Crumbs pursued an initial public offering this spring, which led at least one commentator to fret that we’re in a cupcake bubble similar to the burst of sugary whimsy that puffed up Krispy Kreme’s valuation during the Great Doughnut Bubble of 2003.

AT&T’s cupcake seduction didn’t work on the FCC – which is now leaning towards supporting the Justice Department’s opposition to the T-Mobile deal. Maybe it’s time for the company to return to its old standby, cookies.

Or then, there are brownies. In the great line-up of sweets, they may be due to have a moment.

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