Key players have an entertaining rhetoric romp as they talk up their defense of the little guy, American jobs, and spectrum exhaust.

Rob Preston, VP & Editor in Chief, InformationWeek

September 1, 2011

5 Min Read

InformationWeek Now--What's Hot Right Now

InformationWeek Now--What's Hot Right Now

The rhetoric for and against AT&T's $39 billion deal to acquire mobile carrier T-Mobile is endlessly entertaining if not particularly instructive, as power brokers and self-proclaimed public advocates climb over each other to defend the little guy.

Within hours of the U.S. Justice Department's announcement yesterday that it's suing to block the merger, which it argued would lead to "higher prices, fewer choices, and lower-quality products," all the key players (and many more) kicked into bloviation mode.

--AT&T, as part of its rebuttal to the DOJ suit, said the addition of T-Mobile would let it expand 4G LTE mobile broadband to another 55 million Americans and produce "billions" of additional investment. It also said the acquisition would help solve the country's "spectrum exhaust situation." Who knew the spectrum was emitting so much exhaust? Perhaps this is a green issue?

In a separate statement, AT&T said it's now committed to bringing back to the U.S. 5,000 wireless call center jobs that are now outsourced to other countries. "Today's commitment results from AT&T developing detailed analysis focused specifically on identifying opportunities with the T-Mobile merger to bring good-paying wireless call center jobs back to the United States," the carrier said.

In other words, its commitment results from AT&T developing detailed analysis focused specifically on the $6 billion in cash and other compensation it would owe T-Mobile parent Deutsche Telekom should the deal not pass regulatory muster, so it decided to take on the higher costs of moving back "good-paying wireless call center jobs" to win union backing and regulatory favor for the deal.

--In a clumsy display of Big Labor in bed with Big Telecom, the AFL-CIO and Communications Workers of America issued a release extolling the virtues of AT&T and its commitment to preserving and creating jobs post-merger. (Few T-Mobile workers are unionized; most at AT&T are.)

"These jobs will provide quality wages and benefits and good working conditions for U.S. workers--exactly what's needed to help turn around our struggling economy," AFL-CIO boss Richard Trumka said in a statement. "If more employers took this kind of action, we could begin to move our economy forward and strengthen the middle class." Chimed in CWA chief Larry Cohen: "Cuts in wages, benefits, and jobs have become the new normal in America, so that when a company like AT&T takes action to bring back quality jobs, it's big news."

That backroom deal must have been a doozy.

--Sprint, which stands to fall to a more distant third behind AT&T and Verizon should the T-Mobile deal go through, yesterday released an "independent" study (which it happened to commission) that claims to debunk AT&T's job creation assertions. The study, by David Neumark, an economics professor at the University of California at Irvine, "reveals that this acquisition will almost certainly lead to the elimination of thousands of American jobs as the company works to lower its capital expenditures by $10 billion," Sprint maintains.

--The Heartland Institute, a nonprofit free-market advocate, chided the U.S. government for "creeping further away from the original intent of antitrust laws"--to protect consumers rather than protect competitors like Sprint. Heartland maintains that "peer-reviewed economic analysis" has shown little-to-no impact on consumer prices beyond three providers in a given market. "Nope, no competition here, folks," dripped the institute's Bruce Edward Walker, "only President Obama myopically marshaling his troops to drive up the costs of doing business for the wireless industry, reducing consumers' choices among wireless carriers best suited to their individual needs and preferences, and redefining 'competition' to reflect an alternate universe where the United States doesn't possess the most intensely competitive mobile-services market while boasting among the lowest prices and highest quality on the planet."

--Not to be outdone, Consumer Watchdog, a "non-partisan public interest organization," harkened back to AT&T's 2004 merger with Cingular in opposing the T-Mobile deal and supporting the DOJ's lawsuit on consumer protection grounds. The group claims that after AT&T acquired Cingular, it "deliberately" downgraded its own network so that customers would be forced to migrate to the Cingular network, "pay an upgrade fee of $18, buy new phones, and agree to new and more expensive rate plans." Really? --Meantime, the Media Access Project, a nonprofit "public interest law firm" that promotes "low cost, universal access to media outlets and communications services," provided no evidence for its hyperbolic claim that "this is arguably the most anti-competitive move in recent American economic history." At least it didn't say "in the history of the planet."

I'm not enough of a mobile industry or economics wonk to know whether this merger will harm or help customers. But this deal should be approved or rejected based on a sound analysis of those pricing and market conditions, not on whether it creates jobs, weakens rivals, or otherwise serves special interests.

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Rob Preston,
VP and Editor in Chief, InformationWeek
[email protected]

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About the Author(s)

Rob Preston

VP & Editor in Chief, InformationWeek

Rob Preston currently serves as VP and editor in chief of InformationWeek, where he oversees the editorial content and direction of its various website, digital magazine, Webcast, live and virtual event, and other products. Rob has 25 years of experience in high-tech publishing and media, during which time he has been a senior-level editor at CommunicationsWeek, CommunicationsWeek International, InternetWeek, and Network Computing. Rob has a B.A. in journalism from St. Bonaventure University and an M.A. in economics from Binghamton University.

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