Why We Want The AT&T Merger: Jobs

Published on September 16, 2011, 1:39 pm
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The labor movement supports the merger between AT&T and T-Mobile because it will provide enormous benefits to both consumers and workers.

The new company will speed build-out of the most advanced telecommunications networks to millions of Americans and will strengthen the rights of workers in the wireless industry to gain a voice at work.

AT&T is currently the only unionized wireless company. It allows workers to make decisions about whether to unionize or not free of the usual anti-union propaganda and intimidation. Over the last 10 years, as AT&T merged with other companies, the number of unionized wireless workers represented by my union, the Communications Workers of America, has grown from 9,000 to over 43,000 today. If this merger is approved, roughly 20,000 of T-Mobile’s workers will come under the umbrella of AT&T’s policy of neutrality towards union representation. That means T-Mobile workers will gain the right to make their own decisions about whether they want union representation and collective bargaining.

At the same time, a merged AT&T -T-Mobile will greatly enhance its capacity to build the next-generation wireless broadband network—capable of supporting more phone calls, more text messages, more video downloads and more online research—for Americans in every state. The new company plans to extend its 4G network to cover approximately 97 percent of the country—55 million more people than ATT would have been able to reach on its own. Broadband has already transformed the way we live, work and play and, as it continues to evolve, the strength of the AT&T network will have a transformative impact on our economy.

Some opponents of the merger claim it will create an AT&T-Verizon wireless duopoly with excessive power to raise prices and limit innovation. But the truth is, competition in the industry will remain intense, with packages from Sprint supplemented by the aggressive marketing of low-cost carriers like MetroPCS and Clear. Just look at the daily deluge of full-page newspaper ads, TV spots, the dizzying array of wireless devices and payment plans, and the hundreds of thousands of applications available for download on wireless devices. The merger won’t make that go away, and if history is any guide, we see that wireless mergers have caused prices to fall and innovation to spike. This merger will do more of the same, and create thousands jobs at a time when we need them most.

Furthermore, a stand-alone T-Mobile is simply not an option for the future. TMobile’s CEO, Phillip Humm, testified before a U.S. Senate Committee on May 11: “TMobile’s parent, Deutsche Telekom is not in a position to finance the necessary large scale investments in the U.S. for T-Mobile to remain competitive.” T-Mobile was already a merger target. But because T-Mobile and AT&T utilize the same technology, their merger will turn a two-lane spectrum road into a four lane spectrum superhighway. In addition, AT&T plans to put up $8 billion in extra investment and is strong enough to pay for the transaction in equity and internal cash flows. In contrast, Sprint has yet to integrate its 2005 Nextel purchase, uses a different technology than T-Mobile, and has a “BB-minus” noninvestment grade bond rating that would make raising the capital to finance the merger extremely difficult.

Finally, the merger will help to create jobs at a time when our economy is stalled at historically high levels of unemployment. The Economic Policy Institute has estimated that AT&T’s $8 billion investment in expanding broadband will create 96,000 new jobs.

Wireless is a hot industry. Consider all the software developers who are creating new apps for smartphones. These companies are growing, hiring new workers to keep up with demand. Wireless broadband also opens new channels for manufacturers and service providers, which create new opportunities for business expansion and new jobs.

Merger skeptics rest their case on a projected loss of competition if T-Mobile joins with AT&T. But that is a superficial argument. The fact is, competition will remain robust in the wireless industry, prices will continue to fall—for example, Nielsen’s Customer Value Metrics estimates that the price of downloading a megabyte of data has fallen from 47 cents to 5 cents in the last 18 months—and workers and consumers will benefit from a stronger, more worker-friendly market leader. That’s why the AT&T-T-Mobile merger deserves support from legislators, regulators and the public.


*The author Chris Shelton is the International Vice President of Communication Workers of America, District 1.


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