Last week, a group of 76 Democrats made a small splash inside the Beltway after they signed a letter touting the alleged benefits of the AT&T-T-Mobile merger for rural communities and workers. The problem with the letter, though, is that it’s full of lies that have been trumpeted by AT&T and are being echoed by its supporters, despite being swiftly debunked by Free Press and others.
While it does not outright endorse the merger, the letter claims the deal would bring the benefits of broadband to rural communities that would otherwise not have access. But that’s not true. On June 10, AT&T reported to the FCC that, even without the merger, it already plans to deploy next generation "4G service to 97 percent of the population by the end of 2012."
The letter also suggests AT&T's takeover will generate billions of dollars in additional investment and create thousands of jobs. But AT&T has told Wall Street the merger will result in less investment and more layoffs.
So if these claims are false, who really does benefit from this merger? (Don’t worry, this won’t take long. It’s a short list.)
The most obvious beneficiary of this takeover is AT&T. By eliminating a competitor, AT&T would gain millions of subscribers, a cache of valuable wireless spectrum and a spot alongside Verizon in a massive wireless duopoly. (So massive in fact that these two companies would rival the market dominance of the top 10 oil companies combined.) AT&T’s shareholders are also poised to reap the benefits of the post-merger “synergies” which translate into tens of thousands of laid off workers and billions less investment. While AT&T tells Congress the merger will lead to more investment and jobs, it’s telling Wall Street the opposite. It’s probably not lying to Wall Street.
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Deutsch Telekom and T-Mobile
Deutsch Telekom has been seeking to unload T-Mobile for a few reasons. T-Mobile has been slowly falling behind Verizon and AT&T, thanks in large part to the slanted regulations and unfair playing field that the duopolists have ordered up from friendly lawmakers. The investment necessary to bring it up to speed is not that large compared to the merger price, but it may be more than Deutsche Telekom wants to put in. Additionally, in order to expand its coverage and improve its network, T-Mobile needs more and better spectrum, and has trouble getting it because AT&T and Verizon are so dominant in that arena, too. AT&T’s offer of $39 billion was enough for Deutsche Telekom to unload the company and focus on its European business.
Communication Workers of America has been ceaselessly urging progressives to support the merger, calling it good for jobs and investment, but what it really means is that the merger is good for the union. CWA has been trying to unionize T-Mobile’s workforce for the last four years, and under AT&T it would have access to those workers. T-Mobile's workforce of course should be free to join unions. But what CWA doesn’t mention in its plugs for the merger is that a significant number of T-Mobile’s workers won’t even have the chance to join the union, because they’ll be laid off. The only benefits those downsized workers will see are unemployment benefits.
AT&T is one of the biggest contributors to congressional coffers, and it has spent nearly $54 million in campaign contributions over the past 25 years, and over $142 million on lobbying in the last 15. After the Supreme Court's Citizens United decision, the cost of running for Congress has spiraled upward, giving contributing corporations even more power to dictate policy to money-hungry elected officials. The signers of this week’s letter have received a total of nearly $1.8 million from AT&T, a number that probably helped the signers avoid taking a long look into the letter’s claims.
To be sure, the list of real beneficiaries is small, and noticeably missing are consumers in the wireless market, which after the loss of a key competitor will see less innovation. Everyday Americans will pay for this merger with higher bills and will have fewer choices in carriers, phones and plans.