This week the Washington Post's Cecilia Kang reported that the Obama Administration is feeling "caught in the middle" between consumer advocates — like Free Press — who oppose AT&T's takeover of T-Mobile, and labor unions like the Communications Workers of America, who have come out in support of the deal.
According to Kang, the CWA says the new mega-company "would generate about 100,000 jobs through a promised $8 billion in investment to expand its high-speed wireless network — a powerful argument at a time of soaring unemployment."
However, this "powerful argument" is nothing more than a powerful fairy tale. This merger will indisputably result in lost jobs, not job gains.
First off, AT&T has a long history of laying off its workers, often after acquiring other companies. AT&T has actually cut more than 100,000 jobs in the last nine years, while at the same time T-Mobile has added more than 20,000.
In addition, CWA has said it's looking forward to adding 20,000 newly-unionized members to its ranks if this deal goes through. This is all well and good until you realize that T-Mobile currently employs about 40,000 people. Using CWA's own calculus, as many as 20,000 jobs could disappear if these two companies combined forces.
We can all agree that the more jobs the better, and we can all agree that workers who want to organize unions shouldn't be blocked from doing so. But with this deal, we'd simply end up with fewer jobs for everyone, and workers' bills would go up.
And what about AT&T's promise to increase its spending by $8 billion over the next six years?
It's a sleight of hand. The truth is, thanks to merger "synergies" that AT&T would create, the combined AT&T-T-Mobile would be spending $10 billion less over that period than the two companies would separately.
Here's how it breaks down: AT&T is promising to spend an additional $8 billion over the next six years if the merger goes through. (Forgetting for the moment though that AT&T would need to up its investment by that much even if the deal is blocked, to keep building out its own network and make up for its chronic under-investment). But T-Mobile, which has been much more aggressive than AT&T in building out high-speed wireless networks, would spend approximately $18 billion total in the same period if not acquired. That's $18 billion in investment that would be lost if AT&T takes over T-Mobile.
So do the math: $8 billion (AT&T's new investment) minus $18 billion (lost T-Mobile investment) = negative $10 billion.
Yes, AT&T — a company that is actually planning on reducing investment and firing workers — is getting away with spinning a fairytale about increased investment and new jobs. Let's hope that the regulators at the FCC and Department of Justice are spending their days reading non-fiction, and leaving the fairytales for bedtime.
Go here to learn more about the merger myths AT&T is peddlling.