To this T-Mobile customer, last week's announcement of a proposed merger between AT&T and T-Mobile sent shivers up my spine. And not just because I anticipate a 25% increase in my monthly wireless bill.
A survey of strip malls across the country reveals an AT&T store and a T-Mobile store within a half mile of each other at 80-90% of retail centers. Sometimes they're within a half-foot of each other. Common sense indicates that "ATMobile" will not continue to operate tens of thousands of duplicated stores.
They won't be able to afford it, for one thing. AT&T is paying 28.8 times T-Mobile USA's annual net income for the company (according to Bloomberg) and the price is considerably higher than the customary valuation for global cellular phone companies based on price/earnings ratio,
Given AT&T's track record, (the company shed 20,5000 employees between 2007 and 2009, while reporting overall profits of 36 billion dollars) and the corporate smooth talk about "merger synergies" already emerging from the PR department at AT&T, one can't be too optimistic.
Not to tweak the hand that feeds me, but the recent AOL/Huffington Post merger cost a reported 900 or so jobs. There isn't much reason to believe that if this merger goes through that number won't repeat by a factor of ten - or a hundred.
Which makes the recent show of support by the Communication Workers of America for the deal absolutely baffling. Internecine politics aside, most Americans think of labor unions as advocating for more and better jobs for American workers, not for massive merger-driven layoffs. But here we have one of the largest labor unions in the country getting behind significant job losses for non-unionized T-Mobile workers - and at a time of mass unemployment when jobs are already in short supply. Huh?
The CWA's justification seems to be that T-Mobile workers surviving the merger will join their union when they become AT&T employees. That is probably cold comfort to their cohorts joining the ranks of the unemployed. At this time when public sector unions are passionately requesting solidarity from the 87% of Americans who don't belong to unions - and getting it - where is the show of concern for the livelihoods of others? Rank and file CWA members - and the rank and file of unions of all stripes - may want to question this decision of the leadership. Pushing thousands out of work in yet another corporate merger may not be the best expression of the needs of working class Americans right now.
For those of us who don't work in the cellular industry, it's pretty simple. It is about service and prices for our cell phones. And on those grounds, the merger also falls flat.
Consumer Reports rated AT&T the lowest scoring cell phone company in a December 2010 customer satisfaction survey. Celebrations broke out in the streets when it finally became possible to access i-Phone hardware on the Verizon network. And in a comic moment, the Los Angeles Times wrote a story last week on an AT&T policy that allows the company to sever the contracts of customers engaging in swearing and vulgar language with AT&T customer service representatives. Which gives one an idea of the number of Americans reduced to profanities when discussing their AT&T cellular service.
The cell phone industry as a whole ranks ahead of only one industry in the rate of customer dissatisfaction according to the Better Business Bureau - the cable industry. Another market that operates with insufficient market competition.
Monopolies and duopolies. They're just plain bad for consumers.
Having 73% of the market controlled by two companies is unlikely to improve prices and service. If the merger leads to the acquisition of struggling Sprint by Verizon, which is considered quite likely by major industry analysts, 89% of the cell phone market will be controlled by "ATMobile" and "Verint".
And there goes my monthly bill into three figures.
Can this be stopped? The track record for stopping telecom mergers is, in a word, dreadful. AT&T spends 15 million plus lobbying in Washington DC every year, and this proposed merger just kick started that figure into the stratosphere. It will take a lot of people power. And while angry shoppers are definitely a constituency to be reckoned with, there is a whole lot at stake here besides lousy customer service, high prices and the loss of a lot of jobs.,
More and more people access the digital universe via smart phones. Statistics show that when lower-income communities and youth, especially youth of color, are studied, usage overwhelmingly skews to the heavier use of mobile telephone connections to access news and information and connect with peers. Rising prices and limited service options, especially for data, which are already trends and can only be expected to increase with less market competition, will price out some of the heaviest users of mobile data. Without affordable mobile data options, we risk moving more and more towards a segregated country of digital haves - and digital have-nots. There is already a not-insignificant digital divide. Freezing the cell phone and mobile data marketplace into an effective duopoly will freeze the communication rights of many and make it harder for them to participate in many aspects of civil society.
Especially if they used to have a part-time job at a T-Mobile store in the mall.
AT&T / T-Mobile : a disaster any way you look at it.