A couple of weeks ago, Roll Call published my article explaining how AT&T's acquisition of T-Mobile would harm consumers and workers, particularly Latino consumers and workers. Last week, Roll Call printed Felix Sanchez' misguided response, which vacantly repeats AT&T talking points to suggest that vast consolidation in the cell phone marketplace would somehow benefit the Latino community. Sanchez attempts to rebut my explanation of the danger of two phone companies -- companies with a record of raising prices in concert, no less -- owning nearly 80% of the cell phone market.
More than half of Sanchez' article focuses on naming various Latino-serving organizations that supposedly support AT&T. But some of these organizations -- Sanchez' group included -- have absolutely no expertise on telecommunications issues and no capacity to research and independently substantiate the claims that AT&T has been making in its ongoing onslaught of outreach to these groups.
Before NHMC formally opposed this acquisition, I experienced AT&T's powerful lobbying arm firsthand, and I can understand how many groups could become persuaded after endless outreach with AT&T spin and one-sided "data." Fortunately, NHMC has a team of telecommunications policy attorneys that is tasked with researching exactly these issues. My team and I dug through the entire universe of facts before taking our position.
We discovered that the acquisition would eliminate an important competitor in T-Mobile, driving up prices, diminishing choices and leading to layoffs. Sanchez suggests that we have no support for these assertions, but NHMC's comprehensive Petition to Deny the acquisition is loaded with studies and facts to validate our stances. Obviously he hadn't read it. Sanchez' attempts at substantive rebuttal are outright inaccurate.
First, this acquisition WOULD NOT shrink the digital divide. AT&T touts that it would deploy 4G services to 97% of the country if this acquisition were approved. Ironically, AT&T had already stated that it would do this but inexplicably lowered its goal to 80% in January -- around the same time it was preparing its pitch to buy T-Mobile. Further, AT&T inadvertently revealed that it would only cost $3.8 billion dollars to reach this level of deployment without this acquisition. I say "only" because $3.8 billion is a fraction of the $39 billion price tag of this transaction and a tiny percentage of AT&T's $124 billion in operating revenues for 2010. Verizon also has plans to cover over 97% of the country and is not holding deployment hostage for a government favor. And even while I look forward to greater 4G penetration, I recognize that cell phones are not viable substitutes for home broadband connections and are not some silver bullet to digital equality. As advanced as cell phones are today, they still cannot support opportunities for our families to access job applications, financial aid and other online services that we need to survive and thrive.
Next, this acquisition WOULD NOT lead to lower prices. It doesn't take a rocket scientist to understand that less competition equals higher prices. And AT&T and Verizon controlling 80% of the market could not be good for consumers. This is another instance in which AT&T manipulates data to spin its story. The truth is that cell phone bills have increased in this era of consolidation, even as the companies' operation costs have dropped.
The notion that AT&T would honor T-Mobile contracts is a joke and provides no solace for T-Mobile customers. The minute that T-Mobile customers alter their contracts or buy new phones they would be subject to AT&T's higher prices. And AT&T has already admitted that T-Mobile customers that use certain services would have to upgrade their phones, necessarily forcing them to opt for higher prices.
Finally, jobs. I've been around long enough to know that acquisitions lead to workforce reductions.
Indeed, AT&T has conceded that it would consolidate retail stores and billings systems should this acquisition be approved. I don't understand why an organization that represents the Latino community wouldn't be more concerned about this, or at least be asking serious questions of AT&T before becoming its cheerleader. AT&T has shed over 100,000 jobs in the last decade even as its profits have continued to grow. Why should it do anything different now, especially as it would find itself with tens of thousands of duplicative employees should this acquisition be approved?
There are a lot of smart people at AT&T that have figured out ways to make this acquisition sound like a good deal. But obviously AT&T is not a neutral provider of the facts. One must look beyond its spin to determine the truth. After careful review of all facts and perspectives, I assure you, this acquisition would be a disaster for consumers, particularly Latino consumers.