In an op-ed for the Detroit Free Press, our Co-Chairman Jamal Simmons writes about the ongoing problem of America’s digital divide and how the merger of AT&T and T-Mobile will help address the problem. Here’s a taste:
The Internet transforms daily life and delivers opportunities. Millions of Americans are already taking advantage of the benefits of broadband, from entertainment to on-demand education to job searching and better health care options. But too many disconnected Americans are being left behind.
The AT&T/T-Mobile combination is the fastest way to expand wireless broadband to even more Americans—without drawing on scarce American taxpayer dimes. The FCC just has to say yes.
Last July, 10 attorneys general sent a letter to the Department Justice and Federal Communications Commission in support of AT&T’s merger with T-Mobile. Today, those same attorneys general reenforced their support. From their new letter to the DOJ and FCC:
Within the last two weeks, AT&T announced that in connection with the merger it would bring 5,000 jobs back to the U.S. and it committed to no job losses for wireless call center workers at AT&T and T-Mobile on the payroll at the closing of the merger. We again urge both DOJ and the FCC to focus on ways to resolve specific competitive concerns so this merger can proceed and deliver the significant benefits not only for wireless consumers, but also for investment and jobs that will support economic growth.
Sara Frier of Bloomberg reports Verizon Chief Executive Officer Lowell McAdam spoke out today about the proposed merger of AT&T and T-Mobile:
“The AT&T merger with T-Mobile is kind of like gravity, it had to occur,” McAdam said at an event in New York today. If the government wants to stop the takeover, it needs to have a plan to distribute spectrum and ease the crunch some carriers are facing, he said. “We’re going to watch that very closely.”
In other merger news, AT&T is meeting with the Department of Justice today in federal court in an attempt to reach a settlement. Stay tuned…
With AT&T’s merger with T-Mobile still receiving scrutiny in the Beltway, things are heating up in the advertising world. Since the merger was first announced, AT&T has been touting the benefits of its joining with T-Mobile, including the expansion of AT&T’s 4G LTE network to the vast majority of America. Rival carrier Sprint, meanwhile, has attempted to counteract the merger’s benefits for consumers by hitting hard on the competition angle.
Today, things heated up a notch with AT&T running an ad against Sprint in Washington D.C.. As Shira Ovide of the Wall Street Journalreports:
As AT&T Inc. works to convince regulators and lawmakers on the merits of its proposed takeover of T-Mobile USA, the telecom giant said it is launching an advertising blitz in Washington focused on its original selling point for the deal: better wireless service.
“In case you’re wondering why Sprint is trying to kill the AT&T/T-Mobile merger… It’s all about spectrum,” reads the text of the AT&T ad slated to run starting Tuesday in publications popular on Capitol Hill, such as the Washington Post, Politico and the Hill newspapers.
Sprint has long claimed AT&T’s spectrum concerns are off the mark, which is no doubt why AT&T decided to highlight Sprint’s industry dominance in spectrum holdings. Meanwhile, Sprint is also receiving blowback on the labor front, with the Communications Workers of America — which has a good relationship with AT&T, given the telecom’s union-friendly stance — taking out ads of its own with the headline:
Sprint — a creator of American jobs? We don’t think so.
At the Wall Street Journal, L. Gordon Crovitz has a must-read piece on wireless competition, the AT&T/T-Mobile merger, and the real threat to a healthy wireless ecosystem:
The great threat to competition for wireless data and mobile phones is not mergers—it’s government failure to free enough spectrum to meet demand. Deutsche Telekom agreed to sell T-Mobile, the fourth-largest wireless provider in the U.S., because it couldn’t get enough spectrum to compete and wanted out of the U.S. market. For AT&T, the $39 billion purchase price was the best way to get the spectrum and local cell towers it needs to serve 97% of U.S. consumers with a new 4G LTE network—a technology currently provided only by Verizon. In other words, this merger would mean more competition, not less.
Our Honorary Chairman Rick Boucher has an op-ed for The Gazette in Iowa on the benefits of the AT&T/T-Mobile merger for rural America. Here’s a taste:
[The] promise of expansive rural opportunity leads me to support AT&T’s proposed merger with T-Mobile. The companies combining their strengths will bring 4G LTE wireless broadband access, with data speeds rivaling today’s fastest wired connections, to more than 97 percent of Americans. President Obama has set a goal for 98 percent of the population to have broadband access within five years; the combination of AT&T and T-Mobile very nearly achieves the president’s goal and does so with private capital, not taxpayer funds.
In more Boucher news, the former congressman recently sat down for an interview with WebProNews. Here’s video of the conversation:
Yesterday, Rep. Heath Shuler (D-NC) and fourteen other House Democrats sent a letter to President Obama “urging him to swiftly resolve concerns with the proposed transaction between AT&T and T-Mobile USA.” From the official press release:
“The road to economic recovery is long, but there is an opportunity before us to immediately create jobs and spur infrastructure investments and technological innovations that will create jobs for years to come,” said Rep. Shuler. “By settling the proposed merger of AT&T and T-Mobile USA we can put thousands of Americans back to work and promote economic development across the country. I urge the President to strongly consider the vast benefits this merger will have on job creation and the economy and quickly resolve any concerns the Administration may have with the proposal.”
The full list of co-signers:
Rep. John Barrow
Rep. Mike Ross
Rep. Dan Boren
Rep. Dennis Cardoza
Rep. Joe Baca
Rep. Leonard Boswell
Rep. Ben Chandler
Rep. Jim Costa
Rep. Henry Cuellar
Rep. Mike McIntyre
Rep. Mike Michaud
Rep. Collin Peterson
Rep. Loretta Sanchez
Rep. David Scott
Yesterday at the Newseum in Washington, D.C., we held our latest broadband symposium, “Realizing Deployment of Next Generation Broadband Services and Applications to All of America.”
Delivering the keynote address was former Pennsylvania Governor Edward Rendell, whose long history as an advocate for infrastructure investment made him well-suited to talk about the critical need to expand America’s digital infrastructure to everyone in the nation. As he said at the start of his keynote:
”Our ability to grow economically and compete in the global marketplace is tied to our infrastructure. And when people use the term infrastructure the average citizen thinks of roads, bridges, maybe mass transit. But infrastructure today has a totally different meaning and building America’s future is dedicated no just to rebuilding and revitalizing our transportation infrastructure, which we dearly need to do, but building out our infrastructure to make us competitive in the future. That means the electric grid, which needs serious work in this country, and of course broadband technology.”
Rendell then pivoted to the challenge wireless providers are facing to keep up with unprecedented demand for mobile data:
”Today, America’s wireless industry continues to grow based on consumer demand that’s at an all time high, and the staggering growth of mobile broadband traffic is creating an explosion in new services, new devices, content and applications.”
After calling for the government and wireless industry to keep working together in order to keep meeting demand, Rendell turned to America’s growing spectrum concerns:
”The looming spectrum crunch threatens to dampen the innovation of the high-tech industry. Driven by explosive growth from mobile broadband data, spectrum exhaust — particularly in urban markets — will challenge our ability to provide the services, the us of smartphones, mobile apps, and content to consumers. Clearly there’s a need for more spectrum and everyone knows it.”
One way to quickly address America’s looming spectrum crunch, Rendell said, is the approval of the AT&T/T-Mobile merger, which the former governor is advocating for. But Rendell also made clear spectrum wasn’t the only reason the merger should be approved, and used an example from his terms as governor to help make the point:
”You know, one of the things we did in Pennsylvania that was successful is triple our exports in the eight years I was governor. One of the ways we tripled exports is we went to small and midsized companies who had zero export business and we told them that there’s a market for what you produce. And we told them the countries where that marketplace existed. And we told them how to go about reaching that marketplace, how to do exports and how to deal with the local law and customers. But many of the companies couldn’t do the marketing because they couldn’t get the access [to broadband] they needed. And after this merger, I believe in great part they will.”
In closing his keynote, Rendell tackled regulations and economic growth:
”[W]e’ve got to continue to make the regulatory system work to do its job. Regulation is important. Any suggestion that we should strip away regulations just in return for economic growth is silly. We don’t have to do it. But we have to carry out those regulations in a common sense way that allows for growth and as strong a growth as we can.”
Then the two-term governor challenged America to think big again— not just in broadband deployment, but in all areas of infrastructure:
”We always did big things. We always were fearless. We always took on challenges. And now I think we’re at a critical juncture and that American spirit has to be unleashed again. That spirit will come and that unleashing will come from letting technology do its job.”
In today’s edition of the Chicago Tribune, the paper’s editorial board comes out strongly in favor of approval of the AT&T and T-Mobile merger. After highlighting the negative effect the Justice Department’s actions could have on job creation, the editorial board writes:
Access to advanced wireless Internet is the key. A merger of AT&T and T-Mobile would bring an under-served swath of America into the 21st century of high-speed mobile data communication. Much like the rural electrification movement of the 1930s, this deal offers a chance for many Americans to leap ahead technologically.
If Justice gets its way, progress will slow to a crawl. We think the FCC should approve the merger after obtaining appropriate concessions — and Justice should settle its case sooner, not later. Dragging out this proceeding stands to hurt a nation that can ill afford more damage from a government too often hostile to business interests.
At The Hill, Gautham Nagesh reports that in the wake of the Justice Department’s lawsuit to stop the merger of AT&T and T-Mobile, members of the House Energy and Commerce Committee want to have a discussion:
Chairman Fred Upton (R-Mich.), telecom subpanel chairman Greg Walden (R-Ore.) and Rep. Joe Barton (R-Texas) point to the nation’s unemployment rate and ask Attorney General Eric Holder and FCC chairman Julius Genachowski to what extent job creation and economic growth factor into their reviews of the merger.
“We have also seen press reports that DOJ’s ‘door is open’ if AT&T and T-Mobile USA want to address the DOJ’s ‘concerns’,” the lawmakers wrote. “We want to know what the DOJ’s specific concerns are and how these concerns relate to the impact on jobs and economic growth.”
Earlier this week, a federal judge asked both the DoJ and AT&T to mark September 21 on their calendars in order to talk through a possible settlement.
From an editorial in the Wall Street Journal responding to this week’s announcement that the Department of Justice is suing to block the merger of AT&T and T-Mobile:
The real threat to wireless competition is the lack of available spectrum for companies to use to meet public demand. The crunch has become acute as consumers snap up new smartphones, which enable them to watch videos, download data and more. The last auction was held in 2008 and there aren’t any new ones on the calendar. If companies can’t get the spectrum they need, they’ll restrict usage through higher pricing—exactly what the Justice Department says it doesn’t want.
The political interpretation of Justice’s actions was borne out yesterday when acting antitrust chief Sharis Pozen said that “our door is open” to AT&T if the company wants to resolve the government’s “concerns.” In other words, do our bidding on some regulatory or political business, and you can still get your merger. Meantime, Ms. Pozen and Justice are putting a legal damper on investment and innovation in one of America’s few dynamic industries, and that will do economic damage far beyond AT&T.
The Wall Street Journal‘s complaints about the DoJ’s actions are echoed by Geoffrey Manne of Forbes, who wrote shortly after the lawsuit was announced:
[E]ven on a national level, the blithe dismissal of a whole range of competitors is untenable. MetroPCS, Cell South and many other companies have broad regional coverage (MetroPCS even has next-gen LTE service in something like 17 cities) and roaming agreements with each other and with the larger carriers that give them national coverage. Why they should be excluded from consideration is baffling. Moreover, Dish has just announced plans to build a national 4G network (take that, DOJ claim that entry is just impossible here!). And perhaps most important the real competition here is not for mobile telephone service. The merger is about broadband. Mobile is one way of getting broadband. So is cable and DSL and WiMax, etc. That market includes such insignificant competitors as Time Warner, Comcast and Cox. Calling this a 4 to 3 merger strains credulity, particularly under the new merger guidelines.
Alliance disappointed with Department of Justice move to block merger; lawsuit detrimental to economy and U.S. growth
WASHINGTON, D.C. – August 31, 2011 – The Internet Innovation Alliance (IIA), a broad-based coalition supporting broadband access and adoption for all Americans, today issued the following statement in response to reports that:
1. The Department of Justice filed a lawsuit to block the AT&T and T-Mobile merger; and
2. AT&T would create 5,000 new jobs at U.S.-based call centers – jobs that are currently outsourced:
“The Department of Justice decision today is contrary to this Administration’s commitments to grow the economy, create jobs and expand broadband deployment,” said IIA Senior Advisor Broderick Johnson. “Next week, President Obama is expected to unveil a wide ranging pro-jobs plan. Approval of this merger is consistent with that critical message.”
“The IIA is supportive of the merger because it will be helpful to our economy and U.S. job creation,” said IIA Honorary Chairman Rick Boucher. “Bringing jobs back to America and investing in broadband technology which will foster innovation are a win-win for the U.S. economy.”
AT&T, an IIA member, also committed that the merger will not result in job losses for U.S.-based wireless call center employees of T-Mobile or AT&T, when the merger closes. Analysis of the merger has shown the following:
According to a study by the independent organization Economic Policy Institute (EPI), investment related to the merger will create an estimated 55,000 to 96,000 new jobs.
The Communication Workers of America (CWA) has stated that a post-merger AT&T will be better able to retain and increase jobs, in the long term, because it will be in a more advantageous position to expand and extend its business than either AT&T or T-Mobile could as separate entities.
“Bringing call center jobs to American workers is commendable, but it’s the tip of the iceberg,” said IIA Co-Chairman Bruce Mehlman. “The real job-generating benefits of the merger will be seen as higher-speed mobile broadband gets deployed to millions more Americans, giving them far greater opportunities to reach new customers, serve new markets and benefit from new applications and services that are transforming the global economy.”
As recent research shows, investment in broadband technology — also a pledge with the merger — will greatly contribute to job creation in the United States:
Wireless carriers could invest between $25 billion and $53 billion in building out their 4G network through 2016, which could lead to the creation of 371,000 to 771,000 jobs and gross domestic product growth of $73 billion to $151 billion, according to a study from Deloitte.
According to a McKinsey study, the Internet creates 2.6 new jobs for every one job lost.
Earlier this month, IIA Strategic Counsel Henry M. Rivera spoke as the Labor Council for Latin American Advancement’s Leadership Development & Educational Conference. After his speech, he sat down with James Ferré of Caribbean Business to talk about mobile broadband adoption in the Hispanic community, and the roll the planned merger of AT&T and T-Mobile can play in closing the digital divide:
In 2008, Hispanic Internet adoption increased to 54%, while overall U.S. Internet access was 69%. When it comes to mobile Internet, however, Hispanics are among the most avid adopters. Their 53% rate of mobile-Internet adoption trails that of African Americans, but is far ahead of whites (33%), according to a study by the Hispanic Institute.
“That is why wireless [broadband Internet] is so important for Hispanics,” Rivera said.
Full text of Rivera’s speech at the Leadership Development & Educational Conference is available here.
Yesterday, IIA convened political analysts, economists and small business owners for a teleconference exploring the impact of investment in broadband technology on jobs and economic development. Moderated by our own Jamal Simmons, participants were:
Michael Mandel, Chief Economic Strategist at the Progressive Policy Institute, founder of Visible Economy LLC, president of South Mountain Economics, senior fellow at the University of Pennsylvania Wharton School’s Mack Center for Technological Innovation, formerly chief economist at BusinessWeek
Jon Troen, Managing Partner at Catchfire Media, President and CEO of Colorfx and Rock Communications (small business owner in Des Moines, Iowa)
Corey Mehaffy, President of Moberly Area Economic Development Corporation in rural Missouri (responsible for all economic development efforts including business retention & expansion, business attraction and entrepreneurship)
The discussion addressed a range of issues, from the importance of expanded next-generation mobile broadband for small businesses, to private sector moves like AT&T’s proposed purchase of T-Mobile, which will create as many as 96,000 jobs, according to a study for the Communications Workers of America by the Economic Policy Institute.
Thanks to everyone who participated. Computer World has coverage of the event, and you can download the audio of the teleconference here.
With the Department of Justice and Federal Communications Commission separately looking over the planned merger of AT&T and T-Mobile, The Hill‘s Gautham Nagesh checked in with AT&T’s Jim Cicconi:
“We’re not really running into major concerns or disquiet about the deal on any scale that we feel would threaten approval,” said AT&T senior executive vice president Jim Cicconi, pointing out the deal has now been endorsed by 27 state governors, more than 100 mayors and over 150 Chambers of Commerce nationwide. “We’ve got good momentum on this and it’s growing.”
Cicconi also made clear that one of the merger’s key selling points — near achievement of President Obama’s goal of reaching 98 percent of Americans with broadband by deploying next-generation LTE coverage to the vast majority (97%) of Americans — hinges on merger approval:
“With this transaction we can and will (build out to 97 percent of the population),” Cicconi said. “It costs a lot to do that, $8 billion, but it’s money we’re willing to invest if this merger is approved. We’re not going to do that otherwise. Period. It’s very simple, it’s binary. If approved we can and will do it, if not we cannot and won’t.”
Olga Kharif and Alex Sherman of Bloomberg report that Sprint is in talks with cable giant Comcast to increase Sprint’s ownership of Clearwire in order to keep plans afloat to build out next-generation LTE mobile broadband:
Sprint and Comcast, which are already investors in Clearwire along with Time Warner Cable Inc. and Bright House Networks LLC, are discussing ways to provide funding to the money-losing Kirkland, Washington-based company so it can build out its high-speed wireless network. Clearwire plans to spend about $600 million to upgrade its network to so-called long-term evolution, or LTE, technology, to compete against AT&T Inc. and Verizon Wireless, the company said this month.
In an opinion piece for CNN, Michael Mandel of the Progressive Policy Institute argues regulations are slowing innovation and much-needed job creation. Highlighting the Federal Trade Commission’s recent investigation into Google, Mandel also looks at the FCC’s slow movement on the proposed merger of AT&T and T-Mobile:
For example, AT&T invested $19.5 billion in the U.S in 2010, more than any other corporation, at a time when most companies are hoarding cash. But instead of applauding AT&T’s willingness to spend and create jobs, regulators at the Federal Communications Commission have recently decided to slow down their reviews of both AT&T’s bid to merge with T-Mobile and the company’s earlier proposal to buy wireless licenses from Qualcomm, which has been pending since February. The Commission’s slowdown pace adds uncertainty to the marketplace and keeps investment plans from moving forward.
The full op-ed is worth checking out. Mandel will also be taking part in our next press teleconference, which is happening next Wednesday at 2 pm ET.
Speaking of the merger, on Monday the Communications Workers of America (CWA) released a new paper on the positive effect AT&T’s merger with T-Mobile will have on jobs. From the official press release:
The research element of the compilation includes the study by the Economic Policy Institute that concludes the merger will create 96,000 jobs over the next seven years, work made necessary by the billions of dollars in capital investments planned for building out America’s 4-G broadband network.
The real world experience includes the fact that AT&T employees represented by CWA are protected by contract language that says they cannot be laid off if their work has been off-shored, as well as the fact that there has never been a merger-related layoff of a CWA covered worker in 17 previous mergers and/or acquisitions by AT&T.
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