If AT&T Buys T-Mobile, Who Wins and Who Loses?


Posted on 04 April 2011

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By Preeti Vissa and Samuel S. Kang
Greenlining Institute

AT&T’s recently announced plan to acquire T-Mobile has the potential to change the communications landscape in significant ways. A few have already praised or condemned the proposed merger, but rather than rush to judgment (and federal regulators could take a year or more to approve or reject the proposal), it may make more sense to take a deep breath, step back, and look at the big picture.

If that big picture has an overarching theme, it’s connections. Not long ago, different communications technologies lived in separate silos: Your phone was over here, your computer was over there, your TV was in the next room, and so on. But the walls between these silos are breaking down. Your phone, computer and TV are not just increasingly connected, they’re more and more likely to be the same device – and the connections between those devices and the world are increasingly wireless.

Indeed, it’s been projected that by 2020, the majority of Internet connections will be wireless.

So wireless communication is no longer a luxury, it’s an economic necessity. It will be increasingly central to people’s ability to access jobs, education, health information and civic engagement. Access to this technology at an affordable price is crucial to the welfare of individuals and communities, which is why the proposed AT&T/T-Mobile merger raises a lot of questions.

Much has been written about the so-called “digital divide,” and digital inequality remains a significant problem, both here in California and nationwide. When The Greenlining Institute looked at the issue in 2009, we found that Californians with an annual income of at least $80,000 were nearly twice as likely to use the Internet as those with an income of $40,000. A 2010 Georgetown University study found African Americans and Latinos trailing whites in broadband access nationally. In California, Latinos were among the least likely to have broadband access or use the Internet.

Cost is clearly a factor in all of this, and will continue to be so as wireless broadband becomes more important. T-Mobile has had a reputation for being a comparatively low-cost provider (see, for example, this analysis on one consumer blog). What will happen to low-cost services as the field consolidates and competition declines? Will fewer choices mean consumers pay more? Will existing T-Mobile customers be pushed into higher-cost plans?  Randall L. Stephenson, AT&T’s CEO, has said that consolidation won’t lead to higher bills.

Perhaps not surprisingly, Sprint CEO Dan Hesse has emphatically stated that this proposed merger threatens any semblance of competition.  But was there really any competition in the wireless industry?  

On the plus side, will more Americans gain access to broadband service as a result of this merger? That’s the promise and the hope, but will it be realized?  

In any case, affordable service is an imperative. Without it, the low-income Californians and communities of color that are now on the losing side of the digital divide will even farther behind. In striking contrast to other aspects of digital inequality, African Americans and English-speaking Latinos are more likely than whites to own a mobile phone, and to use that phone to access the Internet.

And what about jobs? Mergers typically mean substantial job losses as companies merge and consolidate staff. What will happen to employment at AT&T and T-Mobile, and what will the merged company do to mitigate the effects of any job cuts?  

In California, AT&T has an excellent record of contracting with minority-owned small businesses, but most of its biggest Silicon Valley suppliers do not. What will AT&T do to change this? Can similar efforts on a national scale help struggling communities overcome the effects of job cuts in the combined company?

Today there are more questions than answers, but no one should doubt that this merger, if it goes through, will affect nearly every man, woman, child and community in America. Federal regulators will need to ask a lot of questions, and we should all pay close attention to the answers.

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Preeti Vissa is Community Reinvestment Director  and Samuel S. Kang is General Counsel at The Greenlining Institute,www.greenlining.org.