US legislators repeat AT&T talking points in letter to Obama

US legislators repeat AT&T talking points in letter to Obama
A group of 15 members of the US House Of Representatives sent a letter to President Obama yesterday asking him to support AT&T's purchase of T-Mobile USA.

In their letter, they parrot AT&T's claims that the deal will result in thousands of jobs being created and increased investment in high speed data networks across the country. Those would be excellent reasons to approve the buyout.

But do they have any basis in reality? If you believe AT&T's promises to investors the answer would be no.

The letter claims:

the merger will engender new private investment to deploy wireless high speed Internet access services to 97% of the U.S. population. Coverage of this magnitude will necessitate an additional $8 billion investment from AT&T over and above its current industry leading capital investments.

But that's not what AT&T is promising investors. In fact they are promising $10 billion in infrastructure savings over the next four years and another $10 billion in "Avoided purchases and investments."

And of course AT&T really has no choice about investing in their infrastructure. Their chief rival, market leader Verizon Wireless, has built entire marketing campaigns around the deficiencies of AT&T's data coverage.

Not investing in their network simply isn't an option.

In the letter, the Representatives also claim:

the merger will reduce unemployment. AT&T has announced plans to repatriate 5,000 jobs that are currently being performed overseas. In addition to these 5,000 jobs, a recent study has shown that the merger will create somewhere between 55,000 and 96,000 new jobs to integrate the two networks and upgrade facilities.

Once again, this is a different story than AT&T is telling investors. Instead they promise another $10 billion in savings on support costs, including call centers, as well as billing and customer service.

It may be true that 5,000 jobs would be introduced to the US, but how many jobs would be eliminated?

What the letter completely fails to address is the Justice Department's primary claim in their antitrust lawsuit that reduced competition would be damaging to the mobile broadband market. You don't have to look any further than the wired internet business in the US to see why that's a real concern.

In his book, The $300 Billion Broadband Scandal, Bruce Kushnik detailed how US telcos were allowed to dominate the wired broadband market with promises of nearly universal 45Mbps fiber to the home connections by 2004 and competitive, open networks.

The actual result has been a duopoly in most markets with high prices and speeds that trail other developed countries by a wide margin.

Written by: Rich Fiscus @ 16 Sep 2011 10:44
T-Mobile AT&T DOJ Obama antitrust
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  • KillerBug

    I'm sure the president will do everything in his power to ensure that jobs are lost and citizens get screwed...he has repeatedly demonstrated that these are his two main goals.

    16.9.2011 12:41 #1

  • xaznboitx

    president can force companies to join together? wow

    16.9.2011 14:07 #2

  • vurbal

    Originally posted by xaznboitx: president can force companies to join together? wow The biggest hurdle to the acquisition right now is the Justice Department's antitrust suit. The only person who can tell them to drop it is the President.

    Rich Fiscus
    @Vurbal on Twitter
    AfterDawn Staff Writer

    16.9.2011 17:09 #3

  • No_ID

    Actually, considering that AT&T is the only cell phone company that is fully unionized I wouldn't be surprised if Obama and his cronies were fine with this merger.

    16.9.2011 17:25 #4

  • vurbal

    Just as a preemptive measure, let me remind everyone that AfterDawn is not a political website and flamewars will not be tolerated.

    Rich Fiscus
    @Vurbal on Twitter
    AfterDawn Staff Writer

    16.9.2011 18:12 #5

  • ddp

    agreed on the no flamewars.

    16.9.2011 23:10 #6

  • llongtheD

    If AT@T would have been bigger campaign contributors to Obama like Light Squared and Solyndra, this deal would have probably flown right through under the radar.
    I saw the flame war warnings and I'm just stating facts, our government is just as corrupt on either side of the aisle. In any case, I hope this deal does not go through. We need more competition, not less.

    If your fish seems sick, put it back in the water.

    17.9.2011 01:17 #7

  • deucezulu22

    And just amazed some of you guys like to talk big game about a guy who has to clean up someone else's crap. Whatever, I'm going to stay on topic. I'm glad people are fighting this merger head on. We need healthy competition, and besides; it's bad enough AT@T brought Cingular.

    17.9.2011 22:46 #8

  • pmshah

    I can't believe AT@T could be so stupid. Do as the Indian industrialists do. Contribute to all political camps that matter. That way you simply can't lose.

    18.9.2011 01:29 #9

  • dakii

    Originally posted by xaznboitx: president can force companies to join together? wow no, they want to merge but are currently being blocked

    18.9.2011 01:45 #10

  • IguanaC64

    Think of all the local T-Mobile stores that would close down. All the salesfolks and the managers that would be let go due to redundancy. Then all the redundant technical folks that work on the equipment let go. Of course there's also the redundant administrative folks.

    I don't see how a merger is going to create more jobs. Some of those T-Mobile people will move over to AT&T, but there's no way all those jobs will exist after a merger.

    19.9.2011 12:05 #11

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