by William Teach | September 1, 2011 8:58 am
Somehow, the DOJ suit against the AT&T/T-Mobile merger deal became about Conservatives
The Obama administration is under attack as anti-business and anti-jobs — and it gave its critics more fuel for the fire Wednesday.
Obama’s Justice Department announced Wednesday morning that it’s going to court to block AT&T’s efforts to buy T-Mobile. Minutes later, FCC Chairman Julius Genachowski announced that his agency also has serious concerns about the deal.
Yes, there were some conservative blogs who thought the suit was a bad idea, and anti-business. I’ll get to why it’s not in a bit
And an hour after that, the White House announced that President Barack Obama wants to talk to a joint session of Congress next week about creating more jobs.
The administration sees no contradiction: Announcing the AT&T/T-Mobile lawsuit, Deputy Attorney General James Cole said that stopping the deal “will help protect jobs and this economy,” because “efficiencies” – namely layoffs – usually follow big corporate mergers.
For a change, they have a point. We’ll get to that
But critics don’t see it that way.
The conservative think tank MediaFreedom said that if the DOJ suit “bears fruit, it will have killed a ‘jobs stimulus plan’ that needed no approval from an ornery Congress — a sad outcome made even more so by the tough road we face in getting our economy back on its feet.”
Sen. John Cornyn (R-Tex.) said he was “disappointed in the Justice Department’s decision,” citing Tuesday’s announcement from AT&T that it intended to return 5,000 outsourced call center jobs to the United States if the deal went through.
Another Texas Republican, Rep. Pete Sessions, called DOJ’s decision “the latest example of the Obama administration’s continued assault on the American economy.”
For a change, I’m going to disagree with these conservatives. This merger (or a merger with Sprint) would reduced competition, reduce innovation, and far from creating jobs, would reduce them. Those 5,000 outsourced jobs would never appear.
Back during the days when BellSouth merged with SBC and spun off Cingular, lots of layoffs occurred. People at all levels were concerned for their jobs. When SBC bought what was left of AT&T except for their wireless division, thousands of layoffs occurred. When Cingular purchased AT&T Wireless, thousands of layoffs occurred. They aren’t going to keep tons of duplicate positions around. There were no jobs created from the merger. As I was working for Cingular at those times, I was able to see the layoffs and insider information on what was happening.
But what about T-Mobile’s call center employees who face unemployment if Genachowski’s agency doesn’t stop the takeover of their company by AT&T? Job cuts like those are typical of a corporate merger’s “synergies.” Along with retail service reps and plenty of managerial, maintenance, and technical staff, those call center workers will find themselves out on the pavement should this ugly deal go down.
It’s no secret. T-Mobile executives acknowledged preparing and offering severance packages for the upwards of 20,000 workers who likely will find themselves expendable in the merged mega-corporation.
And what of stores? Market data leads wireless companies to build stores in certain areas. And the companies tend not to want corporate stores within so many miles of each other. In the Raleigh area, there are 3 stores within a mile of a AT&T corporate store. Think those will stay open? What about others that are not in optimal areas?
Furthermore, this can be a bad deal for the consumer, who will be eventually forced to increase the cost of their wireless plan if they want to upgrade to a newer phone. Just ask the old AT&T Blue customers.
Crossed at Pirate’s Cove. Follow me on Twitter @WilliamTeach.
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