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Dial “J” for Jobs: Why antitrust concerns should not impede the AT&T/T-Mobile alliance
Our antitrust laws play a small but important role in helping to spur employment. Sound antitrust enforcement can spur economic growth by eliminating unnecessary barriers to entry, or by protecting rivalry. When antitrust enforcement is used prudently, the benefits of greater competition not only lead to lower prices and output, but hopefully greater job growth. However, the DOJ’s suit has the possibility to prevent hope for job growth.
The impact on job growth and job preservation is critical to the ongoing debate on the AT&T – T-Mobile merger. The opponents to the merger sound the alarm that the deal will eliminate thousands of American jobs. Attacks on the merger that are premised on job losses, however, are ultimately unfounded for several reasons.
Those who raise the jobs concern use a false comparison. The attack is premised on a comparison between the number of personnel T-Mobile and AT&T employ separately versus the number of jobs T-Mobile and AT&T will provide post-merger. In doing so, the opponents ignore the reality: T-Mobile is on its way out. T-Mobile's parent Deutsche Telekom has made it unambiguously clear -- they are withdrawing from the United States. T-Mobile's days are clearly numbered. And with DT's withdrawal over 40,000 jobs will be lost. That’s 40,000 more American families facing the devastating harm of unemployment.
We need only look a few years back to what happened when the plans of another U.S. subsidiary of a German company failed. In 2008, DHL Express, a subsidiary of German-based Deutsche Post AG, was hemorrhaging money and trying to work out a deal with UPS to salvage its U.S. operations. As is the case today with the AT&T – T-Mobile deal, competitors and lawmakers were up in arms.
The deal ultimately fell through, preempting the need for legislative or regulatory intervention. The results absent the deal, however, were devastating. Out of options, DHL had to cut its U.S. domestic shipping operations to the bone. The job losses were catastrophic. And the losses were not limited to corporate redundancies. Over 8,000 front-line employees lost their jobs as DHL closed its hub in Wilmington, Ohio. In an instant, practically an entire town was laid off.
Merger opponents, spurred and supported by nonunion competitor Sprint, have created a spectrum of competitive harm. But, as I have argued elsewhere, those alleged harms lack substance. The politically expedient call to arms against purported net job losses resulting from the AT&T – T-Mobile merger is short-sighted and, if successful, will ultimately prove to be woefully myopic. Not only will the “redundant” corporate jobs be gone, but many of the well-paid, middle-class front line jobs will fall by the wayside as well. The facts on jobs and economic growth are clear.
First, AT&T has committed to preserve at least 20,000 jobs. These are no mere paper promises. Just recently AT&T committed to move 5,000 jobs from overseas into domestic call centers, and to keep all current call center jobs.
Second, the critics fail to give credence to the spill-over jobs that are created as broadband wireless coverage expands to new markets. As a result of the merger, AT&T will be better able to expand broadband wireless network to new markets, some which currently have no broadband wireless service. According to a Brookings Institute report, for every 1 percent increase in broadband penetration in a state, employment is projected to increase by 0.2 to 0.3 percent per year.
In a time when our nation’s unemployment rate is over 9 percent, we cannot turn our backs on an opportunity for significant job growth. For a more connected and economically stronger America, we can’t leave this merger on hold. Rather the DOJ needs to settle this and answer the call of tomorrow.
Increasing employment opportunities for American workers is priority number one. Yet, this merger is complicated enough as it is. The last thing we need to do is obscure the real issues by injecting an unnecessary and unfounded concern into the discussion.
David A. Balto is a nationally-known expert on competition policy and a Senior Fellow at the Center for American Progress. Mr. Balto has over 25 years experience as an antitrust attorney and is the former Policy Director of the Federal Trade Commission.
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