Job Loss or Job Creation? Investigating the Effects of the AT&T/T-Mobile Merger

by Matt Klassen on November 9, 2011

It should come as no surprise to hear that Sprint has taken on the role of official opposition to the pending AT&T/T-Mobile merger, as the nation’s third largest wireless carrier stands to be the biggest loser should the deal go through. Without many effectual options however, Sprint has opted since day one to launch a strong campaign against the merger, protesting to the federal bodies responsible for approving the deal, launching antitrust lawsuits against AT&T, and even backing studies that demonstrably prove the negative effects of the deal.

Amidst reports and studies propounding the potential economic disaster such a merger could create, with increased market monopolization, possible price gouging, and less consumer choice, several months ago Sprint funded a study that investigated the potential deleterious effects on the job market, predicting that AT&T’s takeover bid for T-Mobile would result in thousands of lost jobs.

In a rare turn of events, however, AT&T has found an ally in its fight to get the merger approved. Refuting the job loss studies, the Communications Workers of America (CWA) union recently cited a new analysis of the merger that found that the deal would actually create 96,000 new jobs, in addition to the current 5,000 outsourced jobs that AT&T has promised to bring back. So who do we believe?

Truthfully, the study that Sprint paraded around the country at the beginning of September was little more than a circumstantial piece of tomfoolery, a study funded by the wireless carrier that clearly was designed solely to add some pseudo-scientific weight to the company’s continued resistance to a merger that will, admittedly, hurt Sprint, although it what degree remains unknown.

Briefly, the Sprint report found that AT&T’s own admission that it will cut capital expenditures, a move that the report concludes cannot mean anything but job cuts. Further, the report indicates that historically AT&T has cut jobs after acquiring company’s and finally that while the merger will create more jobs for CWA union members, “it will almost surely act to directly reduce jobs for American workers.” (first italics mine)

While AT&T may in fact renege on its assurances that the merger will in fact create more jobs, I have to agree with the CWA’s assessment of the Sprint report as “misguided and misleading.” Strangely enough though, that’s not to say that Sprint’s fears are unfounded, just that the company did itself no favours in funding a self-serving report filled with conjecture and speculation.

But lets for a moment assume that Sprint’s accusations are correct and that AT&T and the CWA are in cahoots to preserve union jobs while at the same time allowing AT&T to slash its workforce in an effort to lower its capital expenditures. One would have to assume that through the time consuming and costly federal investigation into this merger that stipulations would be put in place preventing AT&T from instituting these sorts of cuts or giving preferential treatment to the CWA union, meaning that if AT&T did in fact cut jobs the approval of the merger would be rescinded or heavy fines levied.

At the outset I asked the question, “Who should we believe?” in all this, and the answer is clearly neither. While I happen to agree with Sprint that the merger will in fact decrease market competition, likely inflate prices, and give consumers less choice, its report does little to prove any of this. On the flip side, I have to admit that something smells fishy between AT&T and the CWA, as the union has taken it upon itself to support and defend the very heartless corporation unions are designed to protect workers against, that after the CWA was specifically named in Sprint’s report.

In the end, however, I remain unconvinced by either side and I truly hope the federal regulators in charge of deciding the fate of this merger aren’t swayed by any of this partisan nonsense either.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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AT&T Abandons T-Mobile Merger — TheTelecomBlog.com
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