AT&T T-MOBILE MERGER
The world, as we now know it, is changing at a tremendous pace. Potential changes in the wireless industry constitute the major business issue of the day. AT&T’s $39 billion bid to acquire T-Mobile USA affects millions of Americans and translates into billions of dollars for the industry and the economy. We are all a part of it as wireless technology moves at breakneck speed across the world. The technology is a good bet for the future. Ninety-one percent of Americans use a mobile phone. The wireless industry can be even more vital in American society and economy. The AT&T/T-Mobile USA mega-merger is important to the industry and to communities of color.
The U.S. wireless telecommunications services industry includes 1,600 companies with combined annual revenues totaling more than $190 billion. The major companies include: AT&T, Verizon, Sprint Nextel, and T-Mobile USA (an indirect subsidiary of Deutsche Telekom). More than 300 million Americans are mobile subscribers to the tune of an average of 6.1 billion minutes used per day, or about 21 minutes per person per day. The real “on-line” growth comes from wireless data services – mobile Web, text messages, and other non-voice services. Several influential African-American groups have taken stances on the AT&T/T-Mobile matter. Merger proponents’ claim of “connecting every part of America to the digital age” is great news for communities of color, who disproportionately rely on wireless service to make phone calls and access the Internet. Coalitions of notable African-American groups support the deal, saying “it would help Blacks compete for business opportunities and better jobs.”
AT&T reports that the merger “will create nearly 100,000 jobs and provide wireless Internet service to most of the U.S.” which may spur economic development. "The merger of AT&T and T-Mobile will mean more diplomas, better jobs and healthier African-American families," said Melanie Campbell, president and CEO of the National Coalition of Black Civic Participation. Campbell’s coalition and groups like the National Urban League, NAACP and Al Sharpton’s National Action Network support the deal. "AT&T has been among the highest ranked in the telecommunications industry for its commitment to diversity in terms of procurement, philanthropy, promotion and hiring at the federal, state and local levels," says NAACP Senior Vice President, Hilary Shelton. "Wireless broadband is an integral tool in promoting civic engagement and as such is crucial to voter empowerment. We are hopeful that this acquisition will further advance increased access to affordable and sustainable wireless broadband services and … stimulate job creation."
Moving ahead with the merger will solve a need for increased network capacity and speed, and it advances the public interest in many different ways. By 2015, there will be an average of two devices per person or 15 billion network devices utilized worldwide. 4G network build out could mean $25-53 billion for the U.S. infrastructure investment by 2016; create 371,000-771,000 jobs and Gross Domestic Product (GDP) growth between $73 billion-$151 billion. In 2010, U.S. providers reported making capital investments totaling $24.9 billion. For every $1 invested in wireless broadband, it will create an additional $7-10 for GDP. The average U.S. consumer spends $60 on accessories for their wireless device. Businesses spent more than $1.9 billion in 2010 on non-handsets (e.g. tablets, notebooks, e-readers). By 2014, it will exceed $5 billion. With smart mobile devices, stronger, faster and smarter networks are needed to keep pace with wireless data demand. The supply of wireless spectrum currently available in the United States for commercial use is running low. Wireless spectrum is the government-controlled airwaves that wireless companies license to transmit wireless signals and provide wireless services. Just like a real-estate developer needs land to build communities and provide services, wireless carriers need spectrum to build wireless networks and service customers. AT&T and T-Mobile concluded that joining forces was an effective solution to respective capacity issues. The combination will significantly enhance the efficiency of spectrum use and result in considerable improvements in service, quality and deployment of the next generation of mobile data speeds (4G LTE). Hopefully, the Justice Department will allow the merger process to continue. (William Reed is available for speaking/seminar projects via BaileyGroup.org)
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