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.â€
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.â€
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 Right Wing News and Stop The ACLU
I’m sorry, but the DOJ has no business in even attempting to stop this merger.
There are two points which people seem to bring up. First is “less competition.”
“Less competition” is not the same as “no competition.” No competition results in a monopoly. AT&T will not be the only game in town when it comes to mobile phones.
Secondly, if you believe that the government can prevent a legal merger in order to save jobs, then you must believe that the government can spend money to create jobs or keep companies afloat like Solyndra. Both use money to keep jobs at the point of the government sword.
A recent Gallop poll found that 77% of all Americans believe the reason for a company to exist it to provide jobs. That is not what capitalism is about. Jobs are a by product of supplying goods and services – not a reason for existence.
This is another example of the government trying to control a market. Such control has never worked and never will. Such power and authority in companies’ decisions is down right dangerous.
Well, it certainly would have been better had it been the FCC and congress who said “No,” rather than the DOJ.
If AT&T had engaged in “predatory” practices, I could see the sale being blocked. If AT&T was the only wireless provider, I could see the sale being blocked.
I am just not sure that I buy into the idea that a company that is vulnerable to a buyout such as T-Mobile should be afforded any more protection than any other business that fails. Like I said, if one buys into the argument that the sale should be prevented because of jobs that may be lost, why not continue to put money into the failed solar companies? People are going to lose jobs there as well, right?
I know that you are closer to the industry than I am and have a better insight into it.
However, I am leery as to the government picking companies that can expand or those that cannot.
One factor that has to be taken into consideration is the desire of a company to move as much of its business out of the US if it persistently hits regulatory roadblocks. I understand that what is being done here is mostly on the service end. But a company would be nuts to do business in the US if it could be done elsewhere.
I agree with GC here. One, the DOJ has no business getting involved here. This is an FCC matter. And, yet, I don’t think it will be a good thing for America.
Everyone on the ground knows that mergers mean layoffs. Every worker worries to high heaven when they hear of a buyout or merger, fearing that their jobs will get eliminated.
It even happens in state gov’t departments. I work for a state agency and we had a bill pass in to law that “Consolidated” agencies. We know this means many positions will be removed as the whole point of the bill was to save money though consolidation.
And, going from 5 companies where competition drives prices down, to only one or two.. allows prices to go up, services to decline. Look how the unlimited plans have disappeared. Caps are becoming the norm as well.
But, what are we worried about. Working at a job is a capitalistic lie. There’s no reason for it except to pay off the debt that capitalism enforces upon us. We shouldn’t have to buy anything!!!!!
I definitely understand what you’re saying, GC, we like government to keep hands off private companies and their business as much as possible. But, I think this would be bad for competition. It’s typically the smaller players, in this case T-Mobile and Sprint, who are tending to push the prices lower. There was a massive freakout in Verizon and AT&T when T-mobile and sprint went with unlimited talk plans, and then when they lowered them to $69.99. They drove it. I remember back in the day when BellSouth DCS was actually driving the rate plans and technology, even forcing BellSouth as a TDMA carrier to make changes.
Because of the nature of the business and buildout, it would be near impossible for another carrier to make a difference on a nationwide scale, or even roll out on a nationwide scale, and dropping to 3 from 4 would reduce consumer choice and end up stifling innovation.
Yeah, I’m unhappy with the DOJ getting involve, should be left to the FCC, which had to approve the merger, along with a few other 3 letter acronyms.
I am sorry to do this, but I am going to go all “tin hat uber conspiracy” on this.
There is a “poison pill” in the merger agreement between AT&T and T-Mobile. If the merger does not go through, AT&T will have to hand over 3.8 billion dollars of spectrum value, assets and cash to T-Mobile.
We have seen Obama tout American jobs while giving money and technology to foreign companies in the past. As T-Mobile is a German company, could this lawsuit be part of a strategy to hurt an American company and at the same time make “nice” with a German company?
Could that be part of the DOJ plan? To hurt AT&T while helping a foreign company?
Like I said, it is definitely a tin hat idea, but that doesn’t mean it doesn’t have merits.
Just thinking out loud……. :)
You never know, could be. T-Mobile comes out like a bandit if no merger. But, DTK has been trying to sell t-mobile for years, not a big money maker for them. If the deal goes down, though, they get a lot.
I have a feeling yahoo DOJ got involved during to potential monopoly issues.
my tinfoil hat is very comfortable.
With no reason for the DOJ being involved,,, you have to ask why it is. And, that is a decent reason.
You also have to look at the recent history of the DOJ and things it has prosecuted and let go.
Look at the way this administration thru the NLRB has treated businesses.
Look at the way this administration itself has treated small local to … any… business compared to how it reacts to foreign leaders.