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Home / Articles / News / Local News /  Can You Hear Me Now?
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Can You Hear Me Now?

AT&T/T-Mobile merger comes at a cost for New Mexico

November 16, 2011, 12:00 am

AT&T’s plans to acquire T-Mobile USA may greatly expand New Mexico’s rural connectivity, but the tradeoff could come at the expense of T-Mobile employees, who total approximately 2,000 in the state.


The potential for rural connectivity is attractive to Stuart Hamilton, the mayor of Angel Fire. Hamilton says Angel Fire, which currently lacks even basic 3G wireless capacity, would receive 4G technology if the merger goes through.


“They’re promising us better service, so I’m going with it,” Hamilton tells SFR.


But Tom Phelps, CEO of Plateau Wireless, which covers Angel Fire and most of eastern New Mexico, is skeptical about AT&T’s commitment to rural New Mexico. He says the company has passed on previous attempts to invest there.


“Where have they been?” Phelps asks. “Why all of a sudden is this merger—by taking out one key player—going to improve wireless?”


Plateau customers use AT&T and T-Mobile towers to roam. Phelps fears that, without competition from T-Mobile, AT&T will be able to charge Plateau customers whatever roaming costs it wants. 


The $39 billion acquisition would expand AT&T’s base to 130 million customers, easily making it the largest wireless provider in the country. It would also significantly narrow the wireless market from four major companies to three, which concerns New Mexico Public Regulation Commissioner Jason Marks. 


Marks compares a future three-company wireless market with the local cable TV market, which is dominated by Comcast, DirecTV and Dish Network.


“I get lots of complaints that the choices and prices are lousy,” he says, referring to the cable market. “That’s the kind of market scenario we’ll get with the merger.”


AT&T says it will honor all current T-Mobile contracts if the merger is approved, but that still leaves the terms of future contracts in question. 


These concerns prompted the Department of Justice to file an antitrust lawsuit in August to stop the merger. Policymakers and interest groups are deeply divided over who stands to benefit should the merger go through. 


Organized labor claims the deal will help grow its dismal membership—less than 12 percent of the country’s workforce belongs to unions—while consumer advocate groups fear the deal would eventually lead to a monopolized wireless market. 


The dispute leaves Democrats, who typically draw support from both groups, in a murky spot. AT&T’s political donations, which amount to nearly $1.3 million this year, typically lean Republican. But 72 Democratic congressmen signed a June letter to the Federal Communications Commission supporting the merger; 66 of those received AT&T donations. Among them was Rep. Ben Ray Luján, D-Santa Fe, who pocketed $5,000 from AT&T in 2010.


Luján hasn’t spoken publicly about the merger. The rest of the state’s congressional delegation, along with Gov. Susana Martinez, has also stayed quiet on the issue. 


That may be because the deal’s effect on New Mexico’s T-Mobile employees remains unclear. Jerry Fuentes, president of AT&T for Arizona and New Mexico, acknowledges the merger would result in “synergy”—ie cuts—in departments such as human resources and finance.


But the remaining employees could benefit from a merger: Under AT&T, T-Mobile employees who have been trying unsuccessfully to unionize would have a better shot at joining the Communications Workers of America.


“Where have they been?” Phelps asks. “Why all of a sudden is this merger—by taking out one key player—going to improve wireless?”


Glenda Winterhiemer, vice president of CWA Local 7011, says T-Mobile bans CWA from distributing literature on its property. AT&T, on the other hand, has promised not to interfere with any employee attempts to join the union. Currently, 96 percent of AT&T Wireless’ national union-eligible workforce belongs to CWA.


“This is by far the best deal [T-Mobile] workers are ever going to get,” Al Kogler, an organizing coordinator with CWA in Denver, tells SFR. 


If the merger isn’t allowed, less union-friendly companies like Sprint and Verizon are next in line for a potential T-Mobile purchase, Kogler says. Although the German-based wireless company has been ambiguous about what it will do if the deal doesn’t go through, Deustche Telekom reportedly considered selling T-Mobile to Sprint before the AT&T merger was announced.


AT&T claims the merger is needed to jump-start an $8 billion investment in its 4G wireless network plan, and it’s lobbying hard—to the tune of $16 million so far this year—to make it happen. Fuentes says AT&T has two options: Wait for the federal government, which regulates the airwaves, to allocate spectrum (wireless infrastructure), or gain more though buying other telecom companies. 


“All of the [telecom] companies are trying to do something,” Fuentes tells SFR. “Verizon merged with Alltel and got more capacity that way.” 


Fuentes says the merger would expand that coverage to 97 percent of the country within five to seven years.
AT&T also claims the added investment would create jobs. Fuentes says the company is committed to bringing 5,000 overseas jobs back to the US if the merger goes through.


A study by the Economic Policy Institute in May concludes the deal could create between 55,000 and 96,000 new jobs. But in the past, AT&T’s mergers did just the opposite. 


In 2005, SBC Communications bought AT&T. The next year, the newly formed AT&T Inc. bought BellSouth Corp. The moves resulted in more than 30,000 job cuts.


Long before the mergers, SBC and BellSouth belonged the original AT&T, which broke into seven telecom companies after an infamous Department of Justice antitrust lawsuit that began in 1974. (Before that, AT&T was a government-sanctioned monopoly.)


Andrea Quijada, executive director of the New Mexico Media Literacy Project, warns the merger could hearken back to the days AT&T monopolized the market and could hurt an already poor state. 


“Increased [union] membership should not come at the cost of job losses,” Quijada says.  “No merger in the history of mergers has ended up with an increase of jobs.”

 

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