All along it's been hard to understand AT&T's contention that its proposed merger with T-Mobile would increase competition and choice for consumers. And its claim that it would create jobs as it builds out its 4G LTE network sounded iffy.
While the Federal Communications Commission has allowed AT&T to withdraw its petition for the merger, it takes issue with the jobs claims, as well as other AT&T arguments about how the public would benefit. The FCC has released a 109-page assessment of AT&T's claims, concluding the arguments are "unreliable and, at a minimum, raise substantial and material questions of fact," according to The Washington Post.
The Communications Workers of America is among the groups supporting the merger and has decried FCC's roadblocks. According to a post on its website:
AT&T has promised to retain 23,000 call center, retail and technical workers who now have no clear employment path. Additionally, AT&T has committed to return 5,000 jobs to the U.S. from Asia and invest $8 billion in new capital and broadband buildout.
The staff finds the Applicants' assertions that the transaction would create jobs in the United States to be inconsistent with AT&T's internal analyses and record statements concerning cost reductions from the merger. The staff also finds that there are serious questions whether the merger of AT&T and T-Mobile would cause other public harms that are not offset by the claimed benefits.
The FCC staff report says AT&T failed to make the case that the merger would create up to 96,000 new jobs in the U.S. and allow the carrier to roll out 4G service to an additional 17 percent of the U.S. population. Instead of increasing jobs, the merger would likely lead to major layoffs as the combined company cut duplicative positions, FCC officials said Tuesday.
AT&T and T-Mobile did not "attempt to give specifics or quantify their claims with respect to the number of indirect jobs that will be crated by the proposed transaction, making it impossible to assess whether any indirect employment gains, even if transaction specific and realized, will outweigh the direct employment losses."
The report notes that AT&T's wireless division had 70,000 employees in 2002 and is down to 67,000 today after three mergers. The telecommunications sector has been cutting jobs right and left, though largely in the landline business. Yet The Wall Street Journal reported in July that wireless employment hit a 12-year low in May, with headcount at U.S. carriers at 166,600. That story points to consolidation, outsourcing and productivity gains in the industry for the decline in jobs.
In withdrawing from the fight with the FCC, AT&T plans to focus its legal team on a lawsuit with the Justice Department in February. Should it prevail there, it would have to go back to the FCC for approval. Yet the company was dismayed that the FCC released the report and questioned its motives.
James Cicconi, executive vice president of AT&T, pointed out that the report is only a draft drawn up by FCC staff:
This report is not an order of the FCC and has never been voted on. It has no force or effect under law, which raises questions as to why the FCC would choose to release it.