AT&T Offers Up a Faustian Bargain

August 31st, 2011 by · 13 Comments

If it wasn’t already clear that AT&T (NYSE:T, news, filings) really wants to buy T-Mobile USA, witness today’s economic bribery offer. The international telecommunications giant is now promising to bring 5,000 call-center jobs back to the USA if the merger gets approved. Not only would those jobs come back from overseas, the new employees would be eligible to join the unions and there would be no US-based job losses from those call centers due to synergies. (Sorry India, you’re holding the wrong end of that sword!)

What this definitely demonstrates is that AT&T senses this is a critical moment, and that they’re worried the wind is changing for the worse. And I think they’re right. The FCC has restarted the clock, and there has been a shift in the media against the company’s spectrum-derived argument that the deal is necessary to its future. The supporters AT&T lined up in the early stages already did their part and went home long ago. AT&T is therefore playing the most powerful card they have left in their hand: the jobs card.

The timing isn’t exactly subtle here, just 14 months before an election which will almost certainly turn on that very subject. The Obama administration desperately needs to gain some traction with job creation, and is actually putting the finishing touches on a not-so-secret plan right now. The newest Republican challenger, Texas’s Governer Perry, is trumpeting his own job creation talents. And the unions are looking for anything that looks like a victory after a messy but unresolved fight with Verizon.

You have to admit, it’s as inspired as it is cynical. One of the arguments that Democrats might use to bolster a rejection of the deal is that synergies mean job losses, but the tangible 5000 job gains offset that.  If the Obama adminstration nixes the deal we will surely see Republican ads appear arguing that unnecessary government intervention caused jobs to remain overseas that could have been brought home.  And it’s not just about those jobs either, it’s about customer service – because Americans associate overseas call centers with unintelligible, circular conversations and impenetrable interactive voice systems.  AT&T isn’t just promising 5000 jobs, the subtext is that its customers will get someone local to talk to again.

So, what will it be? 5000 more unionized jobs for a nice healthy duopoly capable of strangling what’s left of the competition for the next few decades?  Nothing like a Faustian bargain like that going into Labor Day weekend.  Actually, there are probably a few more short term concessions AT&T will make to sweeten the pot further in exchange for long term dominance – I’ll bet they just hold out for a few more.  This deal is still almost sure to go through in some form, it’s just a matter of time.

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Categories: Government Regulations · ILECs, PTTs · Wireless

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13 Comments So Far

  • Carlk says:

    U.S. said suing to block AT&T deal; Sprint jumps 08/31 07:31 AM

    WASHINGTON (MarketWatch) — The U.S. has filed a lawsuit seeking to block AT&T (T:$28.48,00$-1.1400,-3.85%) from buying the T-Mobile USA arm of Deutsche Telekom (DTEGF:$13.0000,$-0.7100,-5.18%) , Bloomberg News reported. Shares of Sprint (S:$3.79,00$0.2400,6.76%) jumped 7%.

  • David Copperfield says:

    good article (great title too)…so ATT’s proposal is net-net there won’t be any job loss b/c we’ll bring back lower paying call center jobs (from India) while laying off higher paid engineers, outside plant, finance, operations, HR, Legal, regulatory, etc. personnel?

    And, yes, I agree with you, that this doesn’t do a damn thing to mitigate the duopoly conditions this merger surely creates.

    It sounds to me like ATT is simply looking at the zeitgeist and asking themselves what meaningless conditions they can propose so regulators and politicians, who have accepted so much ATT largesse over the years, can sell it to the sheeple.

    What’s next? Maybe ATT can promise regulators free pony rides, hot dogs and apple pie at the retail outlets for the next two years. Maybe even a magic show or two to complement this sleight of hand.

  • Anonymous says:

    Throw in an iPhone/iPad combo and we’re in business….

  • Telcom Dinosaur says:

    RP and DC .. Great stuff here Sad thing is with elections looming nothing moves right. This type of merger goes forward eventually without proper traction in the review stages. Yes even with the likes of Al Frankin on board yelling as loud as he can for Sprint and consumers this too will pass. Checkmate ATT.

  • Carlk says:

    AT&T, T-Mobile deal raises concerns, FCC chief says 08/31 08:32 AM

    WASHINGTON, Aug 31 (Reuters) – The combination of AT&T Inc (T:$28.28,00$-1.3400,-4.52%) and T-Mobile raises serious concerns, according to data the agency has gathered, Federal Communications Commission Chairman Julius Genachowski said on Wednesday.
    “Although our process is not complete, the record before this agency also raises serious concerns about the impact of the proposed transaction on competition,” Genachowski said in a statement following the Justice Department’s decision to file a lawsuit to block the deal. (Reporting by Jeremy Pelofsky. Editing by Robert MacMillan)

  • David Copperfield says:

    Carl, get real. This deal has as much chance of being blocked as Wiley Coyote has of catching the Road Runner.

  • Carlk says:

    LOL! They’re just talking the talk, are they, you think? With all that is at stake for the U.S. including a citizen base that needs free and open borders everywhere X the internet during the 21st Century, if they fail at taking this pivotal stance in blocking the flow of information by emboldening monopoly and duopoly status yet again, I will be doing the opposite of what my grandfather did when he emigrated to this once great country during the wake and rise of Nazism in Deutschland.

  • Parkite says:

    Sheer size is ATT’s only real competitive advantage in the marketplace. They desperately need this transaction. Hopefully, the DOJ doesn’t cave.

  • David Copperfield says:

    well, it appears the DOJ got religion….maybe Wiley Coyote does catch the Road Runner…

    He did in this Family Guy sketch:

    Still the fat lady hasn’t sung yet.

  • Justin says:

    Niiice. So lets give back 5000 jobs until the deal goes through then move them back overseas. I don’t listen to 1 word these unions say.

  • Anon says:

    Top 10 Ideas for at&t to without TMO :

    1. Wait until Jan 2013 & buy TMO

    2. Buy and merge baby bell wireline LEC businesses into one giant RLEC like Century and shut them down – will help wireless penetration for sure

    3. Ask Verizon to raise prices & to keep arrangement on the “down low”

    4. Hire the hot t-mobile girl in the ads

    5. Just buy Germany or the Entire EU and get tmo as a throw in (shame is $6B is about the equity value)

    6. Go back into Cable!

    7. Try harder to sell the jobs! bonanza angle

    8. Buy NASCAR and make Sprint car slower, while giving away free phones* [terms and conditions apply; requires 2 year contract; unlimited data is limited, free calls to at&t clients and loosey-goosey antitrust profs, see Indenture for details**]

    9. Buy vodafone to get half of VZW. Manage conflict with ‘Chinese Wall”

    10. Sue Judge Green for tortious interference with monopoly profits expectation (he started all this compete nonsense)

  • AT&T should throw in some free iPads. I bet that’ll get the merger approved especially if they can get some signed by Steve Jobs 😉

  • Anon says:

    Because of the DOJ suit, at&t will hire 5000 lawyers and lobbyists so the jobs thing is a wash… (well maybe 4900 lawyers and 100 PR agents to sell the story).

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