Social media was abuzz as the House Subcommittee on Intellectual Property, Competition, and the Internet met to address the impact AT&T’s proposed purchase of T-Mobile USA may have on competition in the wireless market.
AT&T Chief Executive Officer Randall Stephenson stressed in his testimony that the transaction was overall good for consumers. He repeated the same consumer welfare arguments that he has shared in public and before the Congress, mainly that the transaction would help AT&T meet increasing consumer demand.
Stephenson also stressed that by buying T-Mobile’s spectrum capacity, the company would be able to innovate and improve the quality of service provided to its customers, including fewer dropped calls and faster data accessing speeds.
Stephenson also noted that the transaction played a role in the overall policy of bringing mobile broadband to urban communities, all without the use of subsidies. African Americans make disproportionate use of wireless devices to access the Internet.
Fifty-six percent of African Americans adopted broadband access to the Internet in 2010, according to the Pew Research Council. While 59 percent of all adult users access the Internet via a wireless device, among African Americans 64 percent do so.
But also of concern to African Americans is the economic impact, or as U.S. Representative Maxine Waters, Democrat of California, puts it, “wealth building.”
Waters raised the point during the hearing that while the disproportionate use of wireless devices by African Americans and Latinos is well documented, attention needs to be paid to opportunities for economic development on the producer side.
AT&T’s Stephenson appeared open to the idea that any divestitures resulting from the acquisition might lead to opportunities for minorities to participate, although the specific forms of participation were not discussed.
Whether the Federal Communications Commission or the Department of Justice take into account the economy when conducting their review is doubtful. For example, when it addressed the public interest benefits of AT&T’s purchase of Cingular Wireless, the FCC applied a framework to assess AT&T’s claims of consumer benefits. This framework was based on the substantial likelihood of harms being outweighed by claimed benefits; reductions in the marginal costs of providing service; that benefits were the direct result of the proposed transaction; and that claimed benefits are verifiable.
This public interest framework is consumption-oriented versus the entrepreneurial bent that Waters may prefer, or at least would like to see given equal consideration.
In short, specific expressions of the need for economic development won’t be coming from the FCC or Department of Justice, since their frameworks for merger review do not specifically call for the promotion of entrepreneurial activity.
Given the high level of unemployment of African Americans, maybe its time for the FCC and the Department of Justice to add entrepreneurial and economic development considerations to its review.