Will African American Concerns Be Part of AT&T/T-Mobile Review?

Will African American Concerns Be Part of AT&T/T-Mobile Review?

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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.

4 COMMENTS

  1. Very strong article. Thank you for bringing the economic impact on AA's to my attention. I have not been in favor of the merger, but I also hadn't delved into exactly why this would hurt or benefit one group.

  2. This transaction should be viewed as an opportunity to forge alliances and collaborate on solutions to a number of problems plaguing the Black community. AT&T has a strong track record when it comes to minority engagement. Hopefully the review and approval process will lead to further commitments by the telecom giant.

  3. Mr. Drew brings up an excellent point: Why not consider economic / entrepreneurial issues as a part of the overall framework? Putting these issues on the table would likely induce AT&T into creating a more specific plan to assist with the minority unemployment issue, and more specifically, the lack of minorities employed in the high-tech sector!

    • Although there's some small degree of politics intrinsic to the DoJ and the FCC as they're both gov't agencies, the FCC's jurisdiction when presented with a merger or other transaction by licensees is principally scientific. Licensed usage of the airwaves by a given company is balanced against various concerns of public interest, e.g.; access, transparency, fidelity.

      The DoJ's responsibilities are broader, and include determining whether a merger is harmonious with our laws and Constitution. While there are rare circumstances where oligopolies and monopolies are warranted, they typically result in a reduction of jobs, stifling of innovation, higher prices, and diminished customer service — part of the aforementioned economic issues — than otherwise produced when the marketplace is truly competitive.

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