The surprise decision by the U.S. Department of Justice to fight AT&T’s takeover of T-Mobile USA raises all sorts of questions for wireless customers, employees and the Seattle area.
Hanging in the balance are more than 5,000 T-Mobile workers in the region, plus thousands of contract employees and vendors whose jobs are tied to T-Mobile’s headquarters in Bellevue.
Here are some opinionated answers to some of those questions.
Q: I’m a T-Mobile customer. What’s going to happen to me?
A: Things should stay the same for a while — perhaps a year or more. Under the original merger plan, T-Mobile would continue operating independently until the deal closed in 2012. AT&T promised to honor T-Mobile contracts after the deal was done.
The federal case is likely to delay the merger, if not stop it altogether. That means T-Mobile will continue operating independently longer. That will postpone any changes for customers.
Q: What if the AT&T deal falls through?
A: T-Mobile will continue to operate, but its parent company, Deutsche Telekom, may try to find another buyer, such as Sprint. That would mean a few more years of uncertainty.
Q: Should I hold off renewing my T-Mobile contract?
A: If you like your current phone and T-Mobile service, you may want to renew your service.
The DOJ lawsuit argues that T-Mobile provides better deals and innovative products. If that’s correct, and you renew, you’ll continue to get those deals through the life of the contract, even if AT&T takes over T-Mobile.
Q: What about the 4G stuff?
A: All the major wireless companies now offer fourth-generation, or 4G, wireless service that’s faster than 3G but doesn’t have as much coverage area yet.
T-Mobile and AT&T tweaked their 3G networks to provide 4G speeds.
Meanwhile, the industry is moving to a fast, robust new 4G technology called LTE, or Long-Term Evolution. Verizon and AT&T already offer LTE service in some areas. Sprint offers another wireless broadband technology called WiMax, but it’s eventually moving to LTE as well.
Although the DOJ lawsuit says T-Mobile’s innovation pushes the industry forward, T-Mobile is unlikely to join the others and move to LTE without hooking up with another company. So customers with the latest T-Mobile phones will get fast downloads where its souped-up network is available.
Q: What if I want the new iPhone/Android phone/BlackBerry/Windows “Mango” phone?
A: If you’re shopping for a new phone and can wait a month or two, you’ll have a bunch of new options, regardless of T-Mobile’s situation. This fall we’ll probably see a new iPhone and new Windows phones. A batch of more powerful Android phones is expected in time for the holiday season, and several new BlackBerry devices just surfaced — at T-Mobile and other carriers.
Q: Why is the government getting involved?
A: The administration is gung-ho for technology and wireless progress in particular. The DOJ believes the merger will reduce competition, resulting in higher prices and less innovation. The deal also needs approval from the Federal Communications Commission (FCC), which is still reviewing AT&T’s plan.
Q: What’s next?
A: The DOJ’s case will be heard by a U.S. District judge in Washington, D.C. AT&T plans to fight the case, and ask that it be expedited.
Q: What will happen to T-Mobile employees?
A: They may get a reprieve, but not forever. AT&T is likely to cut overlapping jobs after the merger closes, but the company isn’t providing specifics. For now, the federal lawsuit extends the uncertainty hanging over T-Mobile employees. If the AT&T merger is blocked, T-Mobile will continue to operate, but it’s not likely to remain independent forever.
Q: What about the 5,000 jobs that AT&T promised to create?
A: Late Tuesday, AT&T announced that it would move 5,000 call-center positions from overseas to the U.S. if the deal closes. It also said there would be no layoffs at any of AT&T or T-Mobile’s call centers (AT&T operates two call centers in Bothell).
This looks to me like politicking. AT&T presumably received a courtesy notice of the impending DOJ lawsuit, and made a pre-emptive move to cast the merger as creating jobs. This provided fresh talking points to unions representing AT&T workers. They already had sided with AT&T on the deal, and may put some pressure on regulators.
Creating more jobs is a good thing, but AT&T appears to be pandering and creating a diversion.
T-Mobile employs 42,000 people across the U.S., including more than 5,000 in the Seattle area. AT&T hasn’t said how many non-call center jobs will be cut, and whether the merger will result in a net gain or loss of U.S. jobs.
Until that bottom line is disclosed, nobody can argue that the deal will create jobs.
Q: Hey, America needs jobs, now.
A: Yes, but before anyone’s swayed by the 5,000 jobs, they should put AT&T’s offering into perspective.
The latest federal figures say 437,890 people were working at U.S. call centers as of May 2010. That workforce will increase by about 1 percent if AT&T shifts 5,000 jobs back to the U.S. It’s almost negligible when you consider there were 13,931,000 unemployed Americans in July.
The median hourly pay for those call-center workers was $11.84. Their mean annual salary was $30,940, according to the U.S. Bureau of Labor Statistics.
Those are hardly family-wage jobs. Many call-center workers would be eligible for food stamps under federal poverty guidelines: The cutoff is $27,214 for a family of two and $34,281 for a family of three.
Meanwhile, AT&T is likely to cut higher-paying T-Mobile management and administration jobs that duplicate what AT&T has at its headquarters in Dallas. In Washington state, the mean salary for management jobs was $112,290 last year.
Q: With so many people unemployed, who is going to buy all these new 4G phones?
A: Good question.