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AT&T, T-Mobile merger good for Black Americans…

October 9, 2011 by  
Filed under News, Weekly Columns

( The world is changing at a terrific rate. Potential changes in the wireless industry constitute the major business issue of the day.

AT&T’s $39 billion bid to acquire T-Mobile USA affects millions among the country’s population and billions of dollars in the industry and economy. We are all a part of it, as wireless technology proliferates across the world.

The technology is a good bet for the future. Ninety-one percent of Americans use a mobile phone. The wireless industry does and can be vital in American society and economy. The AT&T/T-Mobile USA mega-merger is important to the industry and to communities of color.

Huge industry

The U.S. wireless telecommunications services industry includes 1,600 companies with combined annual revenues totaling more than $190 billion. The major companies include AT&T, Verizon, Sprint Nextel, and T-Mobile USA (an indirect subsidiary of Deutsche Telekom). Over 300 million Americans are mobile subscribers, averaging 6.1 billion minutes used per day – about 21 minutes per person per day. The real online growth is from wireless data services – mobile Web, text messages, and other non-voice services.

Several influential African-American groups have taken stances in the AT&T/T-Mobile matter. Merger proponents’ claim of “connecting every part of America to the digital age” is great news for communities of color, who disproportionately rely on wireless service to make phone calls and access the Internet.

Coalitions of notable African-American groups support the deal, saying, “it would help Blacks compete for business opportunities and better jobs.” AT&T forecasts the merger “will create nearly 100,000 jobs and provide wireless Internet service to most of the U.S.” which may spur economic development.

“The merger of AT&T and T-Mobile will mean more diplomas, better jobs and healthier African-American families,” said Melanie Campbell, President and CEO of the National Coalition of Black Civic Participation. Campbell’s coalition and groups like the National Urban League, NAACP and Al Sharpton’s National Action Network support the deal.

“AT&T has been among the highest-ranked in the telecommunications industry for its commitment to diversity in terms of procurement, philanthropy, promotion and hiring at the federal, state and local levels,” says NAACP Senior Vice President Hilary Shelton. “Wireless broadband is an integral tool in promoting civic engagement and as such is crucial to voter empowerment. We are hopeful that this acquisition will further advance increased access to affordable and sustainable wireless broadband services and…stimulate job creation.”

Need for speed

Moving ahead with the merger will solve an inexorable need for increased network capacity and speed, and advances the public interest in many different ways. By 2015, there will be two devices per person of 15 billion network devices worldwide. A 4G network buildout could mean $25-53 billion for the U.S. infrastructure investment by 2016, and create 371,000-771,000 jobs and gross domestic product (GDP) growth between $73 billion and $151 billion.

In 2010, U.S. providers reported making capital investments totaling $24.9 billion. For every $1 invested in wireless broadband, it will create an additional $7-10 for GDP.

The average U.S. consumer spends $60 on accessories for their wireless device. Businesses spent more than $1.9 billion in 2010 on non-handsets (e.g. tablets, notebooks, e-readers). By 2014, it will be more than $5 billion on non-handsets. With smart mobile devices, stronger, faster and smarter networks are needed to keep pace with wireless data demand.

Limited supply

The supply of wireless spectrum available in the United States for commercial use is running low. Wireless spectrum is the government-controlled airwaves that wireless companies license to transmit wireless signals and provide wireless services. Just like a real-estate developer needs land to build communities and provide services, wireless carriers need spectrum to build wireless networks and service customers.

AT&T and T-Mobile concluded that joining forces was an effective solution to their respective capacity issues. The combination significantly enhances the efficiency of spectrum use and results in considerable improvements in service quality and deployment of next-generation mobile data speeds. Hopefully, the Justice Department will allow the merger process to continue.

Written by William Reed

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