FCC Approves AT$T-BellSouth Merger and Pink Slips 10,000 Workers

Posted on January 3, 2007 - 9:50am.

“I call them the black ninjas. They work by night and are very, very good.”
- past FCC Chairman Bill Kennard explaining telco lobbyists

In a holiday present to Wall Street, the FCC approved the 85 billion dollar AT&T/BellSouth merger. The combined company will have an estimated $100 billion dollars in annual revenue, employ 300,000 people, and control 22 states, including local phone service to 70 million and DSL service for 11 million. In many states, it will be the only choice companies have for business access services. AT&T will control one third of all land lines, and control nearly 23% of all broadband access in the U.S. The merger also results in 100% ownership of Cingular (the nation’s largest wireless carrier).

Despite being the largest telecommunications merger in history, the Department of Justice decided it had no interests or concerns with the merger. The FCC was expected to follow suit, but a conflict of interest led Commissioner McDowell to recuse himself, creating a 2-2 partisan split in the FCC. As a result AT&T was forced to make some concessions, or at least some admissions, to break the stalemate. AT&T issued a memo on Dec 28th, restating some commitments from an earlier Oct 13th memo, and the FCC moved quickly to vote the following day. The final vote of 4-0 reflected concessions by both AT&T and Democratic FCC Commissioners Copps and Adelstein (who wrote concurring but less than celebratory statements). Michael Copps wrote "We celebrate today not a triumph for huge corporate mergers but a modest victory for American consumers. . . "we have made this transaction at least minimally acceptable to American consumers".

Some in the public interest community were quick to celebrate the merger as a victory since AT&T acknowledged 'Net Neutrality' as a concept while also agreeing to some short-term 24 month protections. AT&T also agreed to separate "naked DSL" from local phone service and priced the service at the current rates ($19.95). Others in the public interest community expressed skepticism, particularly around AT&T's supposed net neutrality concession - which may or may not be applicable to their IPTV 'U-verse' service. Others expressed concern with the 24 month expiration of the net neutrality agreements.

Your World. . . Downscaled
Lost on the celebrators and nay-sayers is the 'other' impact of corporate mega-mergers: mega-layoffs. In announcing the merger, Business Week reported that "AT&T estimates that about 10,000 jobs will be phased out over three years.” It’s not clear from this report where the job losses will come from, both AT&T and Bell South have downscaled heavily over the last decade. Bell South, in particular, maintains a grotesque mandatory 'unpaid leave policy'. For their part, the Communications Workers of America (CWA) negotiated the return of 3000 outsourced jobs, but this gain has to be offset against the greater loss (which are likely non-union positions). The CWA also expressed strong support for the recent FCC ruling on Video Franchising, another instance of damage control and misplaced priorities when larger principles are at stake.

Back in 1996 when AT&T let 40,000 go while giving the CEO a hefty bonus, one of their vice presidents summed it up this way:

“People need to look at themselves as self-employed, as vendors who come to this company to sell their skills," explained James Meadows, one of AT&T's vice presidents for human resources, who has helped define the company's new rules of engagement.”

"In AT&T, we have to promote the whole concept of the work force being contingent, though most of the contingent workers are inside our walls," Mr. Meadows said. "Jobs" are being replaced by "projects" and "fields of work," he said, giving rise to a society that is increasingly "jobless but not workless."

So, over the next three years, 10,000 AT&T/Bell South workers can expect to have work but no real job. There is no comfort in that . . . nor this,

Your World. Delivered . . . to the NSA
The largest telecommunications merger in history somehow passed without mention that both AT&T and Bell South are involved in a court case where they are accused of collaborating with the National Security Agency (NSA) in illegal spying on millions of ordinary Americans. Ironically, the case was being deliberated in a San Francisco Federal District Court the week prior to the FCC approval of the merger.

Government complicity in this case may explain the previous neglect by the current Department of Justice in examining this merger more closely, but it doesn't explain the FCC's blindspot to this matter. At stake is the Fourth Amendment protection "against unreasonable searches and seizures", a principle that should stop or at least stall any business merger whose parties are charged with such violation. Instead, the players in this case have been rewarded.

- saveaccess