Neely Young: A Look At The AT&T Merger

Many people were disappointed a few years ago when AT&T acquired BellSouth and moved its headquarters out of Atlanta. Here is some good news for those who have missed having the telecommunications giant based here.
 

AT&T is in the process of merging with T-Mobile. The company is paying $39 billion to acquire T-Mobile, and the result will be that the AT&T wireless business will be headquartered in Atlanta.
 

As more people drop telephone landlines, wireless operations will become the major part of AT&T’s business. Still, the merger has attracted criticism from those who worry that the resulting company will be too big.
 

I talked to Sylvia Russell, AT&T President – Georgia and asked her to explain why she be-lieves Georgia citizens should be happy with the merger. Here are the highlights from our Q&A:
 

First a little history. When did AT&T purchase BellSouth?
 

AT&T has a long history in Georgia dating back to the Southern Bell Telephone and Telegraph Company in 1879. SBC and BellSouth had formed a joint company for their wireless business, Cingular, based in Atlanta. In 2004, AT&T Wireless integrated with Cingular Wire-less. In 2006, AT&T completed its acquisition of BellSouth. Today, Atlanta is the home of AT&T Mobility – the fastest growing unit of AT&T.
 

What about T-Mobile?
 

T-Mobile USA is a national provider of wireless voice, messaging and data services. T-Mobile USA is the U.S. operating entity of T-Mobile Inter-national AG, the mobile communications subsidiary of Deutsche Telekom AG, one of the largest telecommunications companies in the world, with 129 million customers.
 

Will the merger help Atlanta?
 

This merger can be nothing but good news for Atlanta. The city will be home to the fastest-growing unit of AT&T. We have a payroll of almost $2 billion annually here in Georgia.
 

Will the merger give Georgians better coverage? Will Albany, for instance, have the same coverage as Atlanta?
 

This merger will benefit Georgia consumers by reducing the number of dropped and blocked calls, increasing data speeds and dramatically expanding deployment of next-generation mobile technology.
 

This merger will allow the company to deliver 4G LTE wireless service to approximately 55 million more Americans, including those in small towns and rural areas of Georgia, than would occur without the merger.
 

AT&T has more than 22,000 employees in Georgia. How will the merger affect them?
 

This deal is good news for our employees in Atlanta and throughout Georgia. There will be some overlap, but having been through several mergers in the past, we expect most overlaps will be dealt with through natural attrition.
 

This transaction enables AT&T to commit to an expanded 4G LTE deployment that would bring high-speed wireless broadband service to 55 million more Americans than currently plan-ned. New jobs will be created when the planned network expansion gets under way. The CWA and AFL-CIO have readily endorsed the transaction.
 

What is the timeline for the merger?
 

This proposed transaction is undergoing a thorough review process at the Federal Com-munications Commission and the Department of Justice. We are working promptly and diligently to assist in these reviews, and we are confident in approvals. The transaction is expected to close in approximately 12 months of the announcement.
 

What are the major objections to the transaction you have encountered, and what is AT&T’s response?
 

Network Capacity Crunch – Some claim that our network capacity issues can be solved without this transaction. The extraordinary capacity gains from this merger will allow the combined company [to be] able to offer more output and higher quality service – and that’s a good thing for consumers, even if our competitors don’t like it. By relieving AT&T and T-Mobile from capacity constraints, the merger will expand output, which economists recognize means lower, not higher, prices.   
 

The Duopoly [Monopoly] Myth – From the beginning, merger opponents have ramped up the rhetoric, claiming, for example, that if this merger is approved, the wireless market will become a “duopoly.” The truth is that a duopoly signifies a market with only two sellers, and that is a flatly inept description of the post-transaction U.S. wireless marketplace. FCC data shows that today three-quarters of Americans have a choice of five or more wireless providers; so, at worst, after this merger they will have a choice of four. 

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