Why MMTC is Endorsing the AT&T/T-Mobile Merger

The following article is cross-posted from the Broadband & Social Justice Blog.

Since its founding 25 years ago, the Minority Media and Telecommunications Council (MMTC) has been a vocal opponent of consolidation in the media and telecommunications industries. A transaction may be compelling to shareholders or have an attractive economic rationale, but transactions that shrink a sector usually come at the expense of communities of color. Too often, what may appear to be "good" for a company is, in fact, bad for minorities.

As just one example, MMTC opposed the liberalization of media ownership rules proposed by the Federal Communications Commission (FCC) in 2003. The rules would have dramatically limited opportunities for minorities to participate in broadcasting as entrepreneurs, workers, and consumers.

Thus MMTC has never affirmatively endorsed a proposed merger — until now.

MMTC joins with other respected organizations — including the NAACP, the AFL-CIO, CWA, LULAC, and the Sierra Club — in supporting the proposed merger of AT&T and T-Mobile. Here is how we reached this conclusion.

This transaction is fundamentally different from past transactions because of what's at stake — the future of wireless broadband.

Mobile broadband is profoundly important in connecting minorities to the Internet. The Pew Internet & American Life Project has found that African Americans and Hispanics are the most avid users of wireless Internet. African Americans and Hispanics don't only use wireless connections to surf the Web — they use them to send email, watch videos, access social networking sites, and access healthcare information at a significantly higher rate than their white counterparts.

This usage is just the tip of the iceberg. Over the last several months, President Obama, Congress, the FCC, and others have declared that next-generation (4G) mobile broadband networks are essential to continued economic prosperity and to individual empowerment — that 4G is going to be vital in supporting cutting-edge services that will radically transform healthcare, education, energy consumption, employment opportunities, entrepreneurship, and economic development.

For 4G to be rolled out in a manner that is both swift and inclusive of minorities, broadband providers will require massive amounts of new spectrum to build 4G networks. Unfortunately, as has been detailed at length, the U.S. is facing a critical shortage of this vital resource.

The proposed merger of AT&T and T-Mobile would help solve the spectrum crunch by putting this scarce resource to the most efficient and consumer welfare-enhancing uses. According to AT&T, this merger would give it "the scale, spectrum, and resources that will enable it to deploy LTE [its 4G network] to more than 97 percent of Americans, many of them in the rural areas and small towns most in need of greater broadband deployment and economic development." The transaction would result in better wireless broadband connectivity in very large and disproportionately minority markets like Los Angeles, Houston, Detroit, and Washington D.C..

In the absence of such a solution to the spectrum crunch, carriers may begin to raise prices in order to suppress demand for advanced services. This would have to be done in order to prevent against network outages resulting from too much traffic riding over networks that are built on spectrum that's unable to keep up with the demand for data. Such a scenario would present a considerable danger to minority communities because affordability remains a key impediment to minorities' adoption and use of broadband owing to the deep and persistent racial wealth gap and deep racial disparities in income and unemployment status.

Indeed, wide availability of next-generation wireless networks is critical to closing the digital divide that exists in this country. According to the FCC, the broadband adoption rate among African Americans and Hispanics continues to hover around 50 percent, well below the overall rate of about 64 percent.

There is another reason to be optimistic and enthusiastic about this transaction: AT&T has a long record of excellence when it comes to diversity and working to inclusion. AT&T ranks fourth on DiversityInc's annual list of the top Fortune 500 companies for diversity. AT&T is also committed to working with minority-owned businesses. In 2010 alone, the company spent over $9 billion on goods and services from minority-owned businesses involved in its supply chain. That's good for the economy and good for consumers.

Thus the proposed merger warrants a departure from MMTC's history of opposition to such transactions. The nation has robust wireless and broadband networks. But spectrum resources are quickly running out. The -proposed merger of AT&T and T-Mobile is a natural next step in the evolution of the marketplace. Done right, this transaction will be a boon to all consumers.

Why MMTC is Endorsing the AT&T/T-Mobile Merger (Broadband and Social Justice)

How to Sustain Innovation in the Wireless Sector (Broadband and Social Justice)

MMTC Spectrum Comments