July 12, 2011
July 12, 2011
By Oregon Tax News,
In March 2011, AT&T and T-Mobile proposed a far-reaching merger that would boost economic investment and significantly increase broadband availability in rural communities. Oregon Congressman Greg Walden (R-Bend), who chairs the House subcommittee with jurisdiction over the telecommunications industry, called the proposal “historic in scope and potential impacts…”
The merger, which would make AT&T the largest mobile provider in the U.S., has broad support from a diverse coalition of interests, including farm groups, minority leaders, rural communities, small businesses, and large technology companies like Microsoft, Facebook, and Silverlake Partners. Twenty governors have also written to the Federal Communications Commission (FCC) in support of the merger citing, among other things, improved broadband availability and access.
Proponents note the merger’s potential benefits to the overall economy and to rural communities and small towns in particular. The deal would ease the broadband capacity crunch resulting from consumers’ growing appetite for faster and more sophisticated data services. It would also generate an estimated $8 billion in new network investments. Oregon alone is expected to see $1.6 billion in new revenue and add 30,000 jobs.
States like Oregon with significant rural populations could be some of the biggest winners if the merger is approved. In contrast to expanding largely in more urban areas as other broadband companies have done, AT&T has strategically committed to rolling out broadband services in less populated regions of the country that have fallen way behind the technological curve. One million square miles of broadband coverage would be added—much of that in rural communities and small towns—and an additional 55 million Americans would gain access to the latest form of wireless broadband technology. Importantly, the merger would spur economic growth and development in rural areas by giving more businesses access to broadband services. According to Connected Nation (www.connectednation.org), businesses with broadband saw 46% more revenue on average than those without a broadband connection.
Opponents have been quick to criticize the proposal, saying it will stifle competition, resulting in higher cell phone prices for consumers as AT&T gobbles a bigger share of the cell phone market. Sprint, which likely hoped to make its own move on T-Mobile, has even filed with FCC to block the merger. However, the cost of cell phone use has decreased every year since 1999, amid numerous telecommunications mergers. And competition is still alive and well. In the last three years, mobile companies have spent $250 billion on related innovations and products, trying to outdo each other for consumers’ hearts and minds.
The Department of Justice and the FCC are currently reviewing the proposed merger and could rule early next year. Between now then, Congress will likely hold hearings, and the pros and cons will be argued in news stories and on opinion pages. Supporters of the merger hope that federal regulators will see the deal as a sign that broadband companies are responding to robust market forces while helping the government achieve its stated goal to provide all Americans with telecommunications services vital to economic prosperity.