Recently, many organizations have made some inaccurate claims regarding the digital divide and wireless policy for Latinos. Given the August 31, 2011 decision by the Department of Justice to block the merger, it is important that the benefits to Latinos are properly addressed.
It seems clear that these groups do not understand the digital age and how the increase in available spectrum will positively impact the wireless market and the Latino Community. These groups claim that the AT&T and T-Mobile merger will result in higher prices for customers. However, this is inaccurate. The truth is that spectrum limitations will be the largest single determining factor in the price of wireless broadband service. Federal Communications Commission Chairman Julius Genachowski has acknowledged this, saying “The spectrum crunch is real. If we don’t do something about it we’ll face lousy service and sky-high consumer prices.” Unfortunately, they have chosen to hide this fact, and to disguise it under the claim of anti-competition. The more spectrum available to a carrier, the lower the price. This will greatly benefit our community.
The truth is that there is a competitive wireless market with or without the merger. Every major region in the United States has several wireless firms which offer competitive service and different pricing plans. Regional competitors like Leap Wireless and MetroPCS offer competition outside of the larger national carriers. Consumers shop for service largely based on offerings in their coverage area. For example, a wireless customer in Kentucky is more concerned with coverage in their home area and not service in New York City. David Balto, an anti-trust attorney has acknowledged these facts and correctly describes the wireless marketplace as a product of high fixed costs and low marginal returns. Mr. Balto, in an opinion editorial in The Hill, says: “The cellular service market is a “small numbers market.” Small numbers markets are characterized by high, upfront fixed costs and offer low marginal revenues — economic factors that naturally result in only a small number of competitors in the market. Having a small number of competitors in these markets is actually a socially efficient result and is not necessarily indicative of anti-competitive behavior.”
Other claims which are not grounded in facts are that the merger will bring job losses. I believe that the endorsement made by union groups such as the Communications Workers of America (CWA) and the Labor Council for Latin American Advancement (LCLAA) supporting the merger are enough to debunk his claim. But beyond the issue of the merger, AT&T has a strong record of workplace diversity, and gives minority candidates numerous opportunities for training and advancement. More importantly, critics such as Free Press fail to see the job creation aspect of the merger. AT&T will have to upgrade and improve their network to expand 4G coverage to 55 million more Americans. This will require billions in investments, and lead to numerous opportunities. A study by Deloitte explains that improvements to 4G networks nationwide among all carriers provide opportunities for investment and the creation of 371,000 to 771,000 jobs.
Mobile broadband offers significant opportunities for users in education and health care, and we need to ensure that Latinos can continue to benefit from mobile broadband service. Additional spectrum provides assurance and incentive to build out AT&T’s 4G network and make the benefits of the digital age available to every American.
America needs to know the facts of the benefits of the digital age, but they do not need to hear unfounded claims whose only purpose is to evoke fear. Questioning the credibility of hundreds of minority figures and advocacy groups who have seen the benefits to the merger does not help those on the wrong side of the digital divide. With the DOJ’s recent decision, we hope that regulators will delve deeper into assessing the benefits that such a merger can have for underserved and minority communities.