Communications Workers of America August 2, 2011

AT&T / T-MOBILE MERGER CREATES JOBS FOR THE U.S. ECONOMY AND JOB SECURITY FOR T-MOBILE WORKERS
The Merger of AT&T and T-Mobile will create jobs in the national economy and offer a voice at work for T-Mobile employees. These important economic gains cannot be made in any other scenario regarding the future of T-Mobile.
n March 20, 2011, AT&T announced the acquisition of T -Mobile USA. The merger and AT&Ts related commitments will benefit American workers. The merger will increase U.S. jobs through both the buildout of 4G LTE service and new opportunities offered to online businesses. Importantly, as a result of contractual agreements between AT&T and the Communications Workers of America (CWA), T-Mobile workers will be offered a free choice about union representation, an important step toward improving their living standard and greater job security. Any other outcome for T-Mobile would have resulted in substantial job cuts.

A Brighter Future for a Troubled Company

T-Mobile USA has been in trouble. It has been losing customers and market share, and its revenues have been flat. The consensus among analysts was that T-Mobile competed poorly for both contract and prepay customers. T-Mobiles parent, Deutsche Telekom, was draining profits from its U.S. asset and had determined not to invest further in this country. In April of this year, T-Mobiles CEO Philipp Humm testified before the Senate Antitrust, Competition Policy and Consumer Rights Subcommittee that the parent company was not in a position to finance the necessary large scale investments in the U.S. for TMobile to remain competitive.1 At least one wireless company was dismissive of T-Mobile as a competitor. MetroPCS CFO, was quoted as saying, "even without the merger, T-Mobile has lost their relevance in the middle tier."2 Investment is what drives economic growth and job growth. A weakened T-Mobile would have reduced headcount. But with the AT&T merger, T-Mobile workers will be part of a company that has a plan for the future and the financial resources to make it possible.

New Jobs for the Economy

AT&T has promised to spend $8 billion over 7 years to extend next-generation, 4G LTE broadband to 97% of the U.S. population. Research shows investment in broadband infrastructure has a strong positive employment effect direct (construction, network), indirect (suppliers for the build out), applicationstimulated (jobs created due to increased broadband services), and induced (workers spending their earnings). Former Treasury Secretary Lawrence Summers has asserted that each dollar invested in wireless deployment is estimated to result in as much as $7 to $10 higher GDP.3 According to the Economic Policy Institute, each $1 billion in capital expenditure can create up to 12,000 new jobs a year as a result of network expansion. EPI estimates that the proposed AT&T network expansion will create between 54,834 and 95,959 jobs for the seven-year program. Some jobs will be in building out the network, while other jobs will be in supplier companies, and still further employment will be induced by newly hired workers spending their income.4

The build-out of 4G LTE broadband to 97% of the U.S. population will increase AT&Ts customer base. If we include jobs required to service the new customers gained as a result of AT&Ts build out, then the employment effect is likely to be still higher. AT&T has estimated that building out to touch 97% of the U.S. population with 4G LTE coverage will result in reaching 55 million more Americans. If AT&T retains its current level of market share, then the build-out could attract 9 million net new customers. 5 The wireless industry averages roughly 1,200 customers per employee; therefore we can expect up to 7,500 new employees to be hired by AT&T to service the new customers in addition to the current combined AT&T/T-Mobile workforce.

Protections Against Merger-Related Job Loss

While some have written that the merger could lead to job surpluses, most redundancies actually occur at the management and administrative level, and are not likely to result in large numbers of displaced workers. The fact is, 34 million existing T-Mobile customers will continue to need network maintenance, customer support, and retail stores, so the majority of T-Mobiles 24,000 frontline occupational workers will continue have a job at AT&T. To achieve that end, CWA, as it has in past mergers at AT&T, will negotiate and enforce agreements with AT&T to ensure that no AT&T Mobility or T-Mobile occupational workers lose their jobs. CWA has negotiated such agreements with AT&T after its acquisitions of Centennial and Dobson and with the Cingular-AT&T Wireless merger. The process uses a combination of attrition and lateral transfers to nearby locations to secure jobs for current employees. CWA is also working to return off-shored work before any U.S.-based workers lose their jobs. Current collective bargaining agreements stipulate establish the policy that traditional wireless work will not be contracted out if it will currently and directly cause layoffs or part-timing of regular employees. 6 Thus, employees cannot be laid off while bargaining unit work has been outsourced. In recognition of this agreement, Randall Stephenson testified before the House Judiciary subcommittee that force reductions will take place first at outsourced sites before U.S. company sites.7 These approaches provide a belt and suspenders system of protection that has effectively mitigated the impact of merger-related job integration for occupational workers in both CWAs existing bargaining units as well as in the acquired companies.

AT&T/T-Mobile Merger Will Raise Industry Standards

The merger is a game changer in the wireless industry. In contrast to the wireline industry which has a 70year history of collective bargaining and good, middle-class jobs all wireless companies, with the sole exception of AT&T, act aggressively to instill fear and intimidation among workers to prevent them from organizing into unions. Consequently, wireless workers trail wireline workers in the salary and benefits that create good, middle-class jobs. T-Mobile management is a case study in anti-union tactics that create fear and intimidation in the workforce. Workers are required to attend mandatory anti-union meetings led by management, are told that benefits will be cut if they vote to have a union, are threatened with job loss. Some union activists have been fired, the ultimate weapon in managements anti-union arsenal. In spite of this, T-Mobile workers have indicated their interest in wanting to join a union now. One unit of 15 technicians in Connecticut recently voted to be represented by CWA, and two other units have filed for elections. Sprint was the only other contender for T-Mobile, and Sprint has notorious reputation for trampling on the rights of workers. The company shut down a San Francisco call center one week before its 235 workers mostly women, mostly immigrants were set to vote on union representation. The company also relies

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heavily on outsourcing and offshoring as a way to cut labor costs. The Wall Street Journal reported that the company has cut its domestic workforce by 20,000 over the past four years as a result of this strategy. A partnership between Sprint and T-Mobile could only result in job loss and would doom T-Mobile workers aspirations for union representation and democracy in the workplace. After the merger with AT&T, T-Mobile's union-eligible employees will have an opportunity to decide union representation. They will be covered by the CWA agreement with AT&T that prohibits management interference (neutrality) when workers seek a union. If past post-merger experience holds true, a majority will select union representation. If T-Mobiles 24,000 frontline workers decide to join AT&T Mobility's 43,000 unionized wireless workers, they will comprise about 48% of the wireless occupational workforce. This combined power has the potential to raise living standards throughout the dynamic wireless industry.

Philipp Humm, Testimony before Senate Committee on the Judiciary, Subcommittee on Antitrust, Competition Policy and Consumer Rights Subcommittee, May 11, 2011. 2 Roger Cheng, "MetroPCS Worried over T-Mobile Merger," Wall Street Journal Online, May 18, 2011: http://online.wsj.com/article/SB10001424052748703421204576329250182238670.html#ixzz1Mk1IGJjl. 3 Remarks of Lawrence H. Summers, New America Foundation, Technological Opportunities, Job Creation, and Economic Growth, June 28, 2010: http://www.whitehouse.gov/administration/eop/nec/speeches/technological-opportunities-jobcreationeconomic-growth. 4 Ethan Pollack, The Jobs Impact of Telecom Investment, Policy Memorandum, Economic Policy Institute, May 31, 2011: http://w3.epi-data.org/temp2011/EPI_PolicyMemorandum_185%20%282%29.pdf. 5 The calculation is as follows: It is expected the build out will reach 55 million Americans. If we subtract the 34 million current TMobile subscribers, AT&T will have 21 million potentially new customers to win. At the current market share of the combined AT&T + T-Mobile (43%), we can reasonably assume AT&T will have 9 million new customers after 7 years. 6 CWA and AT&T Mobility, Letter of Agreement 5, 2009 Regional Labor Agreement, February 8, 2009. 7 Testimony of Randall Stephenson, Hearing of House Committee on the Judiciary, Subcommittee on Intellectual Property, Competition and the Internet, May 26, 2011.
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