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Early last year, a California senate committee held a hearing on the state of telecommunications infrastructure. One of the witnesses asked in his written statement of Feb. 4, 2011 a question acutely relevant to today's takeover of T-Mobile by AT&T. Here is what the witness said:
"In 2006, AT&T and Verizon promised major investment in broadband expansion, video competition, and thousands of new jobs in California if the state deregulated the video market and passed a statewide video franchise law, known by its acronym of DIVCA. Well, now its four years later, leaving the clear questions: Where are the jobs and where is the high-speed broadband investment?"
Answering his own question, the witness supplied part of the answer:
"AT&T and Verizon have slashed the frontline workforce, and there simply are not enough technicians available to restore service in a timely manner, nor enough customer service representatives to take customers’ calls. Let me share some statistics. Since 2004, AT&T reduced its California landline frontline workforce by 40%, from about 29,900 workers to fewer than 18,000 today. The company will tell you that they need fewer wireline employees because customers have cut the cord going wireless or switched to another provider, but over this same period, AT&T access line loss has been just under nine percent nationally. I would be shocked if line loss in California corresponds to the 40 percent reduction in frontline employees.
"Similarly, since 2006 Verizon California cut its frontline landline workforce by one-third, from more than 7,000 in 2005 to about 4,700 today. I venture that Verizon has not lost one third of its land lines in the state."
Not to put too fine a point on it, but the witness noted:
"While the workforce of these telecommunications giants has been decimated by corporate downsizing, over the past three years AT&T reported $37 billion and Verizon earned over $33.5 billion in corporate profits. The public suffers, while these companies pad their pockets."
Who was this wise witness who saw that AT&T didn't live up to its promise of jobs in return for union support for yet another corporate give-away from state government? His name is James Weitkamp, and he is vice president of the Communications Workers of America (CWA) District 9 that covers California.
Official reports from the California Public Utility Commission (CPUC) back up Weitkamp's observation. The law that gave statewide video franchises to the telephone industry also required reporting on employment. The latest report found that AT&T dropped 16.1 percent of its workforce offering landline services like telephone, U-verse and DSL between Dec. 31, 2007 and Dec. 31, 2009, going from 29,509, 24,751. On a percentage basis, Verizon's workforce dropped by a larger number, 23.4 percent, but they had only 8,110 employees in that video/landline sector to begin with. Both companies had asked for the employment data to be confidential, but the PUC turned down the request, saying it would violate the law to do so.
As Weitkamp correctly observed, CWA is concerned about job loss, and for his members it didn't particularly matter whether the jobs were wireline or wireless. Both networks are important, not only to for the job statistics, but to the future of the state. Noting that both AT&T and Verizon have told Wall Street they each will cut back their infrastructure, Weitkamp said the retreat in investment would have "serious implications" for California's economy. He's right.
History is against the theory of job creation. AT&T's current record over the last couple of years shows the company is continually shedding jobs, not creating them.
The only question is why haven't the national CWA leadership and their colleagues in the labor movement learned the same lesson? Why haven't active community groups that endorse special-interest legislation for big business learned that promises of jobs rarely translate into actual jobs? Promising jobs is easy. It happens all the time. Delivering jobs is another issue. It rarely happens when big companies get some giveaway from the government.
And yet, many people are willing to take on face value AT&T's promise of new jobs, even as the evidence points otherwise. At a CPUC hearing on July 7, several people testifying said they thought AT&T should be able to wipe out competitor T-Mobile because of the promise of new jobs and particularly due to AT&T's practice of hiring minority workers.
Representatives of African-American, Latino, Asian and Filipino organizations, ranging from the Allen Temple Baptist Church in Oakland to the National Hispanic Organization of Real Estate Associates, the Black Economic Council, and the Asian American Coalition all praised AT&T for its diverse work force. Many praised AT&T's philanthropic works in the minority communities in the state. Interestingly, many group representatives also compared AT&T's record to companies they said were competitors to AT&T -- Google and Apple.
As Vince Courtney, representing several unions, said, "We need the jobs." And yet, AT&T hasn't made any firm commitments to jobs. Those testifying were banking on AT&T's history and hoping that jobs would materialize, despite all evidence to the contrary.
It's worth noting, however, that AT&T didn't come by its minority work force by the goodness of its heart. AT&T had to be sued by the Equal Employment Opportunity Commission (EEOC) to force the company to offer advancement to women and to minority workers. It entered into not one, but two consent decrees, in 1973 and 1974, and had to provide wage adjustments of about $60 million to 25,000 women and minority workers who had been blocked from advancement and to agree to a specific plan to open up craft and other jobs.
The union, by the way, tried to block those settlements, claiming that the settlements in court cases improperly superseded the union as the bargaining agent for the workers. Judge A. Leon Higginbotham noted in one order that CWA had "remained intentionally aloof" as the process moved forward.
It's also worth noting that in gratitude for all the union support for telephone company public policies, like opposing Net Neutrality, Verizon has started negotiations taking what the union is calling an unprecedented "aggressive agenda" against unionized workers. AT&T certainly will follow suit next year.
As speaker after speaker said, AT&T has created enormous good will in the minority communities for its contributions to various organizations. In one statement at the start of the hearing, J. Alfred Smith, Jr., pastor of the Allen Temple church in Oakland, said only Bank of America and Wells Fargo provided more support to the minority community than AT&T.
To be clear, the fact that AT&T should get all the credit in the world for being willing to spend $60 million doing good works in communities. Their foundation supports any number of worthy causes. It would be great if other companies had the same spirit of improvement. On the other hand, the degree to which recipients feel beholden to support AT&T in its political fights, even if not explicitly requested, is seriously troubling.
However worthy, AT&T's philanthropy is irrelevant to the discussion of the company's takeover of T-Mobile.
At the end of the three-hour-plus hearing Tracy Rosenberg, executive director of the Media Alliance, also based in Oakland, said she wanted to "discourage the idea that this proceeding is a philanthropy contest." Noting that an earlier speaker had lauded Wells Fargo and Bank of America for their contributions to minority communities, she said the role those companies played in today's housing foreclosure crisis shouldn't be overlooked because of their contributions to communities. There are impacts "more profound than grants," she said.
This takeover is about losing a major competitor in the fastest growing segment of Internet use. According to a new study from the Pew Internet Project, about 35 percent of American adults own a smartphone. Add on the younger population and that equates to lots of Internet access via wireless. To have the vast majority of a market that size shared by two ginormous competitors, which is what would happen if AT&T takes over T-Mobile, would seriously harm U.S. consumers, app developers, handset makers, among others and deal a big blow to the U.S. economy. There would be only two winners, and lots of losers. CWA in California recognized that. Maybe others will come around.