AT&T Lawsuit Is Obama's Latest Attack on Jobs

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Published September 02, 2011

| FoxNews.com

President Obama is hyping a new push for a warmed over stimulus, now code-named “targeted infrastructure investments” as his administration continues on an astonishing anti-business rampage that is undermining job creation in this country. 

It’s not just the uncertainty created by the pending onslaught of new regulations, but the certainty that nearly everything this administration does will make it more difficult to do business in this country. 

The latest proof comes from the Department of Justice, which is suing to block the tie-up between AT&T and T-Mobile. 

The lawsuit announcement sent stocks tumbling, and for good reason. This is an open attack on one of our most prolific job creators. It is also a blow to a multi-billion dollar deal that would substantially upgrade our nation’s wireless broadband infrastructure – without taxpayer dollars—supposedly a major goal of the administration.

The tech sector is the brightest spot in our dull economy, with unemployment of just 3.3 percent compared to consistent 9 percent plus in the overall economy. 

A wave of mergers in recent years have unlocked value for shareholders while driving greater network effects and economies of scale, which are especially critical in the wireless space where spectrum is scarce and demand for data services has been growing rapidly.

The Communication Workers of America, the industry’s largest union, strongly supports the merger because the increased investment in upgraded infrastructure would bring good, productive jobs. Quite simply AT&T is not likely to spend $39 billion without significant follow-on investments to maximize their returns; indeed they have already pledged to invest at least $8 billion over 7 years.

The chief corporate cheerleader for the Department of Justice’s lawsuit is Sprint Nextel, which is ironic considering the difficulty that combined entity has had gaining greater operational efficiencies or growing its market share since its own merger. It’s unclear why Sprint would oppose the merger if it really believes its own arguments – that the merger would raise prices and harm consumers – since higher prices would presumably benefit Sprint’s bottom line. It seems far more likely that Sprint fears the merger will succeed, making the market more competitive and lowering prices, taking a bite out of its own profits.

But the principal opposition to the merger didn’t come from unions or competitors. It came from left-wing activist groups, most prominently that absurdly misnamed group Free Press, known for the preposterous statements of its founder, Robert McChesney, a self-described Marxist who has pledged “the ultimate goal is to get rid of the media capitalists in the phone and cable companies and to divest them from control.”

McChesney’s communications director went to work for the FCC before more recently moving over to the newly created Consumer Financial Protection Bureau to wreak similar havoc on the financial sector. Other Free Press alumni are peppered throughout the Obama administration.

Now, with the DOJ’s lawsuit, it’s clear that advancing the narrow ideological interests of such groups takes priority over allowing the market to function. Every previous telecom merger has been met with the same dire predictions from the same so-called consumer groups about the impacts on investment and on price. Every time reality has disproven their outlandish claims. There is no reason to expect this time to be any different.

Moreover, given that the wireless industry is competitive according to any conventional measure of market power. The DOJ had to disregard its own precedent and standard methodology to concoct a newly defined national wireless market. 

In reality, there are at least 5 competitors in 18 of the 20 largest markets, and at least 4 competitors in most other markets. The most recent wireless competition report from the FCC shows that 89.6 percent of the United States population has five or more wireless carriers to choose from.

The Department of Justice should have resisted the urge to interfere in the free market and prevent investment from flowing to its best and highest use, boosting productivity, economic growth, and job creation. When it can stick it to business with more regulation, interference, disruption, and big government interference it always goes for it. And now, unfortunately, the tech sector – under even greater threat of government interference – may start to perform as poorly as the rest of our Obama economy.

Phil Kerpen is vice president for policy at Americans for Prosperity. His forthcoming book “Democracy Denied” will be published by BenBella Books in October.

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