Wireless merger a smart move for jobs

By James Gattuso

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President Obama recently told Congress that the nation desperately needs to spend more on infrastructure to create jobs and to get the economy moving again. But only last month, his regulators aggressively moved to thwart private-sector plans to invest tens of billions and create hundreds of thousands of new jobs in the wireless industry.

The issue is AT&T and its plan to acquire T-Mobile (now a subsidiary of the German telephone company Deutsche Telekom).

Wireless has been one of the most dazzling success stories of the 21st century economy. Two decades ago, cellphones were a novelty, with barely 5 million subscribers nationwide. Today, the number tops 300 million. Today's “smart” phones provide everything from Internet access to GPS positioning.

The growth in such services has been phenomenal. And the investment needed to fuel this growth has been staggering: nearly $300 billion over the last 20 years,

$25 billion in the past year alone.

This doesn't just mean better services for consumers - it means jobs for Americans. According to a new study by Deloitte, investments in new fourth generation, or “4G,” wireless infrastructure over the next five years could top $50 billion and create at least 371,000 new jobs without a drop of taxpayer money.

Finding the necessary spectrum to transmit all these new wireless services isn't easy. That's why AT&T set its sights on T-Mobile, which serves only about 1/10th of the market, but more importantly, has found it difficult to keep up with the most advanced services being developed. Merging opens an alternative source of investment for T-Mobile customers. At the same time, AT&T subscribers would gain access to T-Mobile's spectrum. The plan improves service for consumers, spurring investment, creating jobs.

However, regulators at the Department of Justice have sued to block the merger, claiming it would impair competition in the wireless market. But the deal would hardly end competition in the wireless industry. The marketplace would contain not just three vibrant national competitors but numerous smaller players in each market, ensuring plenty of choice for consumers.

The lawsuit, if successful, is unlikely to stop the revolution in wireless. But it would make it more difficult, deter investment, and delay new job creation. That would hardly meet the goals expressed by the president or the needs of consumers and American workers.

James Gattuso is a senior research fellow at The Heritage Foundation. Information about Heritage fund at www.heritage.org/about/reports.cfm. Comments: staff@heritage.org