AT&T/T-Mobile Block Harms Job Creation

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By Bruce Mehlman

NEW YORK ( TheStreet) -- Consumer confidence is plunging. Economic growth has stalled. Foreclosures persist, the European debt debacle continues, U.S. unemployment remains high and America's annual government deficits are north of a trillion. The global economy is a scary place.

Yet amid the financial doom and gloom, one bright spot remains: mobile broadband. Throughout the dot-com bust of 2001, the financial collapse of 2008 and the 2011 debt dip, broadband availability, adoption and innovation expanded steadily and impressively. Wireless data services barely existed in 2001; today, more than 300 million Americans subscribe.

Wireless devices of a decade ago are museum relics compared with the current generation of smart phones, tablets and mobile appliances. Expanding wireless services will lead to critically-needed new jobs for our economy...as many as 771,000 according to Deloitte, both in the telecom industry directly and in the broader ecosystem of broadband-enabled jobs.

Mobile broadband is not just the golden goose: it's the only goose. So the Justice Department's recent decision to oppose a pro-broadband merger between AT&T ( T) and Deutsche Telekom's ( DT) T-Mobile makes little economic, technological or political sense.

While the President and FCC correctly point to innovation as the only key to long-term growth and competitiveness, this action is inconsistent with those goals. Investing billions of the 2009 stimulus on broadband; reforming antiquated universal service and spectrum policies; using the bully pulpit to urge 98%broadband penetration are all useful initiatives. But government alone cannot get the job done. Blocking the proposed AT&T/T-Mobile combination will undermine and counteract any benefits realized from those other policy actions.

The inconsistency of the DOJ action may in part result from non-technologists' failure to appreciate how rapidly tech markets are evolving. The days of Standard Oil are long gone, and few leading tech companies remain on top for long. Or perhaps some lawyers are listening to the doom-and-gloom voices warning that this merger would spell the end of wireless competition, just as skeptics counseled against previous wireless combinations. In reality each subsequent merger has enabled greater investment, faster innovation, lower prices for consumers and more robust mobile services.

For example, when Bell Atlantic merged with GTE and Airtouch, opponents warned the deal would "create an economic Frankenstein, an unregulated monopoly that will do nothing to improve the quality of life..." Four years later, we were cautioned, the AT&T Wireless-Bell South combination to form Cingular "spells bad news for consumers, who ultimately can expect higher prices and diminished service."

When Sprint ( S) merged with Nextel, doomsayers declared that it "likely spells an end to the lower prices and innovative services consumers have received from cell phone companies." We heard more of the same when Verizon ( T) merged with Alltel on June 5, 2008.

Each dire warning has been dead wrong.

Throughout this decade of wireless consolidation, consumer prices have fallen and services expanded. According to the 2010 U.S. GAO report, wireless prices declined 50% from 1999 to 2009. From the first quarter of 2005 to the last quarter of 2010, even though the average American sent 703 more text messages, prices fell 84%. Similarly, between the third quarter of 2008 and the fourth quarter of 2010, the effective price per megabyte declined approximately 89%.

Mobile broadband markets are incredibly competitive: according to the FCC, 90%of all Americans can choose from five or more mobile carriers in 2010, up from 76% one year prior. The fact is that wireless industry consolidation has been and remains healthy for consumers and essential for those who build upon the dynamic wireless platform; it has enabled critical investment in infrastructure, innovations in business models and great leaps forward in wireless architecture. The market is working...government just needs to stay out of the way.

In this case, the proposed merger will enable AT&T to serve more than 55 million new customers with much higher speed services, upgrading its networks to handle exploding traffic while creating thousands of new jobs here at home. It offers a win-win for consumers and the economy, gaining the support from voices as diverse as the Communications Workers of America, Facebook, Qualcomm, RIM, TechNet, the Wall Street Journal, Kleiner Perkins, Sequoia Capital and 27 state Governors from around the country. The question is whether D.C. denizens understand innovation and job creation better than these innovators and local leaders.

As we look to refuel the American job engine, policy matters. Policy makers should first do no harm. Opposing the combination of AT&T and T-Mobile will do significant harm to mobile broadband investment, rollout and employment. This is a chance for all of these to support efforts to grow the economy -- and we should move ahead to see them realized as quickly as possible.

Bruce Mehlman is co-chairman of the Internet Innovation Alliance and served as U.S. Assistant Secretary of Commerce for Technology Policy from 2001-2003.
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.