Mergers Cost Jobs

Peter : On Rad's Radar?
Peter
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

Mergers Cost Jobs

In the wake of AT&T getting caught misleading the federal agencies about the benefits of its merger with T-Mobile (FCC report here), we see that the merger of PAETEC and Windstream has already resulted in job losses.

Windstream cuts 58 jobs at Palm Harbor office is just the start of at least 280 jobs being cut from its combined workforce of 14,500. Synergies require job cuts. Richmond is losing 70. Even Rochester is losing 52 jobs, according to 13 WHAM TV.

Mergers can't work without job losses, office closings, and other economic detriment. It is what it is, but don't put lipstick on it and try to sell the pig as a boon to anyone but your shareholders. And I think that means short term shareholders, because mounting debt combined with flat markets and more competition in a climate of stagnate job growth means the long term picture is worse than the pig.

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Now the ILEC mouthpieces are writing about how unfair the FCC report was. Really? Because the FCC staff had 2 million pages of documents from AT&T and T-Mobile to sift through, including the "smoking gun memo" that said AT&T didn't need to buy T-Mobile, it could spend one-tenth the $39B price tag to build out the network itself. AT&T also admitted to Congress that it mismanaged its network. They all have spectrum. Or be like VZW and buy it from Leap and SpectrumCo - or LightSquared or DISH et al.

And let's not forget one big thing: both cellcos have lousy customer service records. That HARMS consumers. The FTC, DOJ and FCC were established to protect CONSUMERS, not other companies (Sprint) or shareholders. We have very little (real) competition in telecom.

Final thought: Most mergers fail!

It isn't about bigger. It's about Better. Zappos grew to a $1B with great culture and customer service. Say that about a telco.

It isn't about bigger. Ask Intermedia (ICI, the first billion dollar CLEC that had to sell to MCI) or PAETEC (the company that Arunas Chesonis said needed to be a billion dollar company. For what?). It's about Innovation. Ask a company in the Duopoly about Innovation.



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