AT&T's Proposed $39 Billion Acquisition of T-Mobile Could Mean Local Layoffs



AT&T  announced it will buy T-Mobile USA, the nation's fourth largest carrier from Deutsche Telekom, pending regulatory approval. The merger would push AT&T, the nation's second largest wireless carrier, ahead of first place Verizon, giving the combined company 129 million subscribers compared to Verizon's 102 million subscribers.

AT&T said merging the two companies would result in $40 billion in savings, more than the amount it has agreed to pay for T-Mobile. Some of those savings will come from cutting jobs, many of which could be at T-Mobile USA's Bellevue headquarters where the company has more than 3000 employees. 

The move would be a blow to Seattle's position as a wireless Mecca. Seattle is one of the few cities that has great strength in the field thanks to the local presence of wireless carriers (T-Mobile and Clearwire), platform and device developers (Microsoft and HTC) and numerous applications developers. The Seattle area's strong presence in the field could be further weakened if Sprint acquires Clearwire, an operation in which it already holds a majority share.

But some argue that the region will remain the capitol of wireless regardless of what happens because of its concentration of talented workers in the industry. When McCaw sold its wireless operations to AT&T in 1994, many jobs were lost, but AT&T still employs several thousand people in the region. And many of the employees who left McCaw launched new start-ups.

AT&T has agreed to pay $25 billion in cash and an additional $14 billion in shares for T-Mobile USA. Deutsche Telekom will use the money to reduce debt and strengthen its market position in Europe.  We have achieved the best solution for our company, our customers and shareholders," said Deutsche Telekom CEO Rene Obermann in a statement: "We will be able to focus more on the opportunities of a modern infrastructure in Germany and Europe.

Deutsche Telekom also gets to unload a property that has been steadily losing customers. T-Mobile has sought to boost share by cutting its prices. A merger could result in less pricing pressure in the wireless market. If regulators determine that the move would result in a duopoly and higher prices, they could choose to block the deal.

The deal would give AT&T much needed capacity at a time when the growing use of smart phones is straining its systems. AT&T said it has seen its mobile data traffic grow by 8,000 percent in the past four years. The company expects it to grow another 800 to 1000 percent by 2015. "Put another way, all of the mobile traffic volume AT&T carried during 2010 is estimated to be carried in just the first six to seven weeks of 2015," the company said.

2016 Tech Impact Awards: Tech Impact Champion

2016 Tech Impact Awards: Tech Impact Champion

Congratulations, Ed Lazowska!

Ed Lazowska, Ph.D.
Bill & Melinda Gates Chair in Computer Science & Engineering, University of Washington

When Ed Lazowska arrived in Seattle 39 years ago as an assistant professor, both the University of Washington and the region were very different places. In computer science, he was the newest of only 13 faculty members. The region’s tech industry largely consisted of Boeing, Fluke and Physio-Control. Microsoft at the time was still a dozen people in Albuquerque. 
Today, the UW’s Computer Science & Engineering Department rivals Stanford’s and Carnegie Mellon’s for attracting tech talent and major research — accomplishments that Lazowska helped bring about. As the university’s department chair, his effort to recruit leading data scientists included personally reaching out to Amazon CEO Jeff Bezos, who provided $2 million from Amazon to endow two professorships and personally met with researchers. A decade after leading fundraising to build the Paul G. Allen Center for Computer Science & Engineering, he is doing so again to build a new CSE facility that will help double the center’s capacity.
“Our job,” Lazowksa asserts, “is to provide socioeconomic mobility for bright kids in this region.”
Driving opportunities through research remains his passion, as his own studies in high-performance computing, multicomputer processing and big data science have proved. An early technical adviser on the formation of Microsoft Research and a member of two national advisory committees on science and technology policy, he has promoted private and public investment in “engineering things that one day in the future will be used in game-changing products.”
Lazowska believes big data and cloud computing “lie at the heart of 21st century discovery.” He helped found and now leads the UW’s eScience Institute, a cross-campus partnership that helps scholars in fields such as astronomy, biology and sociology take advantage of data analytics to enhance their research. Given the region’s far-reaching cloud expertise, Lazowska says, “This is an area that Seattle has the potential to own.”
Lazowska’s other initiatives include promoting K-12 STEM education and gender diversity in the UW program. He champions the notion that all students should study computer science to cultivate the “computational thinking” skills needed for the new century.
Lazowska marvels at the region’s transformation into a place “with distinctive and innovative activities in the broadest range of areas.” With his trademark enthusiasm for the UW and the local tech sector, this celebrated educator, researcher, adviser and booster has played an important role in that transformation.
Previous Tech Impact Champions
Tech Impact Champions are chosen not only for their achievements in technology but also for championing the region’s broader tech sector. Past inductees in Seattle Business magazine’s Hall of Technology Champions, previously called Lifetime Achievement Award honorees, are:
  2012: John McAdams, former CEO, F5 Networks
  2013: Jeremy Jaech, cofounder, Aldus and Visio, and chair emeritus, the Technology Alliance
  2014: Steve Ballmer, former CEO, Microsoft
  2015: Tom Alberg, cofounder, Madrona Venture Group