Jobs threatened as Baby Bell gobbles up AT&T

AT&T, once the largest telecommunications monopoly in the world, had a run unprecedented in corporate annals. Now it's a footnote.

AT&T is a classic example of a mega-monopoly that depended on a capitalist government and its regulatory agencies to protect its assets, profits and investments.

Founded almost 130 years ago when the telephone was invented, AT&T grew in arrogance and comfort, confident that its monopolistic control of the local and long distance phone companies and its subsi diaries--the Baby Bells and Western Elec tric, which assembled phones and other parts--would assure its place as the foremost telecommunications leader. This worked for the better part of the 20th century.

In 1984 the Reagan administration was forced to deregulate the industry. The AT&T monopoly was broken up into seven regional corporations known as Baby Bells. The dismemberment of AT&T 20 years ago was a reaction to the revolutionary changes in technology, including microwave radio transmissions.

SBC Communications was one of those Baby Bells, known as Southwestern Bell in 1984. On Jan. 31, SBC concluded a $16.3 billion deal that swallowed up AT&T.

Since 1984, AT&T had fallen prey to predatory capitalist cut-throat competition, spurred on by the revolution in technology that found it ill-prepared for the explosion of new hi-tech companies with deep pockets. Its downfall began following a series of ill-fated miscalculations.

According to the Jan. 31 New York Times, AT&T was undone by "cheaper inter net technology, growth in the cell phone indus try, where it has no role, and regulatory changes that squeezed it out of the local phone industry." The monopoly never recovered.

According to an Economist article on Feb. 5, headlined "The Fall of a Corporate Queen": "For much of the century, AT&T was the envy of the corporate world--the largest firm on the planet. ... No share was more widely held--the firm was so solid it was considered ideal for 'widows and orphans.'

"Their legendary research arm, Bell Laboratories, was responsible for some of the 20th century's greatest inventions, from the transistor to the laser, and fielded seven Nobel Prize winners." Unfor tunately for AT&T, Bell Labor atories was spun off to become Lucent Technologies.

A whole new generation of hi-
tech tele c ommunications corporations sprouted from the Baby Bells and other well-fin an ced corporate entities that capitalized on the new technology in telecommunications.

When the break-up came in 1984, AT&T had around one million employees. Currently, there are fewer than 47,000 workers worldwide. AT&T Chief Executive Officer David W. Dorman, "in his drive to sell the company, sharply reduced AT&T's debts, eliminated tens of thousands of jobs, and retreated from the consumer markets to stem losses." (New York Times, Jan. 31)

What is SBC?

How did SBC, a regional Bell, become the shark that swallowed up the corporate monopoly which had totally dominated the telecommunications industry for 128 years?

Located in San Antonio, Texas, SBC is made up of Southwestern Bell, Ameritech, Pacific Bell, Nevada Bell, SNET and Sterling Commerce. SBC provides local phone service to more than 50 million customers in 13 states and holds a 60-percent stake in Cingular Wireless. Along with Bell South, Cingular bought out AT&T Wire less to become the nation's biggest mobile phone company.

Now, in one shot, SBC will become the largest long-distance carrier and provider of phone and data service to Corporate America. SBC currently employs 163,000 workers.

Before major Wall Street institutions Lehman Brothers and Rohatyn Asso ciates, Morgan Stanley and Credit Suisse First Boston closed the deal, and before regulatory agencies and shareholders approved the merger, SBC announced plans to lay off 13,000 workers. It expects 60 percent of the cost savings from the AT&T acquisition to come from job cuts.

Technology and competition breed layoffs

Edward E. Whitacre, SBC's chief executive officer, who will head the newly merged telecommunications giant, announced plans to save around $15 billion (almost the cost of buying AT&T) by closing overlapping offices, cutting and combining information technology as well as networking its business services such as sales and other operations.

Wall Street sycophants and their academic mouthpieces are trying to sweet talk around this explosive development. They believe the information highway will create more and more jobs for skilled work ers and scientific personnel with higher wages and better benefits and avoid the capitalist boom-and-bust cycles. Not true.

It was only four years ago that the bubble burst in the high-tech industries. Par ticularly hard-hit were thousands of baby boomers in Silicon Valley and Boston's Route 128, who had been brought into the market with Initial Public Offerings (IPOs). During a one-year recession in 2001, over 9 million jobs were lost, exposing the notion that the information-geared economy is more humane or immune from the driving force of high tech.

The buyouts and acquisitions are fundamentally different from those in the decades before the 1984 breakup. People thought of AT&T as a monopoly, but also as a benevolent employer that rewarded a lifetime of service with job security and economic benefits.

Today, the merger frenzy is happening during U.S. capitalist instability, intractable debt and deficits in a shrinking world market. The owners are driven by cut-throat capitalist competition in their war-like drive to push down wages and benefits to control the telecommunications markets.

Sprint acquired Nextel Communi cations to become the third largest wireless company. Verizon, the nation's largest regional phone company and a former Baby Bell, just bought MCI, formerly known as Worldcom, a company that recently emerged from bankruptcy. Market power is being concentrated in fewer and fewer hands and layoffs are inevitable.

Adding to the explosive character of the high-tech, low-pay crisis in telecommunications is the Wal-Martinizing of the service-oriented industries.

Stormy days ahead for labor

The Communications Workers represents 15,000 employees at AT&T and 95,000 at SBC. According to a statement by CWA President Morton Bahr, "SBC's purchase of AT&T makes good business sense, and it could be good news for customers and employees as well as the shareholders of both companies."

No, no, no.

These "could be" promises and class collaboration will only disarm the 110,000 CWA members and thousands of other workers--members of other unions and non-union workers who need to be organized. Many have already been savaged by SBC before the ink is dry on the merger agreement. Their good-paying jobs are up in smoke.

The labor movement must take into account the changes in the current configuration of class forces. The potential for a broad-based strategy that unites labor and the oppressed communities is promising.

The center of organized labor continues to shift from the high-paid, skilled, mainly white and male workforce to the lower-paid service-oriented workers, who are majority African American, Latin@ and women workers. This movement will grow in numbers across industries to organize resistance to the high-tech, low-pay mach ina tions of Wall Street and the White House.

The realities of class truth and the need for independent class-wide struggle will break through the fuzzy class-collaborationist illusions held by many labor leaders. And it will come from below. New forms of struggle will arise, going beyond the narrow restraints of collective bargaining agreements.

Broad-based economic and political strikes and struggles will become the order of the day.