After Nabbing Billions In Tax Breaks, AT&T's Promised Job Growth Magically Evaporates

from the Charlie-Brown-playing-football dept

Telecom monopolies have a pretty good racket going. They’ll consistently demand all manner of tax cuts, subsidies, and other government perks in exchange for broadband networks they only half or partially deploy–or jobs that never materialize. The nation’s telcos in particular have received countless billions in taxpayer subsidies to expand their broadband networks, yet time and time again we’ve shown how they’ve wiggled out of these obligations, leaving huge swaths of America left outside of the reach of fast, inexpensive, competitive broadband (that’s particularly true if you’re poor).

It doesn’t matter how many times we go through this little stage play, it’s a cycle that just never ends. AT&T’s lobbying and policy folks are exceptionally good at routinely promising state and federal governments that a cornocopia of new jobs and amazing broadband investment is just around the corner, but only if AT&T gets what it wants: be that the death of net neutrality, a lower tax rate, more subsidies, or any number of protectionist or otherwise terrible laws designed largely to protect AT&T’s non-competitive geographical fiefdoms. It’s a cycle, and a level of institutional gullibility, that’s pretty staggering in scope and repetition.

Yet somehow we never wise up. We never audit investment promises. And we certainly never hold giant telecom monopolies accountable. For example, AT&T spent most of last year promising all manner of incredible broadband investment, new jobs, and new innovations if the Trump administration was willing to give it a massive new tax cut. These cuts would, we were repeatedly told, result in a huge boon for broadband investment and “really good jobs”:

“Lower taxes drives more investment, drives more hiring, drives greater wages,” Stephenson said on CNBC’s “Squawk Box.” “All of this fits together.”…For example, he said AT&T would have to add 7,000 jobs to execute on every $1 billion of capital investment. “There are jobs wearing hard hats ? to put that capital into the ground or on cell towers,” he said. “There are high-paying, really good jobs with great benefits. The correlation is tight ? very, very tight.”

The AT&T CEO said that reducing business regulations is another way to get companies to invest. Regulation is “effectively a tax on investment,” he argued. “Take regulation down, you get investment up.”

The Trump administration was happy to oblige, doling out cuts worth upwards of $20 billion for AT&T. But this theater ignored the fact that AT&T (and countless other companies like it) have long engaged in all manner of financial bookkeeping magic to ensure they already pay a relative pittance in taxes (especially true in telecom where complex mergers and gamesmanship like Reverse Morris Trusts can be used to endlessly dodge tax obligations). And it also ignored how many times AT&T has made these empty promises then failed to follow through.

And it’s happening again. Despite its $20 billion in tax savings and record profits, AT&T continues to lay off thousands of employees in the wake of the Trump tax cuts:

“Though AT&T is earning record profits, spending billions on stock buybacks and is expecting an estimated windfall of $20bn in savings from Donald Trump?s tax reforms, it has continued to lay off workers and outsource jobs…In the last seven years, AT&T has closed 44 call centers, according to the Communications Workers of America labor union. Four closures, including the facility in Harrisburg took place this year. While some workers are able to relocate to other call centers in the US, many are left jobless. For some, their jobs are sent offshore, where workers can be paid less than $2 an hour.”

Some of these job cuts reflect AT&T’s waning interest in being an actual broadband company as it pivots (like Verizon) to more lucrative online advertising. Others reflect the company’s efforts to manage the massive debt incurred from its endless quest to grow bigger for growth’s sake via an endless wave of megamergers. Unsurprisingly (if you spend five full minutes reading a telecom history book), any real savings from tax cuts, mergers, consolidation and mindless deregulation of natural monopolies (like net neutrality) goes to executive compensation and investors, not to employees or back into the network.

Of course enriching investors and executives is the whole point. Yet we seem intent on adding a layer of bullshit onto these proceedings that try and suggest that such mindless fealty to AT&T is good for everybody, when that’s simply not true. To sell the public and press on this manufactured idea, AT&T and other telecom companies (like Charter) promised employees bonuses (not to be confused with actual raises) as a direct result of the tax cuts. But there too AT&T was misleading, failing to mention those bonuses had already been secured as part of routine union negotiations:

“In a December 2017 news release advocating in favor of Trump?s tax cuts, AT&T promised bonuses of $1,000 to 200,000 employees over the next year. The news release omitted that unions had already previously negotiated those bonuses with AT&T before the tax cut bill was passed.”

AT&T’s broadband investment promises are also routinely hollow. One thing AT&T likes to do is take the CAPEX and network investment numbers it would have had anyway, and claim these are “new” goals only made possible if AT&T gets what it wants. Few in the press ever really bother to fact-check AT&T’s math. Neither do lawmakers, who have come to rely on AT&T’s generous windfalls to help fund their next election. The end result usually winds up being some scattered upgrades in more competitive areas, but huge swaths of America with decidedly last-generation DSL despite a parade of subsidies and tax breaks for AT&T (again, a trend especially notable in low-income AT&T markets).

Our immense gullibility to these bogus promises is a bit more stark to me than it is to most, having watched this play out countless times with nary a single penalty for AT&T over the last few decades. The drama played out again recently with the assault on net neutrality, a move that will result in countless anti-competitive headaches and rate hikes for captive customers, but was similarly framed as an incredible gift to consumers, innovation, American jobs and network investment. Someday we may learn our lesson and stop throwing billions at blatant grifters like AT&T, but it’s abundantly clear it’s not happening anytime soon.

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Comments on “After Nabbing Billions In Tax Breaks, AT&T's Promised Job Growth Magically Evaporates”

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Anonymous Anonymous Coward (profile) says:

In Truth

The only ones surprised by this outcome are those regulators who believed AT&T’s promises (whether they believed them or not isn’t the point, they accepted them as part of the deal to approve) in the first place.

Is there any tracking of regulators and their employment down the road, either in the past or for the future?

Anonymous Coward says:

Re: Re: regulators or legislators?

shocker there!

been seeing this for what? nearly a century now?

I am wondering when people are going to catch on how much of a ride they are being taken for?

And yet they still fill the streets as beggars seeking salvation from the politicians, yet they deserve it not!

Anonymous Coward says:

Re: Re: Re:2 regulators or legislators?

Yes, it is true, I make mistakes like everyone else and recognize that I cause many of my own problems.

The problem is that most of you refuse to accept that you created YOUR problems. You always seek to assign blame to someone else.

There is no greater enemy than the bastard you see in the mirror.

I am successful because I understand this, and get the fuck out of my own way!

Anonymous Coward says:

Re: Re: Re:3 regulators or legislators?

And those born into a poor existence are supposed to provide for themselves and pull themselves up by their bootstraps because it is their fault for being born in the first place. They should have thought about that and voted correctly before having been born, like this poster above, because that is what successful people do – now get busy all you frustrated millionaires.

LOL – the smell of bullshit in the morning.

Anonymous Coward says:

and, as usual, government in the way of ‘campaign contributions’ to congressmen are the real problem. if they weren’t so self interested, maybe something good would actually be achieved but while their own coffers get filled why should they worry about what could have been done with $20billion instead of giving it to telecoms companies or what should have been done with the money as it was given to telecoms companies! while the public are so gullible and content to do nothing, nothing will change in quality of service or anything else. it is after all, money taken in taxes so the people should have a say it what it’s used for!

Thad from Antietam Creek (user link) says:

Today's ATT-ack! Barely hinting other corporations do same.

The Trump administration was happy to oblige, doling out cuts worth upwards of $20 billion for AT&T.

After intentionally mixing up tax cuts and subsidies, you end implying with "throwing billions at blatant grifters" that ATT is getting actual money from (the corporation that masquerades as) the gov’t, but that is FALSE. Tax cuts CANNOT be "nabbed" and are not "subsidies".

Now, you trot out some phrases…

goes to executive compensation and investors, not to employees or back into the network

engaged in all manner of financial bookkeeping magic to ensure they already pay a relative pittance in taxes

used to endlessly dodge tax obligations

Hmm! Just as I say!

But you ONLY SAY. You are not a socialist, it’s just empty rhetoric.

Those would be good EXCEPT that you’re entirely focused on ATT, Verizon, Comcast as EVIL, ignoring that Google / Facebook / Twitter / Apple and ALL other corporations DO EXACTLY SAME. Technically, that makes you a corporate shill of the fascist / gov’t picking winners type.

YOU take your views from The Establishment New York Times! You’re an elitist only pretending to be socialist! I’m even a better socialist too!

You never more than obliquely mention benefitting workers, because they’re just "the masses" to you. You don’t use your massive "platform" here to call for the known CURE to most problems: raising taxes on corporations and The Rich, to around 90% like the 1960s when the US was becoming MORE fair, not less.

Nope, instead Techdirt targets content producers saying they’re evil so go ahead and steal their work, and promotes MASSIVE GRIFTERS like Google which produce nothing, and in music, Techdirt attacks OLD gatekeepers but supports the NEW ones like Apple and Spotify to TAKE OVER THE GRIFTING off artists.

Stop stealing my "blatant grifters" phrase, you little corporatist fiend! You don’t have the GUTS and GRIT to defend it against ALL corporations! Have you NO shame?

By the way: there’s a Gillum nominated to run for governor of Florida who wants 40% tax rate on corporations. Talk him up! Then there’s Ocasio-Cortez in New York good on anti-corporation too but drawback of rabidly for unlimited immigration. And I’m disappointed that "Harris, a 38-year-old Air Force veteran who is African-American and LGBTQ" lost to an "incumbent", because I’m for shaking up The Establishment any way can.

John Roddy (profile) says:

Re: Today's ATT-ack! Barely hinting other corporations do same.

We get it, already. You have a massive hate boner for Google. Everything is Google’s fault. Google is ruining the lives of everyone. Google Googled Google’s Googles, bleh. I’ll bet you’re secretly a shill for another engine. Are you from Are you the butler?

Also, for future reference, the act of failing to mention completely irrelevant information is not equivalent to “IGNORING.”

PaulT (profile) says:

Re: Re:

“You are free to start your own cell phone company.”

Yeah, that barrier to entry is famously low, especially in the current US market.

“AT&T has become a net innovator bringing us endless technological miracles”

Such as?

“Quit being so ungrateful and jealous.”

I’m sure that people would, if the promised benefits were going somewhere other than his bank account. Even if it were just in the form of the employment they said they’d be providing?

Anonymous Coward says:

Re: Re: Re:

“I’m sure that people would, if the promised benefits were going somewhere other than his bank account.”

Spoken like the true undeserving. I need to get paid too!!! what did I do you ask? nothing… but I DESERVE BENEFITS TOO!

This is the problem with you PaulT. You think you deserve without earning. You want it too? Go and get it, no one is stopping you, you are only stopping yourself. And if you were in Randall’s place…. you would be doing the “exact” same thing he is doing.

I have YET to see a single one of your type give anything up except to buy public opinion. How much is in YOUR bank account? There are still starving people in Japan you know!

PaulT (profile) says:

Re: Re: Re: Re:

“I need to get paid too!!! what did I do you ask? nothing”

I’m pretty sure the laid off employees of AT&T would disagree with you there.

“How much is in YOUR bank account? There are still starving people in Japan you know!”

I’d happily pay some bills for them if it were my decisions that had recently made them unemployed.

But, thanks again for confirming that you care more about the bank accounts of the 1% than you do for the livelihoods of the people whose labour got them there.

Sayonara Felicia-San (profile) says:

Re: Re: Re: Re:

Just ignore that do-nothing Ellsworth Toohey! Takers always blame everyone else and are jealous of other people’s hard earned wealth.

These people will never accomplish even a tiny fraction of the miraculous achievements Stephenson has. Here are just a few accomplishments:

1. He mentored Mexico’s Billionaire Carlos Slim, while working at SBC telecom

2. He was appointed by President Bush (A hero, patriot, and fellow business success story) as National Security Telecommunications Advisory Committee.

3. Stephenson was named the 2016 CEO of the Year by Chief Executive magazine.

By all objective measures, Stephenson is one of the greatest unsung heroes of our time.

Mitt Romney says:

Re: Re: Re:2 Re:

“My job is not to worry about those people,” Mitt Romney said of the 47 percent of Americans who are likely to vote for Barack Obama. “I’ll never convince them they should take personal responsibility and care for their lives.”

Is this the sort of thing to which you refer when saying “Takers always…”?

Mitt implied that 47% of the population “takes” from those who “make”. Interestingly this includes veterans, some of who gave up their lives for the “makers” and yet they still bemoan having to give them the tax write offs that they so much enjoy. The nerve!

“jealous of other people’s hard earned wealth.”
– more lies – possibly because you are ignorant, idk.

Sayonara Felicia-San (profile) says:

Re: Re: Re:3 Re:

>”My job is not to worry about those people,” Mitt Romney

This breakthrough, go-getter attitude, is exactly why Romney is a successful wealthy role model, and you are just some dude posting nasty messages on the Internet.

…and let’s not forget that the ACA is just ‘RomneyCare’ with ‘Obamacare’ branding on top.

Even when he ‘lost’ it seems that Romney still came out a winner!

cattress (profile) says:

Re: Re: Re: You are free to start your own cell phone company.

That idiot isn’t spouting libertarian beliefs about capitalism or Austrian Economics. While mainstream Libertarians don’t understand Net Neutrality and default to regulation is always bad, libertarians are against cronyism and allowing the government to have the power to piss away our tax dollars and childrens’ futures in the form of debt to benefit private enterprise.

No, that guy is out of touch curmudgeon, who is willfully ignorant of the facts. I’m surprised he didn’t reference to anyone as a snowflake quite honestly. This guy came of age during a time that only demanded hard work to guarantee success. He doesn’t understand why the kids today don’t put their phones down and get up off their lazy asses and get a job and stop demanding handouts from hardworking men like him. He will never acknowledge how his generation is responsible for a number of the economic woes that our generation faces- after all he bought and paid for his house, it was only 10% of his income, whereas it runs around 1/3rd of todays income. Or that his generation absolutely demanded that we get a college or we would never have the credentials to be trusted to take over businesses as they retired, so now we all of 10s of thousands of dollars in student loan debt- and dammit why don’t we just go learn a trade if we can’t do anything with our fancy degree (which we can, it just doesn’t pay enough to pay our loans and a very modest lifestyle outside of our parents basement….)

This guy doesn’t even realize that these old school government enabled monopolies from many generations ago have rigged the system of purchasing the spectrum so to price out any meaningful competition. He’s too busy railing against the edge providers whose monopoly powers rest solely on providing a product that the users like enough and use enough that it will attract advertisers, ya know, since they censor people like him.

Anyway, don’t trash libertarians and lump us in with the crazies just because they say something resembling a belief in capitalism.

That One Guy (profile) says:

Wrong word

You keep using the word ‘gullible’ to describe this sort of behavior, when I’m guessing that for most the more appropriate word would be ‘corrupt’.

I’m sure some politicians buy the lies the likes of AT&T put out about how if they’ll just get [insert massive benefit here] things will be amazing for everyone, with the company almost coincidentally being one of the beneficiaries, but I suspect most of them know full well they’re being lied to and turn a blind eye because of the sweet, sweet ‘donations’ it nets them.

As I and others have noted in the past, sometimes malice, not stupidity, is the correct assumption.

Anonymous Coward says:

I think Karl forgot about the layoffs as well

Here’s the article from the Guardian:

So any jobs created on wireline ops were simply replacing all the call center staff fired. Ironically, like the South Park cartoon suggests, there is no need for a monopoly to have good customer satisfaction ratings anyways. It’s also why Telco’s are always at the top of the list on

ECA (profile) says:

what facts

“”Lower taxes drives more investment, drives more hiring, drives greater wages,” “

Lower Corp tax?? does What?? give the corp more money? for what? DID YOU SIGN A CONTRACT?? its the only way you can HOLD a corp to anything you want done.

Investment?? HOW?? Generally, investment means that the corp is doing something that Looks good.. NOT that it has EXTRA MONEY.. That money Might goto the investors, BUT NOT LIKELY..

Hiring? Unless they want to DO SOMETHING, they wont hire more then they have…and Will probably FIRE more then hire..

HIGHER WAGES?? FOR WHOM? give everyone in the company a 1 time $2 Bonus?? it just goes into the TOP pockets..

Major corps that control 3-4 Major parts of our country and its infrastructure.. THAT the Gov(probably ) Paid for, at least the Interconnections between all the major cities.. THEn subsidized the building for the Farms and Rural areas..
JUST cause there wasnt 1000+ people on 1 line, strung 5 miles long..
All these corps do with this service is MAINTAIN/repair IT. And collect the bills.
The Gov. Pays to keep up the main lines as a fall back system..IF SHTF..

To bad our gov. dosent think it can FORCE them to do anything.. The Gov could do the work, and Charge the corps for it..or return the money given to them..

David says:

AT&T is obliged not to create jobs

The laws demand that AT&T acts in the financial interest of its shareholders. If this means creating jobs in return for tax breaks, this makes sense as long as the jobs do not lose more money than the tax breaks.

It stops making sense if you can just pocket the tax breaks and pay a few dozen lobbyists and bribe a few politicians rather than pay thousands of salaries.

If bullshitting provides a better longterm return of investment than working, corporate bylaws will demand the former to be put in place.

ECA (profile) says:

Re: AT&T is obliged not to create jobs

I remember when they PASSED THAT LAW..
A corporation is not Obliged to Anyone or anything, except its stockholders..

IS that about the time, that they created more then 1 type of stock?? 1 that has full privileges and 1 that gets NOTHING..

ISNT that also the change that they DONT need to have a product CHANGE HANDS…they only need to CHANGE PAPER..No Physical changes needed for the products, IT CAN SIT..right where it was Dropped.

Anonymous Coward says:

“The laws demand that AT&T acts in the financial interest of its shareholders. If this means creating jobs in return for tax breaks, this makes sense as long as the jobs do not lose more money than the tax breaks.”

Not sure to what law you refer, but yes – the corp should think of the shareholders interest. That does not mean they can not act in a humane manner.

Providing tax breaks in return for jobs is fools errand. So many times these “arrangements” fall apart, the jobs never materialize, the corp keeps the credits (they are credits not write offs!) and the general population suffers while the wealthy laugh it up at cocktail parties. In addition, the jobs that your tax dollar was supposed to bring to town do not pay what it takes to live in that town.

Many are getting really tired of the corporate socialism that has been going on for decades. Privatized profits and socialized losses.

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