Federal Communications Commission (FCC) chair Brendan Carr (pictured) wielded a big stick to get Verizon and T-Mobile US to drop their diversity, equity and inclusion (DEI) practices ahead of gaining approvals for their respective mergers.

Earlier this month, the US Department of Justice’s antitrust division cleared T-Mobile US’ $4.4 billion acquisition of UScellular a day after the operator shelved its DEI practices to better align itself with President Donald Trump’s policies.

Also in July, the FCC gave a greenlight to T-Mobile for the transfer of control of five of Metronet’s subsidiaries to the mobile operator.

In May, Verizon garnered regulatory approval for its $20 billion acquisition of Frontier Communications after agreeing to end its DEI initiatives and reassign staff. AT&T scaled back its DEI efforts in March in an apparent move to appease Trump.

In March, Bloomberg reported Trump-appointed Carr bluntly warned companies promoting DEI initiatives may not receive approval from the agency for their merger and acquisition deals while specifically calling out T-Mobile and Verizon.

Executive orders
Trump has long maintained DEI programmes and practices are discriminatory. Two executive orders issued in January by Trump specifically targeted and effectively outlawed DEI programmes within the federal government

Executive order 14173 prohibits federal contractors and subcontractors from engaging in DEI-related affirmative action or workforce balancing based on protected characteristics. It also requires all federal contracts and grants to include terms certifying compliance with anti-discrimination laws and the absence of illegal DEI programmes.

“What a lot of people don’t realise or ignore, is one of the subsections is that every government vendor also falls under that executive order,” Roger Entner, founder and analyst at Recon Analytics, told Mobile World Live (MWL.) “If you sell to the government, and virtually every telco does, you must scrub that if you want to continue to do business with the government.

“By the way, if you are a TV network and you take money for an ad for recruitment from the military, you fall under that,” he added.

Entner explained Carr and other administration officials “need to express their public adoration and adherence with the wishes of the president”.

“Carr can run victory laps and show how much he implements President Trump’s agenda. He can show how he is humbling even the mighty and he brought them to heel.”

New Street Research analyst Blair Levin told MWL if Carr believed the companies’ DEI programmes were breaking the law he could bring an enforcement action against them. 

“But he hasn’t because such an action would be reviewed by a court and most courts would find that the companies were not violating the law and the FCC had no authority to bring such an action,” Levin said. “Carr has raised the issue in the context of mergers where the companies know he can hold up a merger forever unless they bend the knee.”

While some analysts MWL contacted declined to comment on the Trump administration’s anti-DEI efforts, Levin stated “the chair of the FCC should not be setting human relations policies for regulated companies”.

“There is no way that giving the FCC chair that power will result in faster, better, and cheaper communications, which is what the FCC chair should be focused on,” he stated.

Charter Communication’s $34.5 billion deal to buy Cox Communications is on the clock for FCC approval. Trump is a vocal critic of Comcast CEO Brian Roberts, according to various news stories.

Going forward
While T-Mobile and Verizon buckled on their DEI policies, some companies have held firm, albeit ones which currently don’t have M&A deals in the works.

Shortly after Trump issued his executive orders in January, Apple bucked the trend to drop its DEI policies. Cisco still has inclusion policies and programmes listed on its website.

Depending on Trump’s mood or current agenda, any of the vendors in the telecommunications sector could fall under his administration’s DEI scrutiny regardless of whether they are seeking FCC approvals.

Wedbush analyst Dan Ives told MWL it is clear the FCC’s stance on DEI initiatives will have far-reaching implications for the telecoms industry. He explained companies will need to adapt their diversity initiatives to comply with the FCC’s expectations, “potentially affecting their corporate culture and public perception”.

“It’s about finding a balance between regulatory compliance and fostering a diverse and inclusive workplace,” he said. “Finding that balance will be key for telecom companies moving forward.

”It’s not just about compliance but also about creating a workplace culture that values diversity and inclusion.”

Indeed, Ives stated the FCC’s stance on DEI initiatives will likely lead to a shift in how companies approach these issues.

“It will be interesting to see how they adapt and evolve in response.”