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March 2011

Benton Foundation Welcomes Jim Kohlenberger to Board of Directors

The Benton Foundation is honored to announce that former White House staffer Jim Kohlenberger has agreed to join our Board of Directors.

Most recently, Kohlenberger served as Chief of Staff of the White House Office of Science and Technology Policy (OSTP) under Director Dr. John Holdren. While in the White House, he helped craft the President’s innovation strategy, advanced policies to help spur a mobile broadband revolution through spectrum reform, worked to secure cyberspace, helped put the U.S. space program on a bold new course for the future, and sought to harness innovation as an engine of economic growth and opportunity for all Americans.

From 2004-2008, Kohlenberger was a Senior Fellow at Benton. In that position, he guided Benton's media policy work and strengthened the foundation's collaborations in the field. Kohlenberger headed Benton's advocacy for universal, affordable broadband, tangible public interest obligations for digital broadcasters, diversified media ownership and open communications networks. Previously, Kohlenberger helped shape the Clinton Administration's approach to the Internet. He served as Vice President Al Gore's senior domestic policy adviser and worked to help pass and implement the Telecommunications Act of 1996. Before joining OSTP, Kohlenberger was executive director of the Voice on the Net (VON) Coalition, and ran his own innovation focused consulting practice.

In his new role, Kohlenberger will assist in the governance of the Benton Foundation. In addition, he will join the Board's Program Committee, headed by Elizabeth Daley, dean of the School of Cinematic Arts, University of Southern California. This committee is charged with providing guidance and direction for the programmatic efforts undertaken by Benton staff. Also serving on the Program Committee are Henry Rivera, former FCC commissioner and partner, Wiley Rein, LLP, and Joanne Hovis, president of Columbia Telecommunications Corp., and president-elect of the National Association of Telecommunications Officers and Advisors (NATOA).

Competitive Implications of the Proposed Acquisition of T-Mobile by AT&T Mobility

AT&T's proposed acquisition of AT&T appears to run seriously afoul of the merger policy of federal antitrust enforcement agencies. The first step in merger analysis is typically to measure concentration -- an indicator of the extent of competition.

The standard measure of concentration is the Hirschman-Herfindahl Index (HHI), which is the sum of the squares of the market shares of the sellers in the market. According to the Federal Trade Commission and Antitrust Division Merger Guidelines, if the post-acquisition HHI exceeds 2500, an acquisition that causes the HHI to increase by more than 200 is likely to cause a significant reduction in competition if the market also has substantial barriers to entry. At present, nationwide concentration in wireless telecommunications services is roughly equal to the 2500 threshold, and the acquisition would increase the HHI by more than 600.

These numbers probably understate the effective concentration in the industry for two reasons. First, only the four major carriers can serve customers who seek mobile access in most of the nation. For connections outside their service territories, smaller carriers often resell Sprint’s service. Second, the available data do not distinguish between mobile voice service, which is more competitive, and high-speed data service, which is more concentrated.

FCC's Copps Knocks AT&T|T-Mobile Deal

Federal Communications Commission member Michael Copps appears on this week's The Communicators on C-SPAN -- and he has serious concerns about AT&T’s proposed acquisition of T-Mobile.

Commissioner Copps says the transaction is an even steeper climb for him than Comcast’s merger with NBC Universal. He also said the deal could negatively impact other proceedings at the agency.

"What is the impact going to be on American jobs? I'm trying to find that out. I haven't had a satisfactory answer yet, but I hope and trust that we will. There’s a lot of money on the table, and how much of that money will end up in Europe supporting telecommunications there rather than the United States? It’s a big deal, but as much as anything, what troubles me is that it kind of sucks the oxygen out of so many issues that are pending before the Federal Communications Commission. We can chew gum and walk at the same time, I guess, but this affects so much of what we’re doing. I think whether this goes forward or not has an effect on the whole issue of spectrum auctions. I think it has an impact on public safety. It’s a lot to absorb. I've been at the Commission almost 10 years now and it seems sometimes that we’re the federal merger commission. That’s because companies bring us so many mergers, and it’s always ‘The last one. We’re not going to be back.’ But as soon as you approve one, someone else is at the door saying ‘Hey you let the other guy get real big so you've got to let us too, or else it’s not fair.’"

Verizon official: merger must not be pretext to regulate

Verizon's top policy executive Tom Tauke is concerned that federal regulators could use AT&T's merger with T-Mobile as a pretext for the government to create new regulations.

Verizon does not have a position for or against the merger, but feels strongly the government must not use the transaction as an excuse to introduce onerous new mandates on industry, he said. "We do not want the government to use this transaction as a vehicle for government management of the marketplace," he said. The Federal Communications Commission should also refrain from adding merger conditions that are not related to the transaction or that would otherwise require a rulemaking process, Tauke said, calling that a "perversion of the process." Tauke said it is important Capitol Hill and the FCC maintain a strong focus on freeing up more spectrum.

MetroPCS unopposed to a combined AT&T, T-Mobile

While Sprint is decrying AT&T’s proposed acquisition of T-Mobile, claiming it will marginalize all other operators apart from AT&T and Verizon Wireless, the country’s largest Tier II operator doesn't have a problem with it.

According to MetroPCS chief operating officer Tom Keys, “too big” is a relative term when you’re operator of 8 million customers staring down giants. From Metro’s perspective, the leading operator having 100 million customers versus having 80 million customers makes little difference, Keys said. In fact, Keys sees the acquisition giving Metro a competitive advantage. It not only would knock one of the Big 4 operators out of the business, but it would also remove the one nationwide operator with the most similar market focus to Metro’s, Keys said. T-Mobile has always targeted the lower-end of the postpaid market and the prepaid markets -- Metro’s sweet spot. If T-Mobile were swallowed up by AT&T, that could leave 34 million abandoned customers, many of whom are ripe for Metro’s plucking.

Chairman Rockefeller expands phone industry probe

Senate Commerce Chairman Jay Rockefeller (D-WV) is expanding his investigation into whether phone companies are ripping off consumers with unwarranted fees on their monthly bills. The investigation surrounds a practice called "cramming," which adds unauthorized third-party charges to telephone bills. Chairman Rockefeller began the investigation last year, asking AT&T, Verizon and Qwest for data on cramming. He expanded the probe to CenturyLink, Windstream, Frontier Communications, FairPoint Communications and Cincinnati Bell.

Brookings Panel Debates Wireless Spectrum Policy, AT&T-T-Mobile Deal

The Brookings Institution assembled leading telecommunications experts and business representatives to discuss the future of spectrum policy and the impending merger between AT&T and T-Mobile.

“Mobile broadband is exploding in demand,” said James Cicconi, Senior Executive Vice President-External and Legislative Affairs at AT&T at the start the discussion. “By 2015 we expect our network to carry 19 billion exabytes of data which is equivalent to 400 quadrillion DVDs annually.” Cicconi proceeded to explain why AT&T views the merger between it and T-Mobile a necessity to solve the spectrum crisis. He stated that T-Mobile currently lacks the necessary spectrum licenses to create a 4G Long Term Evolution (LTE) network and its parent company Deutsche Telekom does not have the capital necessary to buy more licenses. “We already carry more wireless data than any other company,” Cicconi said. “When we acquire the additional spectrum owned by T-Mobile we will be able to expand our 4G network to cover 95 percent of the population.” Former Broadband Plan Executive Director, Blair Levin, called access 4G “critical” and said that mobile broadband is vital to future economic growth. Levin went onto say that a spectrum crunch will occur if broadcasters do not sell off some of their holdings, but he opposed taking spectrum away from the owners without proper compensation. “The best way to reallocate spectrum is with voluntary incentive auctions,” Levin said, “but if the current owners are not able to profit from the auction no one will participate.”

Kansas City Gets Gigabit Speeds. What About the Rest of Us?

[Commentary] Google's announcement that it will wire Kansas City with a gigabit network is going to throw a big spotlight on the deficiency between goals promoted in the National Broadband Plan and the vision promoted and amplified by Google.

Whereas the Broadband Plan’s 10-year goal is to have 100 Mbps in 100 million homes, and just 4 Mbps in rural areas, Google asked, what can you do with a gigabit in the next year or two? One great thing that should come from news coverage of Kansas City’s community stakeholders is that the real value of broadband finally will sink into more people’s minds. Google redefines the general perception of public-private partnerships in broadband. Google is going to win in a number of ways. The publicity alone is going to be huge when you consider how much it costs to generate the print and digital coverage it’s getting from this project. Then there’s the R&D value of Kansas City as a test bed for potential Google apps and networking. Ultimately, there is also a dollars-and-cents value of being a part or partial owner of the infrastructure, depending on how Google structured the deal with the city.

News Corp. Tells Time Warner Cable To Stop Streaming Channels On iPad App

After several days of grumbling, it looks like the knives are coming out. Fox confirms that it sent a letter demanding that Time Warner Cable stop streaming its National Geographic and FX channels to iPads. This scuffle with TWC could turn into the first battle over whether iPads are covered by existing payment and licensing schemes, or whether content owners can insist on new iPad video streaming rights. Fox is the second programmer to make such noises about TWC’s iPad app; Scripps Networks Interactive complained earlier this month.

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