May 2011

FCC hears from AT&T supporters, opponents

AT&T's proposed acquisition gave rise to a stark set of arguments filed with the Federal Communications Commission (FCC) on May 31 in the first official deadline of a review process that could extend well over a year.

If not an occasion for novel insights about the deal, which has already faced the gamut of arguments during public debate, the deadline still marks an important opportunity for opponents and supporters to officially log their opinions with federal regulators after sounding off in the press and on Capitol Hill for several weeks. That means an array of groups lining up on each side, ranging from blatant front groups funded by the dominant players to significant voices whose opinions could be persuasive in the review process. Anyone who files a petition to deny the deal becomes a part of the proceeding and may have access to confidential information that is filed under a protective order. Microsoft, for instance, decided to file in favor of the merger in what could be an important counter argument to concerns that the merger could harm the tech industry. Meanwhile, the leading opponents included public interest groups, third-largest wireless carrier Sprint and regional carriers. The groups say the deal could raise prices by eliminating a low-cost competitor.

FCC Has No Choice but to Reject AT&T Takeover of T-Mobile

Free Press filed with the Federal Communications Commission a petition to deny AT&T’s proposed takeover of T-Mobile. Free Press President and CEO Craig Aaron made the following statement:

"Make no mistake: AT&T’s takeover of T-Mobile will cost jobs, stifle innovation and kill competition in the wireless market, sticking consumers with the bill. The FCC’s mandate is to ensure this merger is in the public interest, and thus it has no choice but to block the deal. This new mobile behemoth would have unprecedented control over the market reminiscent of the old Ma Bell monopoly – except this new company will be even more enormous. A combined AT&T, along with Verizon, would control nearly 80 percent of the wireless market, with free reign to squash competitors and limit consumer choice. It would be like if ExxonMobile merged with BP, Shell, Chevron-Texaco and Citgo, and then forced you to sign a contract to buy only Exxon’s gas for the next two years. AT&T and T-Mobile vastly overstate the purported benefits of this transaction. Eliminating a significant competitor from the wireless market obviously harms competition, and to argue otherwise is pure nonsense. Moreover, the two companies do not need to merge to achieve the capacity or build-out gains they claim this merger would set in motion. Worse still, the deal would eliminate American jobs in the midst of one of the worst recessions our country has ever experienced. This outcome may be a good deal in the short-term for the executives and shareholders of these two companies, but it’s a raw deal for the American public. The FCC must reject this merger."

MAP Challenges AT&T/T-Mobile Transaction

AT&T seeks approval of a transaction which would effectively create a duopoly in the mobile wireless market. Removing T-Mobile, the most aggressive and feisty of the four nationwide carriers, as a competitor, would enable AT&T to stifle innovation, increase prices, and decrease choices for wireless customers – especially wireless broadband users. These negative impacts of the proposed acquisition would harm all consumers and harm the public interest in general.

Moreover, the merger likely would cause the most harm to traditionally unserved and underserved populations, including members of communities of color and rural residents, who rely to an even greater degree on affordable and innovative wireless broadband service offerings to access the Internet and partake in its benefits. It would also interfere with the development of new avenues for creative expression. This would be especially harmful to independent creators and others who use the Internet, and increasingly, use mobile wireless broadband access thereto, to create and distribute all manner of video programming and other types of artistic works and political expression.

T-Mobile is a classic example of a “maverick firm.” Its ads directly and forcefully challenge AT&T by name. It has been a technological innovator, introducing breakthrough products like the Sidekick. It was the first adopter of the Android operating system. It is, by far, the pricing leader among the four national wireless companies. Antitrust law recognizes that such “maverick firms” are disproportionately important in highly concentrated markets because they have strong incentives not to model their business practices on those of the dominant companies. Thus, eliminating T-Mobile would be particularly valuable to AT&T and Verizon.

Public Knowledge and Future of Music Coalition Tell FCC To Reject AT&T Takeover of T-Mobile

AT&T and T-Mobile failed to prove why they should be allowed to merge, even failing to meet their own public-interest standards, according to Public Knowledge and the Future of Music Coalition.

In a filing with the Federal Communications Commission (FCC), the groups said that a merged company would be “contrary to the express policies of Congress and the Commission to rely on competition rather than regulation to protect consumers and spur deployment of new services.” The merged entity would be able to assert control over handsets, applications, equipment and protocol development, telco and tower equipment, conditions on retailers and mobile commerce while at the same time having dominant control over ancillary areas such as special access, video program distribution, enterprise data and intercarrier compensation.
Noting the struggles that Apple had in getting AT&T to accept the iPhone, PK and FOMC said, “Device manufacturers with less clout than Apple have even dimmer prospects for innovation in an even more concentrated market.”

Sprint Files Opposition to AT&T/T-Mobile at FCC

Federal regulators face a stark choice on AT&T’s $39 billion bid to acquire T-Mobile: Say no and preserve today’s competitive market structure or approve it and put the nation on the path toward a duopoly.

That’s the principle message from Sprint’s petition to deny AT&T’s proposed marriage to T-Mobile. Parties interested in formally opposing the deal must file such petitions at the FCC by the end of May 31. In a 377-page filing, Sprint, the leading foe of the wireless mega-deal, paints a grim scenario for the future of the wireless market if the deal gets approved. If AT&T succeeds, “the Twin Bells’ market dominance would dwarf Sprint, the sole remaining national carrier, and the rest of the wireless industry, thereby creating an entrenched, anti-competitive duopoly,” Sprint wrote. While many of Sprint’s arguments against the deal have been trumpeted already, its petition includes new analyses and challenges to claims that AT&T has made with respect to the deal. The public interest benefits of the transaction that AT&T has claimed, such as relieving network congestion, are illusory, Sprint argues. “If AT&T has capacity constraints, they are the result of its failure to upgrade and invest in its network,” Sprint wrote. Further, Sprint claims that AT&T could deliver broadband to 97 percent of the country — the most widely touted benefit of the deal — by spending a fraction of the $39 billion AT&T plans to pay for T-Mobile. “In the absence of the proposed transaction, competition likely will drive AT&T to reach” the 97 percent target anyway, Sprint posits.

House GOP sees jobs in wireless broadband

The House Communications Subcommittee will hold a hearing on spectrum policy June 1. A Republican staff memo in advance of the hearing strongly backs the notion that freeing up airwaves will create jobs.

"Additional spectrum for wireless broadband will produce needed jobs in America. The buildout of wireless networks requires workers from a wide range o education and skill levels. Construction and maintenance of wireless networks is a capital-intensive venture," the memo said. The memo cites the large sums wireless companies have invested in infrastructure, placing the figure at $310 billion over the last 25 years. "From the high-tech design and production of the network, to the building of towers, and installation of equipment, American workers at all levels of the economy are beneficiaries of increased investment in wireless networks," it said. "There is also, of course, the less tangible but no less real economic benefits from increased productivity, as well as the creation of entirely new and innovative businesses," the memo said.

White House defends cybersecurity plan

The White House is pushing back against reported criticism of its cybersecurity plan by US Chamber of Commerce. "Our proposal strikes a critical balance between strengthening security, preserving privacy and civil liberties protections, and fostering continued economic growth," said White House spokesman Nicholas Shapiro. "The Chamber's draft document certainly misinterprets some of the administration's thinking and we are confident that those misinterpretations will be fixed as we continue ongoing conversations with the Chamber on this important issue," Shapiro said.

EPIC gets part of Google settlement

US District Judge James Ware approved a class action settlement over Google's Buzz social network, and awarded $500,000 to the Electronic Privacy Information Center (EPIC) which filed a complaint with the Federal Trade Commission last year, saying Buzz threatened the privacy of Gmail users.

Although EPIC had previously been left out of the proposed deal, Judge Ware wrote that there was no good cause to exclude EPIC from the settlement. "EPIC has demonstrated that it is a well-established and respected organization within the field of Internet privacy," Judge Ware wrote. EPIC had originally requested $1.75 million. The settlement also includes money for the American Civil Liberties Union, the Electronic Frontier Foundation and the YMCA of Greater Long Beach, among other groups.

ACA Asks FCC to End Retransmission 'Price Fixing'

In what it calls an effort to “inject free-market competition into retransmission consent,” the American Cable Association is urging the Federal Communications Commission to adopt rules that would ban separately owned broadcasters from bargaining “as a collusive unit within the same market and outlaw broadcast networks and TV stations from interfering with cable operators’ rights to carry distant network signals that customers have historically received and valued.” In comments filed with the FCC claiming an urgent need for retransmission consent reform, ACA requested agency action this year in time for new rules to apply to thousands of retrans agreements set to expire on Dec. 31.

LightSquared Considering Deal With AT&T for Capacity

Apparently, LightSquared is considering a deal with AT&T to buy network capacity from the mobile-phone carrier. The initiative is preliminary and may not result in a deal. Under an agreement, LightSquared would pay to use AT&T’s so-called fourth-generation network when it needs additional capacity. AT&T is building a 4G network and plans to roll it out in its hometown Dallas, Chicago, Atlanta, Houston and San Antonio this year.

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