June 2011

Baseball Commissioner Rejects Dodgers’ TV Deal

Bud Selig, Major League Baseball’s commissioner, rejected a proposed cable television deal by the Los Angeles Dodgers on June 20. That scrambled the team’s financial future and voided a divorce agreement reached June 17 by Frank McCourt, the Dodgers’ owner, and his wife, Jamie, who wants the team to be declared half hers.

Selig said in a statement that the 17-year television deal with Fox was “structured to facilitate the further diversion of Dodgers assets for the personal needs of Mr. McCourt” and would mortgage the team’s future. Frank McCourt has blamed Selig’s refusal to approve the deal, which is worth $2.5 billion to $3 billion, for his financial problems. In April, Selig took control of the team and installed a trustee, Tom Schieffer, to run it. Selig’s decision is likely to reinforce McCourt’s fear that baseball will seize the team and sell it against his wishes, and could send McCourt to federal court to fight the commissioner. A flashpoint in the deal is a $385 million upfront loan from Fox that would reduce the annual rights fee to the team. Only $211.5 million of the $385 million would finance team operations. Of the rest, $80 million would repay debt, which Major League Baseball says is too high; $23.5 million would repay most of a $30 million personal loan from Fox that McCourt used to meet payroll last month; $10 million would pay the McCourts’ legal fees; and $10 million would be spent as they desire. McCourt could use another $50 million of the Fox money to bankroll a $100 million payment to his wife if the team were declared his property by Judge Scott Gordon of Los Angeles Superior Court, who is overseeing the divorce.

Commerce secretary nominee John Bryson becomes pawn in political chess match

Tapping a respected Southern California businessman as the next Commerce secretary seemed an astute move by President Obama to mend fences with corporate America, but former Edison International Chief Executive John Bryson still faces a rocky road for confirmation.

Heading into a Senate hearing June 21, Bryson, 67, has become a pawn in a hyper-partisan Washington political chess match that has left dozens of nominees on hold. Nearly all Senate Republicans have vowed to block his confirmation unless the White House advances three pending free trade deals. Another Republican, Sen. Lindsey Graham of South Carolina, has promised to hold up the nomination until Obama speaks out against a National Labor Relations Board complaint that accuses Boeing Co. of building a non-union assembly plant in his state in retaliation for union strikes. Bryson had served on Boeing's board before recently stepping down because of his nomination. But on top of those problems, Bryson himself has drawn surprisingly vocal opposition from several Republicans. They object to some of his environmental views and his role more than 40 years ago in co-founding an organization they despise, the Natural Resources Defense Council.

President Obama and Twitter: Why he took control of his own account

The White House announced that President Barack Obama would make it clear which tweets were by him and which were by staffers. It's a nod to the coming campaign, as well the fallout from the Rep. Anthony Weiner scandal. Politicians are under pressure to reassure followers about who is actually behind social media messages, and followers are getting more adept at sniffing out when a public figure is using social media consultants to post and tweet on his or her behalf, says Jonathan Askin, a media professor at Brooklyn Law School.

Rep Dingell Wants Spectrum Answers from FCC

Rep John Dingell (D-MI) wants to know when the Federal Communications Commission will release broadcast engineering models that predict the impact the agency's broadcast spectrum auction plan with have on broadcasting and its viewers.

"[T]his analysis would be helpful to the Congress ... in understanding the implications of spectrum reclamation" as it considers authorizing legislation, Rep Dingell wrote in an open letter to FCC Chairman Julius Genachowski. Rep Dingell is skeptical of the plan, by which the FCC proposes to auction off up to 120 MHz of the TV spectrum to wireless broadband providers. The FCC hopes to entice broadcasters to contribute spectrum to the auction by allowing them to share in the proceeds.

In his letter, Rep Dingell asks a series of questions, giving the FCC until June 27 to reply:

Assuming no stations will be required to move into the low VHF band and no surviving TV stations will lose coverage, what are the general implications of reclaiming 120 MHz for the auction? How many TV stations would have to share a channel or go off the air? (The recover spectrum, the FCC is encouraging stations to either give up their channels or share channels with other stations.)
How many stations in the Northeast, the Great Lakes region and San Francisco/Los Angeles will have to share or go off the air?
How many stations would have to be moved to a new channel?
What are the answers to above question, assuming the FCC reclaims just 90 MHz? 60 MHz? 30MHz?
For each of the reclamation scenarios, how many TV viewers will lose service and how many channels with they lose?

Sprint counters AT&T's spectrum claims

In a filing with the Federal Communications Commission, Sprint further pressed its case against AT&T's proposed acquisition of T-Mobile.

Though Sprint led the redacted document with the now familiar arguments that the $39 billion transaction would hurt consumers by eliminating competition, raising prices, and harming innovation, the carrier also devoted significant space to countering AT&T's controversial claims that the deal is its only solution for solving an impending spectrum crisis. "Sprint's filing demonstrates, once again, that AT&T's purported rationale for the proposed merger -- that there is no other way to meet its projected data service demand growth -- is simply unfounded," Sprint said in a statement. "AT&T could increase its capacity by developing its warehoused spectrum, accelerating its 4G network buildout, and implementing a more efficient network architecture, just as other wireless carriers around the world are doing today."

Skeptics Question AT&T's Logic In T-Mobile Deal

When AT&T officials announced plans to buy T-Mobile USA for $39 billion, they cited the so-called spectrum crunch as a big reason for the merger. AT&T says it needs more wireless spectrum to avoid dropped calls and to satisfy its customers' growing hunger for data.

Now government regulators are asking AT&T to back up those claims. AT&T officials like Ralph de la Vega argue the company needs to acquire T-Mobile's network to keep up with the fast-growing demand for data. "Our data usage has grown 8,000 percent over four years; our own estimates say it's gonna grow eight to 10 times in the next five years," de la Vega said at a wireless conference earlier this year. "So it's in the public interest that we solve that pending spectrum exhaust issue in major cities by this combination." It's an assertion federal regulators are likely to examine closely. Late in May, the Federal Communications Commission asked AT&T for more information about any "spectrum constraints" the company is facing. Skeptics, including Sprint Vice President of Government Affairs Larry Krevor, think AT&T will have a hard time proving its claims. "AT&T has more spectrum, more licensed spectrum, than any other carrier in the country," Krevor says.

Public interest groups say AT&T interested in 'expanding their bad service at high prices'

A coalition of public interest groups blasted AT&T's proposed acquisition of T-Mobile USA, arguing the transaction would harm consumers and curtail competition in the wireless market. The groups, which include Media Access Project and Consumers Union, filed a reply with the Federal Communications Commission in response to arguments from AT&T and T-Mobile that the merger would benefit consumers by accelerating the deployment of next-generation wireless access.

"Removing one of three direct competitors with AT&T from the nationwide market — and its only competitor in the GSM submarket — would leave a void that no other carrier is capable of filling," the groups state. "Removing T-Mobile, in particular — a consumer-friendly, price-disciplining, maverick provider of low-cost and innovative mobile wireless products in an increasingly consolidated market — implicates the public interest even more palpably. "No amount of rhetoric or economic gerrymandering of markets can change that fact." The public interest groups claim AT&T has previously resisted investing to improve capacity and deploy next generation wireless networks as competitor Verizon Wireless has done. The groups argue AT&T shouldn't be rewarded by attaching its willingness to build out its network to the government's approval of the merger.

"'Maximizing AT&T's wealth' is not, and never has been, a public interest benefit justifying any merger, much less a legally cognizable merger-efficiency that could justify increasing concentration in an already highly-concentrated industry," the groups state. The filing also notes that under-served groups such as minorities and rural residents tend to rely on wireless broadband service to an even greater degree, and argue that their public interest should trump AT&T's interest "in expanding their bad service at high prices at the expense of competition." The groups note AT&T will not offer T-Mobile's service plans to AT&T customers but will simply honor existing contracts until they expire or customers request an upgrade. They ask the FCC to deny the merger, referring to the telecom giant as a "well-chronicled price hiker and strong-arm tactician."

Public Knowledge Calls AT&T Takeover of T-Mobile Illegal

AT&T’s takeover of T-Mobile is illegal under the Communications Act, Public Knowledge will argue in a filing to the Federal Communications Commission (FCC).

The Communications Act (Sec. 314) bars the FCC from approving transactions that lessen competition or restrain commerce between the U.S. and foreign countries. In its reply comments to the FCC, PK said: “As the record shows, even under the most cramped and restrictive reading of the statute, Section 314 prohibits the transfer of facilities and assets between AT&T and Deutsche Telekom. The Commission has received numerous submissions from foreign carriers, foreign governments, and others that the combination of assets will “substantially lessen competition” in international roaming for GSM-based carriers.” Public Knowledge noted the law creates “an absolute bar” to approving the transaction: “Undoubtedly, a transaction that reduces the number of possible international roaming partners from 2 to 1 “has the effect” of substantially lessening competition, if not creating an unlawful monopoly, between those geographic regions and “any foreign country” in direct violation of the language of the statute.”

In its filing, PK will also argue AT&T has not been forthright with policymakers about its plans to accept further universal service fund (USF) support. In its formal papers filed with the FCC, AT&T said the FCC should not impose any USF-related conditions.” However, in testimony to the Senate Antitrust Subcommittee, AT&T Chairman Randall Stephenson said the company would accept a condition not to take USF funds for its promised advanced wireless build-out. AT&T in its filing characterized Stephenson’s statement at the hearing as a “voluntary commitment.”

Free Press: AT&T Fails to Make Case for Merger

Free Press filed reply comments with the Federal Communications Commission challenging AT&T’s proposed takeover of T-Mobile.

Free Press’ filing disputes AT&T’s claims that the merger will bring better broadband coverage and improved service to consumers, create jobs and increase investment, and lower prices.

"AT&T's argument basically boils down to the proposition that what's good for AT&T is good for the country. Of course, the FCC and the Department of Justice cannot accept this self-serving claim," said Free Press Policy Director Matt Wood. "A monopolist's hollow promises to provide better broadband coverage and improved service cannot overcome this deal's obvious harms to competition and consumers. AT&T says it will provide broadband to 97 percent of the country if it is allowed to buy T-Mobile, but in public statements the company already touts its rollout of 4G wireless services to that same percentage of the nation without the merger by the end of 2012. Rural advocacy groups voicing support for this deal have been duped by AT&T, because people in areas that supposedly will benefit from AT&T¹s merger promises will already have access to 4G services from AT&T and other carriers next year. AT&T's promises about investment and jobs are similarly misleading, as the company touts to its investors the decreases in investment that this merger would allow. AT&T can talk about creating synergies all it wants, but it cannot pretend at the same time that it will increase investment in American jobs and infrastructure. The deal's real benefit to AT&T would be a reduction in the competition it faces - accompanied by greater incentives and improved ability to raise prices and tighten control over its customers. In following antitrust law and the public interest mandate, there is no other choice but to block this takeover."

Activists Take On AT&T/T-Mobile Merger

Activist organization ColorOfChange.org has launched a new campaign against the AT&T/ T-Mobile merger, calling on the Federal Communications Commission to block the deal.

In a report on the proposed deal, Color of Change says “AT&T wants to buy T-Mobile – and it could have huge, negative consequences, especially for Black Americans.” The report outlines the potentially harmful economic effects the merger could have and questions the major civil rights groups that have come out in support of the merger. “The deal is likely to destroy jobs, raise the price of cellular service and threaten net neutrality for wireless high-speed Internet,” the report claims. “Protecting net neutrality for wireless broadband in increasingly important as more and more people use their phones to access the Internet, especially African Americans,” the report claims. Color of Change’s study says that combining the two companies would effectively get rid of the competition, causing a snowball of other problems to gather, and that false and deceptive arguments have been used to support the merger.

Benton

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