November 2011

FCC Staff Analysis and Findings on AT&T’s Proposed Acquisition of T-Mobile

The Federal Communications Commission’s staff finds that AT&T and T-Mobile have failed to carry their burden of proving that the proposed transaction, on balance, will serve the public interest. Upon careful examination summarized in this document, the staff concludes that significant harms to competition are likely to result, primarily in the form of increased prices to consumers, reduced incentives for innovation, and decreased consumer choice. In addition, there are serious allegations of other harms that require further investigation. Staff further finds that the bulk of the applicants proffered benefits are inadequately supported by the data supplied, achievable through means other than the elimination of a competitor, or otherwise not cognizable under the FCC’s public interest standard. Staff therefore recommends that the FCC designate the proposed transaction for a hearing.

The Verge notes these findings from the report:

“Staff thus finds, as has DOJ, that the proposed transaction would likely lead to a substantial lessening of competition in violation of the Clayton Act. A transaction in violation of the Clayton Act would not be in the public interest.”
The transaction would eliminate "a nationwide rival that has played the role of a disruptive competitive force in the marketplace."
The FCC discovered that the Herfindahl-Hirschman Index — a widely-accepted indication of how competitive a market is — is high enough to warrant concerns of anticompetitive effects in 99 of the top 100 wireless markets. The one exception? Omaha, Nebraska, where T-Mobile doesn't operate.
The FCC claim that T-Mobile's "aggressive, pervasive" deployment of HSPA+ caused AT&T to accelerate its own deployment of the technology. Looking back on developments in 2011, it's interesting to note that AT&T didn't really start pushing HSPA+ hard until early this year after T-Mobile was riding the "4G" marketing wave with its own HSPA+ deployments in 2010.
The FCC also rattles off a couple examples of plan tweaks AT&T has made in recent years in direct response to T-Mobile, further damaging AT&T's claim that it doesn't view T-Mobile as a viable competitor.
The FCC repeatedly expresses concern that the elimination of T-Mobile from the marketplace would leave AT&T as the sole national provider of GSM wholesale services, which is a pretty legitimate concern considering the importance of GSM on a global scale. Here's where it gets interesting, though: citing some redacted information, the FCC says that "T-Mobile had developed plans to increase its provision of wholesale services to a variety of different entities."
The FCC spends several pages tearing apart AT&T's mathematical model for predicting whether prices will rise or lower in the years 2014 and 2015 should the acquisition go through. The language is, in places, downright damning — for instance: "The Applicants' economic model has at least three basic problems that render unreliable its prediction of the consequences of the transaction." Terms like "serious flaw," "critical flaw," "unreasonable," and "not rational" appear in here, too. The FCC really doesn't like these models.
AT&T made a very big deal about immediate network improvements resulting from the merger — in fact, it's been essentially the core element of AT&T's public-facing PR campaign. Yet here's another downer from the FCC: "Although we requested it, the Applicants did not provide the backup materials necessary to verify the engineering analysis of signal quality and 3G roaming improvements from integrating the networks." The report goes on to call out apparent errors in AT&T's math and its assumptions about future cell site density that would directly lead to overstating network improvements.

AT&T’s loss with T-Mobile likely to be another bidder’s big gain

Instead, T-Mobile could be targeted by plenty of players, from cable and satellite TV providers to private equity firms. But mobile is a different game that can be brutal on newcomers. The companies that are the best fit for T-Mobile are these three players that already know the mobile game:

Sprint -- Sprint could pick up T-Mobile and operate both networks, integrating the two via LTE. The combined companies would claim about one-fourth of the U.S. mobile market, making the market more competitive — not less.
America Movil. The Mexico City–based telecom provides services to more than 200 million subscribers primarily in Latin America, and it operates the small prepaid TracFone business in the U.S. The company is headed by Carlos Slim Helu, a Mexican billionaire who has long had an interest in the U.S. Expanding from prepaid to postpaid would be a big step, but Helu has the bankroll and the mobile expertise that could help T-Mobile once again become a major player.
Vodafone Group. A massive force in worldwide mobile, Vodafone operates networks in 30 countries and has partner networks in 40 more. And while it owns 45 percent of the joint venture Verizon Wireless, it has voiced its dismay at Verizon’s unwillingness to pay annual dividends. Meanwhile, Vodafone’s networks employ the same GSM technology used by T-Mobile USA, and some of them have begun to deploy LTE services. Coming to terms with Verizon to dump its part of the joint venture wouldn’t be easy, but it might be worth it for Vodafone give up its minority stake in Verizon Wireless in exchange for full control of the lesser carrier.

Public Knowledge Releases Details of AT&T Lobbying, Media Campaigns

AT&T has hired three former U.S. senators, four former members of the House and dozens of staff members of current and former legislators of both parties to push its $39 billion takeover of T-Mobile, according to a review of lobbying records by Public Knowledge.

In addition, PK also released information showing AT&T has spent $40 million in advertising to push the merger between May and October. Of that total, about $14 million was spent in June alone. The bulk of the spending was for TV ads, much of that concentrated in Washington and New York.

“This information gives us a more complete picture of the vast lobbying and advertising resources AT&T has dedicated to trying to ram through this takeover,” said Harold Feld, legal director of Public Knowledge. “It is even more impressive that while many members of Congress have ignored the facts and are backing this takeover, the Justice Department and the Federal Communications Commission have not. It is clear that the data the DoJ and FCC have compiled on this deal will negate all of the money AT&T has spent to mislead policymakers and the public.”

AT&T spent $12.4 million on lobbying for the first three quarters of this year, according to AT&T lobbying reports. The former senators working for AT&T are John Breaux, Trent Lott and Don Nickles. Breaux is a Democrat, the others are Republicans. Of the former House members, the most prominent is ex-House Commerce Committee Chmn. Billy Tauzin, who retired as a Republican after starting his career as a Democrat. The other former members are former Democrats Jim Davis, Ron Dellums and Vic Fazio.

The data shows that AT&T spent about $37 million for television ads. The advertising data shows that AT&T spent $9 million on TV network ads, $5 million on national cable ads, $4 million on ads in the Washington, D.C. market and $3 million in the New York City market.

New cybersecurity bill would foster sharing of online data between government, private sector

Leaders of the House Intelligence Committee are introducing legislation to foster the sharing of online information between the private sector and the government to better protect commercial computer networks from cyberattacks.

The bipartisan bill, drafted by committee Chairman Mike Rogers (R-MI) and ranking member Dutch Ruppersberger (D-MD), has strong support from the telecommunications industry but is already raising concerns among civil liberties advocates familiar with the draft. The legislation exempts private firms from liability for sharing data with the government, as well as for any failure to use that data to improve their networks. The goal is to encourage the private sector and the government to exchange the kind of information that could be useful in protecting systems that are critical to the nation’s security and economic interests.

Civil rights advocates, however, are warning that, as written, the bill preempts privacy protections in existing law and lacks adequate measures to ensure that consumer data are not misused by the government. The Cyber Intelligence Sharing and Protection Act of 2011 was crafted to allow the sharing of a variety of data. That data could include Internet protocol addresses a company detects in a hacking incident on its network, or classified threat intelligence from government entities such as the National Security Agency. Companies would not be forced to share data, and could decide which government agency to share it with.

Research: Violent video games may alter brain function

There might be something to that link between violent video games and aggression.

For years, researchers have bantered back and forth with findings that support and then debunk such a link. But researchers at the Indiana University School of Medicine in Indianapolis found signs via functional magnetic resonance imaging that the brain is affected by violent games. In the research, being presented this week at the annual meeting of the Radiological Society of North America in Chicago, the researchers studied 22 healthy men, aged 18 to 29. All were given fMRI scans and were then split into two groups of 11: one that played a Mature-rated first-person shooter game for 10 hours over a week and then did not play for one week, the other that did not play games during the period. Researchers gave each group follow-up scans at the one-week and two-week mark. During the fMRI, the subjects were given tasks. At the one-week mark, the video game group showed less activation in the left inferior frontal lobe during the emotional task and less activation in the anterior cingulate cortex during the counting task, compared to their own previous results and those of the control groups.

On the second week scan, those brain changes were diminished in the video game group. "The activation returned toward baseline but did not completely normalize. We don't know how long the effect lasts for those who play longer," says study co-author Dr. Vincent Mathews.

National Do Not Call Registry Data Book for Fiscal Year 2011

The Federal Trade Commission issued the . The FTC's National Do Not Call Registry provides consumers with an easy way to stop unwanted telemarketing calls.

In its third year of publication, the Data Book contains a wealth of information about the Registry for FY 2011, including:

The number of active registrations and consumer complaint figures since the Registry began in 2003;
FY 2011 complaint figures by month and complaint type;
FY 2011 registration and complaint figures for all 50 states and the District of Columbia by population;
The number of entities accessing the Registry by fiscal year; and
An appendix on registration and complaint data by consumer state and area code.

According to the Data Book, at the end of FY 2011 (September 30, 2011), the Do Not Call Registry contained 209,722,924 actively registered phone numbers, up from 201,542,535 at the end of FY 2010. In addition, the number of consumer complaints about unwanted telemarketing calls increased from 1,633,819 at the end of FY 2010 to 2,272,662 at the end of FY 2011.

This year's Data Book also reveals trends in complaint data. In addition to providing information on the total number of consumer complaints per month, it also contains data on the number of monthly complaints specifically related to pre-recorded telemarketing "robocalls," and requests for a telemarketer to stop calling. While the number of consumer complaints about recorded messages used in telemarketing hit a low of 79,592 in April 2011, for example, the data show that the number of complaints about such calls have increased consistently since then, reaching 140,503 in September 2011. Most telemarketing robocalls have been illegal since September 2009. The FTC remains committed to stopping deceptive, misleading, and otherwise unlawful robocalls, and will take action against entities violating the agency's Telemarketing Sales Rule.

Internet sales tax fight returns to Congress

Apparently, eBay is preparing to amplify its attack on a proposed law that would usher in sales taxes on Internet shopping.

The online auctioneer plans to tell a congressional panel considering the legislation tomorrow that the measure would merely consolidate the market power of Amazon.com and the largest big box retailers while putting eBay's small sellers out of business. In fact, says Tod Cohen, eBay's deputy general counsel, online retailers with less than $10 million in sales--eBay sellers, in other words--have seen their share of electronic commerce fall from 31 percent in 2008 to 19 percent in 2010.

Dec 1 is D-Day for Clearwire (and Sprint)

Clearwire has to decide if it will make a $237 million interest payment on Dec 1, and the decision will have implications that could rock the tumultuous mobile industry.

If it makes the payment, it will eat into cash it desperately needs to build out an LTE network and keep afloat, but if it defaults it threatens Sprint — its largest benefactor. Analysts are torn on the topic with most thinking that Clearwire may hedge and take a 30-day grace period while it scrambles for cash. The question is if Sprint will rush in to play savior to Clearwire with more money. Sprint has raised some $4 billion in debt, which might go toward the Clearwire cause, but it has been incredibly focused in the last few months on halting the merger of AT&T and T-Mobile, as well as implementing its own network modernization plan. Can Sprint now turn back to its Clearwire problem? Abandoning Clearwire would leave Sprint with a weak spectrum position as it attempts to roll out a 4G network. So Thursday, all eyes will turn to Clearwire to see if it and Sprint will make it through the holiday season to fight for another year.

Obama Administration takes new steps to encourage doctors and hospitals to use health information technology to lower costs, improve quality, create jobs

Department of Health and Human Services (HHS) Secretary Kathleen Sebelius released a report showing that doctors’ adoption of health information technology (IT) doubled in two years. HHS also announced new actions to speed the use of health IT in doctors’ offices and hospitals nationwide, which will improve health care and create jobs nationwide.

While protecting confidential personal information, health IT can improve access to care, help coordinate treatments, measure outcomes and reduce costs. The new administrative actions announced today, which were made possible by the HITECH Act, will make it easier for doctors and other health care professionals to receive incentive payments for adopting and meaningfully using health IT. In addition to improving the health care system, data indicate that the national transition to health IT is creating jobs. Over 50,000 health IT-related jobs have been created since the enactment of the HITECH Ac. According to the Bureau of Labor Statistics, the number of health IT jobs across the country is expected to increase by 20 percent from 2008 to 2018, much faster than the average for all occupations through 2018. HHS also announced its intent to make it easier to adopt health IT. Under the current requirements, eligible doctors and hospitals that begin participating in the Medicare EHR (electronic health record) Incentive Programs this year would have to meet new standards for the program in 2013. If they did not participate in the program until 2012, they could wait to meet these new standards until 2014 and still be eligible for the same incentive payment. To encourage faster adoption, the Secretary announced that HHS intends to allow doctors and hospitals to adopt health IT this year, without meeting the new standards until 2014. Doctors who act quickly can also qualify for incentive payments in 2011 as well as 2012. These policy changes are accompanied by greater outreach efforts that will provide more information to doctors and hospitals about best practices and to vendors whose products allow health care providers to meaningfully use EHRs. For example, in communities across the country HHS will target outreach, education and training to Medicare eligible professionals that have registered in the EHR incentive program but have not yet met the requirements for meaningful use. Meaningful use is the necessary foundation for all impending payment changes involving patient-centered medical homes, accountable care organizations, bundled payments, and value-based purchasing.

HBO To Cord Cutters: You’ll Never See Our Shows

HBO is cementing its reputation as a trail-blazer with a new batch of hit shows and, more recently, a hugely popular mobile offering. But the company is determined to remain a traditionalist when it comes to its relation with TV distributors.

HBO Co-President Eric Kessler said there is no chance his company will make shows like True Blood or The Wire available to digital non-subscribers. HBO currently has around 30 million customers, all of whom must buy its content as an upgrade from their cable or satellite package. HBO’s decision to remain tightly wedded to the cable industry makes it something of an outlier in this age of aggregation. The rationale, according to Kessler, is that services like Netflix and Hulu are competitors and that HBO’s bread and butter is content not licensing.

Benton

Search