March 2015

Sens Amy Klobuchar (D-MN) and Jon Tester (D-MT) introduced a bill to improve rural communications and address call completion challenges. Persistent phone call completion problems in rural communities across the country are creating major inconveniences for families, hurting businesses, and threatening public safety. A 2012 test call project found that nearly one in five calls placed to rural areas were delayed, of poor quality, or incomplete. The legislation -- the Improving Rural Call Quality and Reliability Act -- would direct the Federal Communications Commission to establish basic quality standards for providers that transmit voice calls to help ensure businesses, families, and emergency responders can count on phone calls being completed.

The Improving Rural Call Quality and Reliability Act would direct the FCC to establish basic quality standards for providers that transmit voice calls to help prevent the discriminatory delivery of calls to any and all areas of our country. The legislation also directs the FCC to require these providers to register with the agency. These reforms would ensure small businesses, families, and emergency responders in rural America can once again rely upon their telephone calls being completed. The legislation is supported by the National Association of Regulatory Utility Commissioners, the NTCA–The Rural Broadband Association, and the Western Telecommunications Alliance.

[Commentary] On March 25, Congress will once again take aim at the Federal Communications Commission’s ability to do its job as the expert agency in the communications sector. At issue this time is whether another agency with three initials -- the Federal Trade Commission -- should take over authority from the FCC. Behind the debate is the question of whether antitrust law is sufficient on its own to prevent big Internet providers from taking advantage of consumers. We think the answer is “no.” It is not an exaggeration to say that the ongoing success of modern communications has rested on this dual FCC/antitrust agency oversight of the industry.

Antitrust is no doubt important to ensure healthy marketplaces in many sectors of our economy. But the FCC is specifically charged with the central goals of communications policy: achieving universal service, protecting consumers, promoting competition and innovation, ensuring a communications platform that supports a diversity of viewpoints. Only combined market oversight will ensure digital communications platforms capable of promoting social and economic justice necessary to support a robust democracy.

[Gene Kimmelman is CEO of Public Knowledge. Allen Grunes is an antitrust attorney]

Time Warner Cable consistently has acknowledged that it is incurring financial losses from its deal to distribute the Los Angeles Dodgers television channel. The New York cable in 2013 entered into a 25-year contract with team owners Guggenheim Partners to carry the channel, SportsNet LA. The contract is valued at $8.35 billion over the life of the deal, according to the team and Major League Baseball. Time Warner Cable had anticipated that other pay-TV companies would pony up and carry the channel, helping Time Warner Cable recoup its costs. But that hasn't happened. Time Warner Cable remains the only major distributor to carry the channel in Southern California. Other operators, including DirecTV, Dish Network, Charter Communications, AT&T U-Verse and Cox Communications have balked -- saying the price of the channel was too high. Time Warner Cable has not publicly put a number on the extent of its losses from the Dodgers contract. Industry sources, however, have estimated that the company is losing more than $100 million a year on its deal -- with losses expected to grow as long as Time Warner Cable remains the only major distributor carrying the channel.

Verizon Wireless may have scored big in the Federal Communication Commission's recent $45 billion AWS-3 spectrum auction by securing more $10.8 billion in new spectrum in major markets. But one financial analyst believes that the operator is in dire need of more spectrum, because it has over 40 percent of the industry's postpaid customers on its network and controls less than 20 percent of available spectrum. BTIG analyst Walter Piecyk wrote in a research note that Verizon is preparing to launch an over-the-top video service later in 2015, and there is some speculation that the company will integrate this with its wireless services. If so, Piecyk says, the company will be increasingly limited by its spectrum position. And even if it uses LTE Broadcast technology to be more spectrally efficient, that technology still uses a "decent chunk of spectrum," so the company will need more spectrum to offer that service wirelessly. Because of this, Piecyk says that he believes Verizon is the most obvious buyer of spectrum from the secondary market from players such as Dish Network and Sprint.

However, Piecyk admits that the company could run into problems from the FCC's spectrum screen, which the agency uses to evaluate spectrum purchases. Specifically, the FCC does not want any single operator to have more than one-third of usable spectrum in a market. The agency uses the screen to determine whether proposed deals after the auction should be subjected to a more detailed competitive analysis. However, Piecyk notes that the FCC's "definition of usable spectrum can be subjective and inputs of the spectrum screen can be altered with any new proposed transaction."