Daily Digest 3/16/2018 (Something Strange Is Going On)

Recently, the House of Representatives approved H.R. 4986 -- a bill that, among other things, reauthorizes the Federal Communications Commission and approves the agency’s funding for fiscal years 2019 and 2020. House passage followed an announcement that the bipartisan leadership of the Senate Commerce Committee and the House Commerce Committee had reached an agreement to support the legislation -- framing the bill as reauthorizing the FCC and spurring deployment of 5G wireless networks across the nation. However, problems with the bill -- specifically in Sections 401 and 402 of Title IV -- are apparent upon closer inspection and warrant serious consideration and revision by the Senate Commerce Committee. As currently written, H.R. 4986 should not be granted unanimous consent in the Senate and should not be included in the fiscal 2018 omnibus spending bill that Congress must pass by March 23 in order to fund the government. Congress should fix the bill’s shortcomings, or strip them out, and permit the other meritorious and uncontroversial provisions to become law. Section 401 will likely diminish the FCC’s ability to address competition and consumer protection issues in the future. It also weakens congressional oversight of the FCC and agency conflicts of interest. These provisions were not even included in the high-level bullet points highlighted by the Senate Commerce and House Commerce leadership press release, and they should be stripped out of H.R. 4986 prior to consideration by the full Senate.

March 8, the Voices for Internet Freedom coalition hosted a briefing for members of Congress and their staff about the disastrous policies the Federal Communications Commission is moving forward that would make it harder for poor people to access vital communications services. The FCC’s War on the Poor briefing brought together affected communities, advocates and policy experts for a panel discussion about the FCC’s proposal to roll back the Lifeline program, the vote to undo Title II Net Neutrality, and the agency’s refusal to stand up to predatory prison-phone companies. All of these actions have a disproportionate impact on communities of color and people living below the poverty line. Speakers and panelists at the War on the Poor briefing called on members of Congress to:

1. Voice their opposition to the plan to roll back Lifeline, and leave millions without affordable internet access.
2. Support bipartisan legislation that would force the FCC to stand up for families being exploited by prison-phone companies’ predatory practices.
3. Sign on to the congressional effort to overturn the FCC’s bad Net Neutrality vote and restore the Title II Net Neutrality protections.

[Commentary] A large and growing group of voices, including those from legislators, journalists, FiberTower shareholders and trade associations, argues that AT&T’s purchase of FiberTower’s millimeter wave licenses is a sweetheart deal that undervalues that spectrum—spectrum those in the industry believe is critical to the rollout of 5G.  Most recently, Rep Anna Eshoo (D-CA), in a letter to the Federal Communications Commission, claimed that the agency signed off on AT&T’s FiberTower purchase without holding an open debate about the transaction. The Competitive Carriers Association, a trade group for small wireless operators, agreed, arguing that the transaction gives AT&T “a first-mover advantage in coveted 5G spectrum at the expense of American taxpayers.” Those complaints about AT&T’s purchase of FiberTower’s licenses extend to Verizon’s purchase of Straight Path’s millimeter wave spectrum licenses. Verizon agreed to pay $3.1 billion for Straight Path in 2017, and earlier this year Verizon and Straight Path paid a $600 million fine because Straight Path didn’t meet the FCC’s spectrum license buildout requirements. The full details of AT&T’s purchase of FiberTower have not yet been made public, and therefore AT&T’s final price tag for FiberTower’s licenses may change. Indeed, in her letter, Rep Eshoo estimated AT&T paid roughly $2 billion for the licenses, based on the price Verizon paid for Straight Path. But AT&T’s purchase of FiberTower may now face complications due to the ongoing debate in the bankruptcy court.

The Trump administration imposed fresh financial sanctions on Russian government hackers and spy agencies to punish Moscow for interfering in the 2016 presidential election, and for a cyberattack against Ukraine and other countries that officials have characterized as “the most destructive and costly” in history. Sanctions also were imposed on individuals known as “trolls” and the Russian organizations that supported their efforts to undermine the election. Additionally, the administration alerted the public that Russia is targeting the U.S. energy grid with computer malware that could sabotage the systems. Taken together, the moves represent the administration’s most significant actions to date against Russia for its aggression against the United States. They are intended to deter tampering with this year’s midterm elections while signaling to Russia that Washington will not allow its attacks to go unchallenged, officials said. The sanctions targeted many of the same Russian organizations and operatives identified by Robert S. Mueller III, the special counsel, in an indictment that outlined an audacious attempt to spread disinformation and propaganda to disrupt American democracy and, eventually, influence the vote on behalf of President Trump. The sanctions also responded to other cyberattacks, including a previously undisclosed attempt to penetrate the American energy grid.

The face-off, between the Justice Department and AT&T over the company’s $85 billion agreement to buy media giant Time Warner, has broad ramifications for media, technology and other industries as well as for the government’s powers to deter large-scale corporate consolidation. It could determine whether antitrust enforcers will have real practical authority to challenge so-called vertical mergers involving two complementary companies that operate at different levels of the same industry. Typically, the government challenges unions of direct competitors that sell similar products and services, or horizontal mergers. The ruling could affect major pending health-care mergers and may have ramifications for the tech economy. If the deal is allowed, AT&T argues, it could act as a bulwark against the power of digital media giants such as Google and Facebook. Or it could create an entertainment behemoth that holds consumers hostage, as the government insists. The outcome could also affect how strongly the Trump administration, with its rival populist and pro-business factions, pursues the kind of vigorous antitrust enforcement that was a hallmark of the Obama administration. The case is a pivotal moment in a recurring clash between merger mania and government enforcement, and the drama has produced two lead actors: AT&T boss Randall Stephenson and US antitrust chief Makan Delrahim.

The Bureau of Economic Analysis released, for the first time, preliminary statistics and an accompanying report exploring the size and growth of the digital economy. Goods and services that are primarily digital accounted for 6.5 percent of the US economy, or $1.2 trillion, in 2016, after a decade of growing faster than the US economy overall, BEA’s research shows. From 2006 to 2016, the digital economy grew at an average annual rate of 5.6 percent, outpacing overall U.S. economic growth of 1.5 percent per year. In 2016, the digital economy supported 5.9 million jobs, or 3.9 percent of total U.S. employment. Digital economy employees earned $114,275 in average annual compensation compared with $66,498 per worker for the total U.S. economy.

IHeartRadio’s parent company, iHeartMedia, filed for bankruptcy protection in an attempt to restructure part of the $20 billion debt load that has burdened it since a leveraged buyout a decade ago, on the eve of the 2008 recession. The company announced that it had reached agreements with creditors to reduce its debt by more than $10 billion. It said it would continue to operate its stations during the process. According to court filings, iHeartMedia, known as Clear Channel Communications until 2014, paid $1.4 billion in 2017 in interest on its debts. Its media division, which includes the broadcast stations, a popular music app and a unit that syndicates shows by Rush Limbaugh, Sean Hannity and others, had $3.6 billion in revenue and $735 million in operating income. Counting its global business in outdoor billboards, which is not part of the bankruptcy, the company had $6.2 billion in revenue over all. The bankruptcy is the culmination of iHeartMedia’s yearslong dance with its creditors; a final phase, long expected by analysts, began in Feb when the company skipped a $106 million interest payment. It is also the latest and most high-profile shift in the tumultuous radio business, which has struggled to retain advertising dollars and compete with streaming services like Spotify and Pandora.