Agenda

John Malone is solidifying his hold on home-shopping channels — in his own particular way. His Liberty Interactive, which owns QVC, will combine with its longtime rival, the Home Shopping Network, in a $2.1 billion deal.

The deal will put together the two home-shopping television networks at a time of upheaval in the retail world. Amazon’s dominance in selling online has grown seemingly nonstop, while Walmart has made e-commerce a big priority with the purchases of start-ups like Jet and the clothing brand Bonobos. Combining QVC and HSN, which also have substantial e-commerce operations, is meant to help them gain scale, combine resources and cut costs. QVC and HSN would remain stand-alone brands under a new QVC Group structure after the merger.

[Commentary] Telecommunications companies are preparing to roll out the next generation of wireless networks, dubbed “5G,” which promise an enormous increase in capacity and connectivity. These networks not only will increase competition in broadband, they are a key enabling technology for a host of advanced products and services. They also represent a gateway to better economic opportunities in inner-city areas that are underserved by broadband today.

But these new networks are different in structure and appearance too. Instead of high-powered antennas on tall towers, they rely on an array of lower-power transmitters closer to the ground that serve much smaller “cells.” That’s why mobile phone companies are concerned that cities and counties will throw up bureaucratic or financial roadblocks to 5G in their communities. It’s not a groundless worry; wireless companies already have encountered local resistance in places where they have introduced the new technology. It’s the look and the intrusiveness of the small cell networks that seems to spark the controversy. People are upset about the deployment of thousands of pieces of equipment the size of small appliances being placed strategically and liberally on publicly owned “vertical infrastructure” (that’s bureaucratese for municipal utility poles, street lights and even traffic lights). That means a lot of equipment in full view and in proximity — really close in some cases — to houses and people. The wireless industry has a solution to this potentially huge NIMBY headache: A bill in the California legislature (SB 649) that would “streamline” the approval process for putting small cell networking gear on public poles and lights. If it’s on property the government controls, approval would be automatic in most cases, so local governments couldn’t drag out the permitting process with public hearings and studies. The bill also would limit how much rent locals can charge the companies for space on their poles and lights.

The telecommunication industry has been pushing this “streamlining” strategy in other states, with various degrees of success. Eleven have adopted some sort of laws to limit the local permitting process and pole fees. Legislators in other states, like Washington, have been more skeptical. California’s lawmakers ought to be wary as well and show more interest in protecting the rights of communities to govern the use of their infrastructure, rather than letting telecommunication companies make those decisions for them.

On January 31, 2017, the Commission adopted a Report and Order in MB Docket No. 16-161 eliminating two public inspection file requirements: (i) the requirement that commercial broadcast stations retain in their public inspection file copies of letters and emails from the public; and (ii) the requirement that cable operators maintain for public inspection the designation and location of the cable system’s principal headend. On March 24, 2017 and May 25, 2017, the Office of Management and Budget (“OMB”) approved the Commission’s Paperwork Reduction Act (“PRA”) submissions associated with changes to the broadcaster correspondence file and cable principal headend rules adopted in the Public Inspection File Report and Order. Today, the Federal Register published OMB’s approval, and the effective date of these rule changes will be June 29, 2017.

Federal Communications Commission Chairman Ajit Pai is set to speak at an event in August put on by Americans for Prosperity, a group backed by GOP mega-donors Charles and David Koch. Chairman Pai will give remarks at the organization’s annual "Defending the Dream" summit in Richmond (VA) on Aug 19, which its website bills as a “conference is the chance for activists, staff and free market leaders to come together and learn how to be more effective advocates for freedom.” Americans for Prosperity’s free market and conservative ideology squares up with Chairman Pai’s. The FCC chairman has called for reducing regulation at the commission in favor of letting the market forces make decisions instead. Americans for Prosperity has praised the chairman’s plan.

President Donald Trump intends to nominate Brendan Carr, a former aide to Federal Communications Commission Chairman Ajit Pai, to fill the final open seat at the agency and provide a crucial vote to reverse tough net neutrality rules.

Carr, currently the FCC’s general counsel, would fill a Republican slot on the commission and would be expected to support Pai’s push to roll back the regulations for online traffic. Carr’s intended nomination comes after President Trump nominated Jessica Rosenworcel, a former FCC commissioner, on June 14 to fill a Democratic seat. If the Senate confirms both nominees, as expected, the FCC would have its full complement of five commissioners and a 3-2 Republican majority. Chairman Pai praised Carr’s “distinguished record of public service” and said his expertise on wireless and public safety policy “will be a tremendous asset to the commission.”

Before becoming general counsel in January, Carr spent three years as Pai’s legal advisor for wireless, public safety and international issues. Before joining the FCC, Carr worked as a telecommunications attorney at the Wiley Rein law firm, where his clients included AT&T, Verizon Communications and USTelecom. Because he worked on Pai’s staff, Carr would be expected to back the chairman.

Rivada Networks said it received the top score among three bidders to build Michigan’s statewide public safety broadband network. But that doesn’t at all mean it will beat out FirstNet for its first statewide win.

Michigan’s Department of Technology, Management and Budget recommended that the state analyze Rivada’s bid alongside FirstNet’s proposal “to determine the best value bid for the state,” the company said this morning in a release. Michigan is the second state to select a vendor for a potential alternative to FirstNet, Rivada said, following the lead of New Hampshire, which is also considering Rivada’s offering. “We are honored that our alternative plan for public safety broadband in Michigan will have the chance to be placed side-by-side with the federal government’s offering,” said Declan Ganley, Rivada’s co-CEO, in the announcement. “By putting out this RFP (request for proposal), Michigan has given its governor a real choice, as envisioned in the legislation that created FirstNet.”

Reports of a potential wireless partnership between Sprint, Charter and Comcast have quieted speculation about a merger between Sprint and T-Mobile. But analysts say T-Mobile could play a role in any such arrangement.

Sprint Chairman Masayoshi Son struck a exclusive two-month deal to hold discussions with Charter and Comcast through July focusing on potential partnership arrangements. One such deal could include the cable companies taking an equity stake in Sprint and investing in the carrier’s network, through which they could presumably launch a branded service. But T-Mobile could join such an effort, Jonathan Chaplin of New Street Research wrote in a note to investors. A model that complex would be difficult to pull off, but it could benefit all stakeholders. “Actually, the best-case scenario (for T-Mobile) would be a four-way deal; however that seems tough to get across the goal line,” Chaplin wrote. “The worst-case scenario would see a Sprint/cable deal that leaves T-Mobile out in the cold entirely; we don’t think this is the most likely outcome either. And then there are a host of scenarios in between, where T-Mobile would benefit, potentially greatly, but without the negotiating leverage that many have assumed.”

[Commentary] Comcast and Charter are negotiating with Sprint to offer wireless services to their cable and high-speed internet customers. The real disruption may be how Sprint’s negotiations with the cable companies put a potential merger with T-Mobile USA in limbo. The parent companies of Sprint and T-Mobile, SoftBank of Japan and Deutsche Telekom of Germany, have been in negotiations to merge their American wireless companies. If Comcast and Charter are bidding for a stake in Sprint, then those Sprint and T-Mobile negotiations will be affected.

[Commentary] Sprint needs a deal. With a market value roughly equal to its $33 billion in net debt, a tie up may be the only way for Sprint to get the resources to invest enough in its network to remain competitive. A deal with cable would be bad for Sprint’s wireless competitors because it would reduce the likelihood of industry consolidation through the hoped-for merger of Sprint and T-Mobile . It also would lower the cost of offering wireless service for the two cable companies, further exacerbating wireless competition. The optimistic view is that Sprint is talking to the cable guys to get T-Mobile and its majority owner Deutsche Telekom to agree to a deal on more favorable terms.