What’s At Stake in United Stated v. AT&T, Inc.? The Future of Antitrust. (Part I)

The Department of Justice (DoJ) Antitrust Division challenge to the AT&T/T-Mo deal, United States v. AT&T, Inc., in addition to being a huge deal for us in the telecom world, is probably the single most important merger review case for the next ten years. In two ways, this has become a battle about the future of antitrust enforcement and the soul of the Antitrust Division.

Yes, that sounds melodramatic, but I make no apologies. As I explain below, this case has become a test case for the nature of antitrust and whether traditional metrics of concentration and market share, notably the Herfendahl-Hirschman Index (“HHI”), coupled with the concerns that such concentration predicts both the ability of the largest company to raise process and for all surviving companies to raise process (the “coordinated effects” test), will still have validity going forward.  If the court accepts the arguments from AT&T and its defenders that the traditional measures of concentration are irrelevant, then antitrust review of mergers will essentially end for the next 5-10 years while economists and antitrust enforcers struggle to develop a new set of metrics for predicting the likely impact of mergers.

More importantly, however, this case represents a clear decision of the Antitrust Division to move ahead with enforcement despite the possible political consequences. Yes, politics has always mattered, and anyone who rises to the position of Assistant Attorney General for Antitrust has a well-developed political sense. The back channels for unofficial influence remain strong, and only a brave head of the Antitrust Division, whether or Acting or confirmed Appointee, seeks to challenge the most powerful and well connected companies in Washington.

But we have not yet reached the point where the head of the Antitrust Division decides to enforce the Antitrust law and the White House tries to pull it back. This may seem a small thing, but it is what separates us as a country that can still aspire to say it follows the rule of law and a country like Russia where  law enforcement is simply the extension of the policy of the ruling oligarchy. And I assure you, oh cynical reader, that when we cross that threshold you will know the difference between a society where influence matters and a society that has abandoned any pretense of the rule of law.

I shall reserve this second point for a separate post. I address the legal significance of the case below . . .

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Forget The First Amendment, BART Messed With The Phone System. Violated CA and Federal Law.

I suppose I am, at heart, really a telecom lawyer after all. My reaction to the news that the Bay Area Rapid Transit (BART) police shut down cellphone networks in a number of stations had nothing to do with democracy, the First Amendment, Tahrir Square, etc. With all deference to the importance of these concerns, my reaction was WHAT DO YOU MEAN THESE IDIOTS MESSED WITH THE PHONE SYSTEM! From my perspective, and the perspective of traditional telecom law, BART could just as well have turned off the local central office and all this chatter about whether or not BART is a public forum is just a distraction.

Obviously, however, no one at BART thinks of cell phones as the phone system. In BART’s open letter explaining what they did and why it was cool, BART focuses on the First Amendment /public forum issue and completely skips the fact that they shut off a phone system. Mind you, I suppose I can’t blame them – much. A number of folks are asking if there is a right to cell phone service as if there were a novel question rather than something settled by decades of telecom law.

Also missed by most: this goes well beyond BART. If BART gets away with including “we can shut down cell phone service” in its tool box you can guarantee that other local law enforcement agencies will start copying this – and all for the best of reasons. Because what could possibly go wrong when you pull the plug on a critical piece of infrastructure whenever some local police chief or city council person or whoever decides they need to do something about these “flash mobs” or “rioters” or whatever? BART emphasizes the narrowness of the impact. But Montgomery County, MD, where I live, is worried about an outbreak of flash mobs of teenagers that materialize to raid local stores. Suppose they decide to start turning off the phone grid in neighborhoods they believe are “at risk?” Sure, lets just knock out phone service for a neighborhood for a few hours. What could be the harm – and it’s all in a good cause, right?

There is a reason we do not mess with the phone system, and why that doesn’t change when the phone system is wireless.  Legal reasoning below . . . .

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PK Action Alert To Save the Future of Unlicensed Spectrum

Despite the obvious reliance on unlicensed spectrum by Americans every day in the form of everything from wifi to baby monitors to RFID, the current mania for spectrum auction revenues combined with lobbying from companies opposed to the TV white space has put the future of unlicensed spectrum at risk. This is particularly true under the discussion draft circulated by House Republicans last week. That draft would require that before the FCC could allocate any new spectrum for unlicensed use, it would first have to have an auction that would allow companies to buy the spectrum for exclusive use. Only if everyone collectively outbid AT&T or Verizon for unlicensed would the spectrum go to unlicensed use. As Stacy Higginbotham at GigaOm notes, this would have devastating impact on the future of unlicensed and the innovation that comes out of the unlicensed bands.

As if that were not enough, the proposed bill literally allows companies to buy their way out of FCC consumer protection regulation.

We are trying to stop this before it’s too late.  Public Knowledge has created an Action Alert asking anyone who cares about protecting unlicensed, or opposed to letting companies literally buy their own rules, then help us this Friday (tomorrow) by telling your member of Congress not to sell off our digital future or let companies buy their way out of public interest obligations. Sign up for the PK mobile Action Alert and you will get a text message tomorrow letting you directly contact your member of Congress so you can tell them why this bill is a really, really bad idea.

I reprint the PK Action Alert below.

Stay tuned . . . .

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The Community Broadband Fight In North Carolina

The problem with fighting extremely bad corporate-sponsored legislation is that it has a distressing tendency to re-emerge time and again long after a human being would have gotten a clue and gone away. So it is with the fight by corporate carriers against local governments providing any sort of broadband. Most of us thought this fight over about 5 years ago, when the majority of carriers realized that municipal networks not only were not a threat, but were potential customers. Since then, excluding the occasional flair up around projects like Lafayette’s fiber build, things have generally been quiet on this front. As a result, we have a number of useful munibroadband networks (see this map) and, surprise surprise, big carriers continue to make money hand over fist.

Alas, some big carriers never give up their big dreams of squashing all who oppose them and crushing the life out of anyone who might show them up. So it is with Time Warner Cable in North Carolina. TWC’s allies in the NC state legislature tried year after year to get legislation banning local governments from providing broadband in communities where private companies haven’t bothered or do a dreadful job. Every year, a coalition of the tech community and local governments would refight the same fight and manage to kill the bill again.

But to TWC’s great delight, Novemeber 2010 ushered in a new generation of Tea Party Republicans who intend to show their respect for localism and small town virtues by kicking the crap out local governments that try to bring broadband to the people. As a result, the North Carolina House has now passed this job-killing piece of corporate welfare designed to protect helpless providers like TWC from small towns and rural areas they don’t want to serve. An equally awful version now seems ready to pass in the North Carolina Senate.

A bit more detail, and how we can do our part to save municipal broadband below . . . .

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After 10 Years of Struggle, Low-Power FM Will Give Thousands of New Communities A Chance To Get Their Voices On The Air.

Ten years ago, the FCC did a startling thing. It recognized that much of the rise in “pirate radio” came from frustrated demand for small, local licenses of the sort the FCC had simply stopped distributing many years before. So the FCC offered a deal to the “pirate” community: stop transmitting illegally and the FCC would create a low-power radio service. Despite fierce resistance by commercial broadcasters at the National Association of Broadcasters (NAB) (and, to their eternal shame, National Public Radio, which can be just as much of a bad incumbent as its commercial sisters), the FCC adopted rules to allow 100-watt radio stations to operate on a non-commercial basis. These stations would operate on a “secondary” basis to full power stations, required to protect these stations from any interference. To create space for these new community Low Power FM (LPFM) stations, the FCC would relax the “third adjacent” spacing requirement, a mechanical rule for spacing radio station transmitters far enough apart adopted in the early days radio to ensure no interference. The FCC studied the matter and concluded that relaxing this rule would not cause harmful interference to existing full-power stations.

Needless to say, the full-power broadcasters did not give up so easily. But neither did the supporters of LPFM. It’s a story worth celebrating not merely for the result, but for what it teaches us about staying in the struggle for the long-haul.

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Did You Know This Election Turned On Network Neutrality? Why Washington Has Its Head Up Its Rear End.

Apparently, the election results last Tuesday were a “national referendum” on network neutrality. I’m not sure how I missed this, but the constant repetition of this idea in the blogosphere and on Twitter has now utterly convinced me and everyone else in the Washington Echo Chamber that is totally true. In fact, I am assured that the only reason I refuse to acknowledge this fundamental truth is that I am in deep denial.
For those readers outside Policyland, you may wonder how government officials entrusted with making decisions that actually impact your lives could come to believe something so plainly ridiculous. In all of the various “lessons learned” pieces out of the election, no one outside the Telecom neighborhood of Policyland has even suggested this is the case. But, through the amazing combination of narcissism that puts us at the center of everybody else’s universe, the utter certainty with which people around here make ridiculous statements, and the sheeplike willingness of people on both sides of the debate to retweet this at each other, I now have people asking me about this and whether I think it’s true.

This is why Washington is broken and out of touch with America. There is a difference between stuff that is incredibly important because it has real impact on people’s lives, which applies to a lot of the policy work here in DC, and stuff that people care about, which is not a heck of a lot that goes on in DC. I wish it weren’t so. I would love it if we lived in a nation of policy wonks where the difficult details of national policy are the stuff of kitchen table conversations and earnest discussions at social gatherings.
However, I can assure you from personal experience that trying to engage people in detailed conversations about telecom policy is about as popular with normal people as the intimate details of your last root canal.

Still, as a case study in how conventional wisdom evolves in Policyland, this may amuse some of you non-DC folks. More below . . .

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Losing Maine: An “Elijah Moment” For The Same Sex Marriage Movement.

Things looked good early in the evening November 3 for those who opposed Maine’s Question 1 — the referendum to overturn the state legislature’s redefinition of marriage as between two consenting adults rather than between a man and a woman. As the first state to pass such a law through its legislature without a court order, Maine represented a potential turning point for the movement. If Question 1 were defeated, it would provide further momentum and show that a legislative strategy could succeed. By contrast, a majority of voters in Maine voting to pass Question 1 would be a devastating blow not merely to same sex couples in Maine, but to the movement as a whole.

The “No On One” folks had run an excellent campaign. Unlike the campaign against California’s Proposition 8 last year, which was slow to recognize the substantial resistance to same sex marriage opponents would tap, the No On One folks ran a substantial ground game, ad campaign, and mobilization strategy. Voter turnout was heavy, which was thought to favor No On One, and early returns — from urban areas — looked very good.

Then things went sour. Enthusiasm on both sides was very high. Rural districts went overwhelming Yes on One. By the end of the night, it appeared that a majority of voters in Maine had rejected the state legislature’s effort to eliminate discrimination in marriage. You can read Adam Bink’s liveblogging (which I find heartbreaking in its straightforward reporting) here. Nate Silver (who had predicted defeat for Question 1) has some analysis here, including speculation on the possibility that there may be a “Bradley Effect”-type phenomena wrt same sex marriage. Others blame Obama for declining to invest his own political capital. But whatever the reason, the loss on Question 1 in Maine creates the possibility of what I call an “Elijah moment” — based on Kings I 19:1-14 — for the many people who have invested so much of themselves in the movement to provide the fundamental right of marriage to all.

More below . . .

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As Maine Goes . . . .

Damn. The Question 1 fight in Maine is turning out to be a real squeaker. So I’m posting a link here to the Courage Campaign Equality Program.
http://www.couragecampaign.org/page/content/321CountdownForEquality/

There are ways to help campaign to save same sex marriage in Maine and show that there are places where a majority of the people understand the need to defend the rights of others as well as their own rights. To borrow from John Donne:

All mankind is of one author, and is one volume; when one man dies, one chapter is not torn out of the book, but translated into a better language; and every chapter must be so translated…As therefore the bell that rings to a sermon, calls not upon the preacher only, but upon the congregation to come: so this bell calls us all: but how much more me, who am brought so near the door by this sickness….No man is an island, entire of itself…any man’s death diminishes me, because I am involved in mankind; and therefore never send to know for whom the bell tolls; it tolls for thee.

So too the rights of all. I am straight and happily married. No one in my immediate family is a same sex relationship or lives in Maine. I have no personal stake in the outcome.

Except that I am not truly free unless all are free. Any person’s oppression diminishes me, because I am involved in humankind. And while I have no delusion that I shall see the end of injustice, cruelty or oppression until the End of Days that does not absolve me of my duty to do all I can, when I can, how I can.

Stay tuned . . . .

Deja Vu All Over Again in Pennsylvania.

Some of you may remember Pennsylvania as the state where the battle to save muni broadband began when, around Thanksgiving 2004, the PA Legislature passed a law preventing local government from“competing with the private sector” by prohibiting state or local government from offering broadband services unless the local government solicited service from the private sector and got turned down. While that sucked from the perspective of the citizens of PA, it did help kick off the massive fight that blocked anti-muni broadband legislation in other states, such as Indiana and Texas.

Now, those whacky worshipers of the Gods of the Marketplace in the PA Legislature are at it again! As reported by Craig Settles, the Hon. Patrick Browne (R-Senate District 16), Chairman of the PA Senate Finance Committee, and several lesser acolytes of the Absolutist Free Market Faith have introduced SB 530. This bill would prevent the State of PA or any local government therein from taking any stimulus money for purposes that would “compete with the private sector.” Indeed, if I read it correctly, it would prevent PA or local government from ever engaging in any activity that “competes with the private sector” unless it was (a) related to higher education, (b) maintaining public parks, (c) “necessary services” defined as “those services that are critical for human safety and health, including fire departments, emergency services and medical services;” and (d) any current activity, but that activity may not be expanded.

More below . . . .

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The Fairness Doctrine Vote Proves Conservative Noise Machine Still Strong As Ox But Twice As Dumb.

Conservatives take joy where they can these days, so no surprise they are busy patting themselves on the back for attaching to the DC Voting Rights Bill an amendment to prevent the FCC from reviving the “Fairness Doctrine.” It makes an interesting case study on a number of levels. First, how does the conservative echo chamber still manage to get a Democratic Senate to vote for an item pushed by conservative talk radio 87-11? Were the situation reversed, and liberal Senators wanted to attach some piece of useless legislation promoted by Air America, such as a ban on banging your head against the wall until you fall unconscious, conservatives would take joy in crushing it just to show the bleeding heart Liberal wussies who rules the roost.

Of course, some of it may be the piece of legislative jujitsu pulled off by Senator Durbin, which modified the amendment to reenforce the overall regulatory power of the FCC to promote diversity. All in all, this makes an excellent case study on how Rush and his crew are leading the GOP back to glory while the Ds stay focused on being effective.

Details below . . .

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