Tales of the Sausage Factory

An insider’s view of the media hegemony

Smart Cities, Spectrum, and Senator Snowe — Will Any Republican Presidential Candidates Show Vision?

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Thomas Friedman writes in his column yesterday that none of the Republican candidates has focused much on technological innovation, then proceeds to focus on the matter of “smart cities.” Friedman’s thesis is fairly straightforward: to maintain our competitive edge, we will need to keep pumping up our bandwidth, particularly in cities and towns which historically act as the incubators for The Next Big Thing and all its associated, Highly Useful Little Things. Blair Levin’s Gig U gets favorable mention, and Blair gets quoted a lot on why we want huge bandwidth in urban areas as well as making sure everyone gets access to functional broadband.

Let me give the Republican candidates that care (and I just know y’all hang on my every word) some advice. When you want to know where to stand on spectrum, follow the lead of Senator Olympia Snowe (R-ME). Most importantly, do NOT follow the lead of House Republicans. Why? See below . . . .

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The Internet Is For Porn — House of Representatives Version

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Based on this news report, it would appear lots of member offices in the House of Representatives are using BitTorrent to download lots of infringing material. Including, not surprisingly, porn. Now we know why SOPA supporters are convinced that the only use for peer-2-peer and cloud services is piracy and porn. It’s what they use it for.

Inspired by Rep. Jared Polis’ inclusion of the lyrics of the “Internet is For Porn” from the musical Avenue Q in the record during the SOPA mark up, I bring you the fair use parody below . . . .

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AT&T’s Terrible Horrible No Good Very Bad Day In Court

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Today AT&T and the Department of Justice met to have a status conference with Judge Huvelle on the pending litigation. It unfolded very much as I predicted last week, but even better than I could possibly have imagined.  Most of the news coverage has been surprisingly anemic and failed to capture how Judge Huvelle spent 45 minutes racking AT&T Counsel Mark Hansen over the coals. (Cecilia Kang at Washpo and Brent Kendall at Marketwatch being the exception, but even they cannot capture the utter savageness of the beat down Judge Huvelle gave). Mind you, Hansen did not help himself with his “nothing to see here judge, move along” attitude. Also, when the judge says: “I think I should hear from the government now” that is not the time for you to make the same argument she just dissed again. You shut up and sit down.

Some rapturous details, indecent gloating, and a few further predictions below . . . .

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That Was The Week That Was For AT&T/T-Mo. Is There A Next Week?

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It’s been a fun few days in AT&T/T-Mo land to say the least. I swear, this has become my favorite telecom reality show since Death Star Reborn: The AT&T/BellSouth Telenovella finished its series run back in December 2006.

With even the German government, Deutsche Telekom’s largest shareholder, resigning itself to the deal unwinding, the only question that remains is how long AT&T will resist the inevitable. A review of this week’s developments below . . . .

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The Republican FCC Reform Industry Doesn’t Want.

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You haven’t seen a lot of industry lobbying to support the FCC Reform Legislation pushed by House Republicans on the Energy & Commerce Committee. One would think that a bill which requires the FCC to spend three years building up to adopting a rule, imposes all kinds of new burdens on the FCC before adopting a rule so that rulemaking will be even more burdensome and less likely to occur, and generally tries to limit the FCC from regulating or imposing conditions on media and telecom mergers would generate loud applause from industry players supposedly chaffing under the terrible yoke of the FCC. But we haven’t, and we won’t. Oh, Republicans may lean on industry trade associations for some perfunctory applause and ritual chanting about “the burdens of job killing regulation” blah blah Amen. But their heart won’t be in it.

This may surprise those who think that the proposed Republican FCC Reform Bill is an industry fantasy crafted by high-paid industry lobbyists and pushed by their wholly owned subsidiaries. The bill contains everything industry always claims to want, so where the heck is the industry cheerleading squad? Why haven’t they shown up to cheer its passage with any enthusiasm? Why aren’t industry lobbyists busy writing op eds about how this wonderful FCC reform bill will make your cell phone bills cheaper, bring us better broadband, and give you free cable? And why are Republicans so determined to push it if no one in industry really wants it?

I explain below . . . .

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AT&T’s General Jim Cicconi Surrenders To Genachowski At Appomattox Court House.

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We remember the surrender of General Robert E. Lee at the Battle of Appomattox Courthouse as the end of the Civil War, despite the fact that Confederate forces remained in the field for several weeks thereafter. The announcement by AT&T and Deutsche Telekom (DT) that they have told the Federal Communications Commission (FCC) to dismiss their application to transfer T-Mo to AT&T “without prejudice” is rather similar. To quote Craig Moffett: “the fat lady hasn’t started singing yet, but she’s holding the mike and the band is about to play.” (We’ll ignore that the fat lady is supposed to be singing opera.) This is reinforced by AT&T informing the SEC for the first time that it expects to pay DT the break up fee, which it values at $4bn ($3 bn cash, $1 bn spectrum) rather than the $6 bn announced last March (the spectrum rights appear to have been devalued $2 bn).

More than you could ever want to know about FCC procedure below . . . .

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Why The Eviction of Occupy Wall St. From Zuccotti Park Raised An Interesting First Amendment Question.

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A bit off topic, but I couldn’t resist. For most folks, the question of whether the recent eviction of Occupy Wall Street (OWS) protesters from Zuccotti Park constitutes a violation of the First Amendment has very little to do with law and much to do with principle. Those opposed to the eviction note that the demonstrators were peaceful, the Mayor displayed clear animus to the protestors and their message, and that the claims of health and safety are mere pretext. Those who support the City’s actions argue that the protesters had essentially co-opted the park to the exclusion of other public uses and that the protesters were in violation of the park rules (usually eliding over the fact that the rules were adopted after OWS began) and that it is privatekly owned space in any event.

After reading the Order upholding the right of NYC and the owners of Zuccotti Park to prohibit tents and, potentially, other sleeping things such as sleeping bags, I believe this raised an interesting 1st Amendment Question for those of us who follow 1st Amendment law. Those interested in why this is actually an interesting question, rather than resolution of the question, can see more below . . .

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My Insanely Long Field Guide To Cisco’s War On The TV White Spaces

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Will Cisco’s war against the TV white spaces tank incentive auctions? No doubt this question comes as a surprise to the vast majority of people unaware Cisco was running a war against TV white spaces (TVWS). True, Cisco has mostly tried to stay behind the scenes. But as we get closer to the Super Committee deadline, which include negotiations for incentive auction rules that would let TVWS survive, Cisco has become increasingly willing to go public with its anti-TVWS lobbying efforts.

This blog post on the Cisco blog, followed by this letter from the High Tech Spectrum Coalition (HTSC), finally say publicly what Cisco and its allies have been saying privately since debate over spectrum legislation began last January: “Death to the TV White Spaces.” Instead, argues Cisco, open up a new block of 5 GHz spectrum to “replace” the white spaces. But with spectrum legislation in trouble – as evidenced by CTIA’s non-stop radio advertising here in D.C. and it’s recent ‘we love unlicensed, can’t we all get along?’ letter to the Super Committee – Cisco’s continued opposition to white spaces threatens to tank any hope of getting incentive auctions passed either in the Super Committee or elsewhere.

Incentive auctions, while popular as a revenue generator, were always a tough sell because of broadcaster passive/aggressive opposition. Adding D Block reallocation made it even more difficult. Cisco’s war on the TVWS threatens to be the final straw that makes this lift just too heavy. It splits a tech community that would otherwise wholly support incentive auctions, while simultaneously pissing off key members of Congress who helped get TVWS done in the first place.

So the time has come for Cisco, CTIA, and others who really want incentive auctions, to ask themselves whether it’s worth it to risk incentive auctions just so that Cisco can keep Microsoft, Google/Motorola, Dell, and others from bringing a competing product to market. The Hutchison/Rockefeller Bill, S.911, was a compromise that kept spectrum for TVWS, gave Cisco the 5 GHz block it wants, and made sure that a minimum threshold of 84 MHz would be auctioned before allocating any recovered spectrum to replace white spaces lost by auction or repacking. While not great from my perspective as a white spaces supporter (and I’d still like to see it tweaked some), it was at least a livable compromise. Cisco’s anti-TVWS campaign already backfired once, with the Republican discussion draft to require auction for all unlicensed spectrum. Will Cisco and CTIA fail to learn just how easy it would be for them to blow this for everyone? Or will they settle for the compromise that got a bipartisan bill out of the Commerce Committee?

Why Cisco has been gunning for the TVWS, the quiet little war of the last ten months, and how to get out of this quagmire before it’s too late, below. . . .

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Can People Please Stop Pretending That DoJ is Going To Settle in AT&T/T-Mo?

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It’s been a rough day for those who continue to hold the belief that DoJ and is really planning to settle with AT&T, or that AT&T’s mighty lobbying machine can bring the Antitrust Division to heel. First, White House Chief of Staff Bill Daley, appears to be losing influence. That’s important because cynics and true believers in the unbeatable awesomeness of AT&T’s lobbying have often pointed to Daley’s ties with the business community (and AT&T specifically) and cast him in the role of white knight for AT&T.  With Daley apparently in fade out mode, that seems rather unlikely.

But more importantly, at an unrelated hearing, Senator Herb Kohl (D-WI), Chair of the Judiciary Committee, asked Holder whether DoJ was “in it for the long haul.” Holder was about as aggressive as he could possibly be without challenging AT&T CEO Randal Stephenson to ‘meet him outside in the parking lot after the hearing and settle this one-on-one,’ and committing to “do to AT&T and Deutsche Telekom what Joe Frazier did to Muhammad Ali in Madison Square Garden – win a unanimous decision!” According to Reuters, Holder told Kohl that “people in the antitrust division are committed to seeing this through. There is a trial team in place and they are ready and eager to go to court.”

No doubt DT will continue to tell European analysts that Eric Holder is “such a flirt” and this is how we negotiate settlements here in the United States.  I also expect that a hardcore contingent will just never believe that AT&T can’t get what it wants in DC by spreading enough PAC money around and rounding up a few more endorsements. But anyone looking at this ought to realize that AT&T is wasting its money on all those commercials promoting the benefits of the merger to try to force a settlement.

AT&T can still prevail in court (although as I noted here and here, events of last week do not inspire much confidence on that front). But anyone thinking AT&T can avoid a trial really needs to wake up and smell the coffee. At this point, either AT&T and DT figure out how to unwind the deal, or bet the long odds that they can prevail. If I were an AT&T or DT stockholder I would definitely prefer Option 1. But as long as AT&T and DT management can spend money that’s not theirs, they will continue to hold out for a miracle.

Stay tuned . . .

 

The Sprint/C. Spire Skirmish: AT&T Loses Ground While DoJ Gets A Roadmap

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Any tactician knows that battles can be won or lost by defining the battlefield. Skirmishes like the fight over whether Sprint and C. Spire (formerly Cell South) can go ahead with their private lawsuits against AT&T’s acquisition of T-Mobile help define the terrain for the bigger fights to come (order here). By ruling on what constitutes a recognizable injury under the antitrust rules and making preliminary determinations about the nature of the market, the Order sets the boundaries of what arguments DoJ can make and what it will need to do to prove its case. Where AT&T manages to have certain market definitions locked in and certain potential injuries excluded as not cognizable under antitrust in these early rounds, it gains an advantage. By contrast, where the court rejects AT&T’s efforts to limit the scope of the review by adopting different market definitions or recognizing certain injuries as addressed by the antitrust law, DoJ gains an advantage.

Both Sprint/C. Spire and AT&T claimed victory after Judge Huvelle issued her decision Wed. evening – Sprint/C. Spire for staying in on some claims when AT&T had said they would get thrown out, AT&T on the basis that “most” of Sprint and C. Spire’s claims got dismissed and what remains doesn’t matter. But everyone knows this is just a skirmish in the big battle between AT&T and DoJ. So, setting aside who won or lost this particular round, how does this position AT&T for the real fight?

More below . . . .

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