DoJ Says “No” To Ma Cell; Here’s What Happens Next (and Why It’s All Over But The AT&T Screaming)

In what is undoubtedly the best Labor Day present the Department of Justice ever gave America, DOJ has filed to block the AT&T/T-Mobile Merger in court. One should not, however, expect AT&T to give up easily. AT&T can, and almost certainly will, decide to fight rather than simply abandon the deal. If nothing else, it has $6 billion in break up fees to pay if the merger does not go through. On the plus side, the odds definitely favor the DoJ, which is why so many companies simply abandon the merger once DoJ has filed.

Meanwhile, the FCC, an independent agency, still needs to make its decision on what it will do. Unlike DoJ, where the head of the Anti-Trust division makes the call (subject to the usual political checks, of course), the FCC must have a vote on an Order, which must get a majority of the Commission (3 votes). Since Congress repealed the FCC’s ability to immunize phone mergers from antitrust back in 1996, the FCC cannot approve if DoJ wins in court. OTOH, the FCC is under no time pressure, and can wait to see how the court case turns out. At the same time, however, the court may decide to stay consideration until the FCC decides, since the merger cannot proceed without FCC approval.

All of this has huge implications for AT&T and its current bluster that it will fight DoJ for the right to eat T-Mo. Normally, AT&T could hope to get this wrapped up in a few months, and continue to try to use its political muscle to force a settlement. But the interaction between DoJ’s challenge and the FCC lawsuit make it incredibly difficult for AT&T to get this done before Deutsche Telekom decides it wants it $6 billion cash ‘n spectrum break up fee. As I explain below, AT&T must simultaneously persuade the FCC not to act while convincing the court to move at super speed, despite the fact that the usual way things work is for courts to wait for agencies to finish review (because the agency may remove the need for the court to act).

I explain AT&T’s legal problems below . . .

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What the DoJ Documents Tell Us About the Comcast/NBCU Merger

In all the hoo ha about the Comcast/NBCU Merger, few folks troubled to read the Department of Justice Competitive Impact StatementComplaint, andConsent Decree. That’s rather unfortunate, as these documents sets forth a straightforward case under the antitrust laws for program access conditions for online competitors and for network neutrality. Here’s the short version:  Comcast pre-merger makes almost 30 times more money from providing cable service than from programming revenues. Even adding all of NBCU’s revenue, Comcast will still make more than twice as much from selling cable service ($34 billion) as from programming ($16.9 billion). Anyone who can do basic arithmetic would therefore conclude that yes, Comcast’s incentive to protect its cable business from erosion by online distributors (or even from traditional rivals) outweighs the potential gain from increasing programming distribution. As an added bonus, for those ideologically committed to believing otherwise, turns out Comcast’s own documents agree with the simple arithmetic and not the fun theoretical models their experts submitted. Which is why (among other reasons) DoJ continued oversight is not merely something extra. It really matters.

Lets break this out some below …

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Genachowski's Remarks At Auschwitz

I cannot claim to know Chairman Genachowski very well. But the remarks below, given as head of the U.S. delegation in commemoration of the 65th Anniversary of the Liberation of Auschwitz, mark him as my brother on a level that goes beyond all levels of politics and policy.

Ezchor! Lo tishcach I will remember; do not you forget.

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On the Cultural Significance of “The Cultural Significance of Free Software” : Part one: my review of the book.

In a manner remarkably similar to how my homologue John Compton Sundman was approached by the obscure editors from the Society for Analytical Engines to edit the entries of the inaugural Hofstadter Prize for Machine-Written Narrative (as chronicled in Cheap Complex Devices), I was approached, some five months ago, by the book review editor of the journal “Science as Culture” to write a review of Two Bits: The Cultural Significance of Free Software by Christopher M. Kelty. I agreed to write the review for free. (Why? Because I’m a monkey/amateur –just ask Harlan Ellison).

I think the book, despite its various shortcomings, is good; important, even. It raises significant issues that bear upon (yes, I know how hyperbolic this sounds) whether democracy and the ideals of pan-human equality have any future.

My draft review appears below. At some point, presumably, a version of this review, perhaps considerably revised, will appear in Science as Culture

Funny issues arose regarding copyrights and copylefts of the review itself. I’ll write more about them in a second post.


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Important DC Cir Opinion on Boring Procedural Stuff for the FCC,And Why We Should Care.

Every now and then, the fact that I am a lawyer leaks through here. OK, it leaks through a lot — including my insatiable tracking of the minutia of the D.C. Circuit and how it impacts things FCC.

Which brings me to last month’s opinion in Globalstar, Inc. v. Federal Communications Commission. In the grand scheme of things, this decision only impacts two companies, Globalstar and Iridium. What makes the decision important is that it addresses the scope of a Petition for Reconsideration and whether a Petition for Recon re-opens the entire docket. Along the way, it once again admonishes parties about relying on ex partes to build an administrative record, which may actually breathe some life back into the procedural rules at a time when every FCC proceeding is “permit but disclose.”

More importantly, this case illustrates that the details of this stuff matter — not just in telecom but in all aspects of regulatory reform. If we want a real progressive movement, we need to nurture our own special teams in every policy area that follow the day-to-day mundane and prosaic details that make the difference for effective advocacy on the big ticket items.

So for all you procedure buffs out there, continued below . . . .

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FISA Reflections: FISA and The FCC

Well, the foul FISA Amendments Act is signed. I shall have more refections as time permits. But I did have one thought here. FISA and the FCC.

The Title II of the FISA Amendment Act of 2008, the “Protection for Electronic Communications Service Providers,” provides for protection from any “covered civil law suit.” As John Dean first observed, the bill does not refer to criminal immunity. Personally, however, I think that is a bit of a red herring, although I am curious as to whether the pardon power really runs to corporations and other artificial person that exist solely as a function of law. But lets assume it does. So let us assume that on his last day, Bush pardons anyone and everyone involved in the whole sorry affair. Where does that leave us?

The Federal Communications Commission.

The FCC is not a “court” of the United State as defined by the act. A complaint brought to the FCC under the Customer Premise Network Information (CPNI) rules, or even the broader provisions of Section 202 “just and reasonable practices,” does not fall within the purview of a “covered civil action.” In the event that a pardon is considered to cover possible administrative sanction, I would observe that a Petition for Declaratory Ruling that the conduct disclosed violated the CPNI rules is not a criminal action or civil liability, but would still entitle the Commission under its broad powers pursuant to Section 4(i) and Section 403 to investigate. Indeed, under Section 403, the Commission is free to conduct an investigation into the matter on its own motion — if it so desires. The Commission is not limited by the Article III “cases or controversies” requirement. It can investigate anything pertinent to its regulation of all communications by wire or radio, particularly when related to administration of any provision of the Act.

The upside is that, short of a statute specifically prohibiting the FCC from investigating anything related to the domestic spying program, it is damn hard to take this broad investigative authority away. As noted above, even the absence of any criminal or civil liability cannot divest the FCC of its authority to investigate communications carriers — particularly those regulated as common carriers under Title II. Given that the Chair of the FCC cannot be removed by the President, and I would need to check about the applicability of an executive order to the FCC, nothing short of a direct Act of Congress again could deprive the FCC of its ability to investigate. (I imagine we will need to watch the appropriations bills very carefully to see if some clever person sneaks it in under the radar.)

The downside, of course, is that this lies entirely within the discretion of the agency. Even a filed complaint or Petition for Declaratory ruling cannot compel the agency to action.

So we shall just have to see what happens after the election. If we have an FCC interested in letting the American people know how their government spied on them, what actual benefit accrued, if any, and what the FCC might do under existing law to keep that from happening again in the future (all, of course, consistent with national security, blah, blah), we can at least find out what went on and shame these companies into being more careful the next time around. OTOH, if we have an FCC that believes that “national security” means giving the telcos a free ride if the Administration asks nicely, then we can’t find out jack.

Stay tuned . . . .

Rather Trivial In the Scheme of Things, But Trivial Is What The News Has Become.

In the journalists who act like the stereotypical blogger rather than the bloggers that rise to level of journalists, I cannot help but include this little piece by Ted Hearn over at Multichannel News. It is perhaps no surprise that reporters for trade magazines beholden to cable television have been, to put it politely, less than pleased with Kevin Martin. But there is a difference between general unfavorable coverage that upholds journalistic standards and the sort of gratuitous nastiness that is supposed to be the purview of the blogosphere and the editorial pages. Or there used to be. And when Hearn compounds this by missing the opportunity for a more interesting story to focus on the little Martin-zingers, I just gotta wonder if I should consider myself a journalist after all.

Hearn’s story is about a Korean journalist miffed at Martin having a press conference in Seoul, South Korea, at the OECD Ministerial Meeting. Hearn’s opening, that “Fifty-five years of peace on the Korean peninsula suffered a minor setback last week after Federal Communications Commission chairman Kevin Martin landed in Seoul for a two-day ministerial session of the 30-country Organization for Economic Cooperation and Development,” can be dismissed as comic overstatement for humor. It’s the little zinger at the end that has me shaking my head in wry amusement wondering if Hearn has been taking lessons recently from Rita Skeeter.

The whole thing would hardly be worth a raised eyebrow but for how it illustrates a more serious issue that Hearn muffed. As anyone who follows international news in even a cursory way knows, U.S. – S. Korea relations have been in a bit of a tailspin over the decision of S. Korean Pres. Lee Myung-Bak to lift restrictions on importation of U.S. beef (‘Said Myung-Bak: “We have assurances that the U.S. guarantees the safety of it beef.” Sadly, the U.S. Ambassador was suffering from salmonella from some U.S. tomatoes and could not respond to a request for a quote . . .’) That a reporter was miffed over Martin’s conduct is a potential barometer for the touchiness of U.S.-Korean relationships and whether the beef business will spill over into cable or tech concerns, and whether the trivial conduct of U.S. officials may have impact for American interests.

Such a story would have been timely and important, but would have required some actual work and reporting. So much easier to simply take what someone else has done and editorialize around it. You know, like this thing you’re reading here. Except this is a blog that I write in my spare time without the pretension of pretending to be a journalist. Although given this story and last week’s MSM hack job on Kozinski, I’m starting to rethink calling myself a journalist. Judging from what I’m seeing, what I do isn’t really that different.

Stay tuned . . . .

Jabberwocking the Fundies

Here at Wetmachine we have a tradition of posting what the New Critics called “close readings” of arcane texts. Usually these close readings are done by Harold Feld in Tales of the Sausage Factory or by Greg Rose in Econoklastic, and most often the closely-read documents are obscure legal decrees, rulings, opinions, pronouncements, etc, originating from the Oracle at Federal Communications Commission, or they’re drafts of some lobbyist-written telecommunications bill lurking in the shadows of some state legislature or congressional committee, hoping to become law while nobody’s looking –although occasionally Harold treats us to a scholarly exegesis of a biblical or Talmudic text.

Over at Enter the Jabberwock, my erstwhile OpenLaszlo colleague Josh Crowley has a long-running series of close readings of illustrated tracts by the crackpot so-called “Christian” fundamentalist Jack Chick. Crowley calls these analyses “Chick Dissections”. In them he mercilessly skewers the artwork, logic and theology of individual Chick tracts. He does this in a direct, unironic voice, taking each frame of the comic book under review at face value. In other words, he does not come at them with a knowing, jaded air of sophistication and superiority. He engages them on their own terms.

When I first saw these Chick Dissections I wondered what the point was, since the comics themselves are so ineptly drawn and poorly reasoned that they basically are self-refuting; they are their own parody.

But, you know, Jack Chick is not some lone nut promulgating his paranoid ravings in photocopied pamphlets on a streetcorner to an indifferent audience of dozens. He’s a lone nut promulgating his paranoid ravings to an audience of millions, some of them quite credulous, through his website and publishing empire. The fundamentalist meme, in Christian, Islamic, Hindu, or whatever form, is a present danger to civilization. Therefore Jabberwock/Crowley is right to resist it. The Chick Dissections are not to everybody’s taste, but Jabberwock is providing a valuable service. And he’s often quite funny.

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AT&T's $10 DSL and the Renomination of Commissioner Tate: What The Senate Confirmation Hearing Should Ask

The Consumerist runs this good but inaccurate report on AT&T’s offering its mandated $10 DSL intro rate for those who have not subscribed to DSL previously. AT&T accepted this as a merger condition when it acquired BellSouth last year. What Consumerist gets wrong is that this condition comes not from the FTC, which did not review the merger (regular readers will recall that it was the Department of Justice Anti-Trust Division that gave the merger a thumbs up with no conditions). The price control aspect came from the FCC, as part of the bucket ‘o concessions AT&T made after it failed to get McDowell unrecused and suddenly had to respond to Democrats rather than blowing them off with bogus concessions.

This matters for two reasons. First, it means that complaining to the Federal Trade Commission, as suggested by Consumerist, is not exactly effective. FTC had nothing to do with the condition and won’t enforce it under their merger authority. If AT&T makes it damn hard for people to order the cheap rate, then there might be a claim as an unfair or deceptive trade practice, but I think that is kind of a stretch.

No, the place to complain is at the Federal Communications Commission. While it doesn’t hurt to file a complaint with the FCC’s Enforcement Bureau, you will also want to make sure that you copy it to the FCC’s record in the AT&T/BellSouth merger via its Electronic Comment Filing System (ECFS). The relevant docket number is 06-74.

But, more importantly, this raises some serious questions that Congress needs to ask not merely about AT&T’s commitment to honoring the merger conditions, but also about the FCC’s willingness to enforce them — especially in light of statements made by Chairman Martin and Commissioner Tate at the time of the merger. Fortunately, President Bush’s decision to nominate Tate for a second term provides an excellent opprtunity for members of the Senate Commerce Committee to put these questions to Commissioner Tate directly.

Because while $10 DSL is important, this is also important to other AT&T merger conditions, such as network neutrality condition. And while, unlike many of my colleagues, I don’t think Martin or Tate are mindless Bellheads or wholly owned subsidiaries of AT&T, I do think it’s important to get them pinned down on the record that they will vigorously enforce the merger conditions and not allow AT&T to weasel out by “complying” in a way that deprives these conditions of meaning.

More below . . . .

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The Federal Trade Commission Gets in on Network Neutrality

As widely reported, Federal Trade Commission (FTC) Chair Deborah Platt Majoras announced that the FTC will look at network neutrality. In the same paragraph, however, she also expressed her doubts on the need for network neutrality legislation. That, combined with her choice of forum (Progress and Freedom Foundation’s Aspen Summit; PFF is a vigorous opponent of NN), the FTC’s natural bias toward post-conduct remedies rather than prophylactic regulation, and Majoras’ decision to sign off on the Adelphia transaction without considering the voluminous evidence collected by the FCC make me suspect that the FTC will conclude that Congress should take no action and that antitrust solves everything.

A bit more analysis below.

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