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Regulation

Pro-Regulation Camp Seeks to Undermine Competition Policy in AT&T/T-Mobile Review

Like pro-regulation forces did everything they could to undermine competition policy to justify FCC net neutrality regulation last year, those same FreePress-led pro-regulation forces are focused in 2011 on trying to characterize the AT&T/T-Mobile combination as a threat to competition -- so that they can impose new regulations on AT&T that they can then try and force on the rest of the industry.

The problem is that the FreePress-led pro-regulation forces are trying to convince people of the preposterous claim that the AT&T/T-Mobile merger will reconstitute the Ma Bell Monopoly when the obvious facts are that AT&T is no longer dominant 27 years after the Bell-break-up.

The Senate Judiciary Antitrust Subcommittee hearing on the AT&T-T-Mobile merger is entitled: "The AT&T/T-Mobile Merger: Is Humpty Dumpty Being Put Back Together Again?"

 

Just like it was preposterous last year that the U.S. was falling behind on broadband because of insufficient competition, it is preposterous that the AT&T/T-Mobile merger will reconstitute the the Ma Bell monopoly.

 

The Big Unanswered Net Neutrality Questions

The latest debate over net neutrality regulation in the House Judiciary Committee today spotlighted for me three big fundamental questions that the FCC has still not answered.

  1. If the alleged net neutrality problem the FCC claims to be trying to solve in the Open Internet Order was so incredibly urgent to put in place in December, that everyone's holiday plans at the FCC had to be disrupted, why is the publishing of the rules in the Federal Register happening at such a leisurely, anything-but-urgent, pace?
  2. When the law of the land has a clear national policy bias "to promote competition and reduce regulation," how does the FCC legally justify an FCC Open Internet policy bias to promote regulation and reduce competition?
  3. How can the FCC use an obviously de-regulatory, pro-competition provision of law, Section 706, to legally justify an obviously regulatory de-competition Open Internet Order?

FreePress Continues to Divide Not Unite

FreePress' campaign director, Tim Karr, continues to overuse its main political tactic of demonizing anyone that disagrees with FreePress' goal of ridding the world of free market capitalism and property ownership.

FreePress' play book is all about the politicization of issues -- dividing people, not uniting them.

Read Randy May's Great NRO Piece "Rolling Back Regulation at the FCC"

Kudos to Randy May of the Free State Foundation for his outstanding must-read piece in the National Review Online: "Rolling Back Regulation at the FCC --How Congress Can Help Competition Flourish."

It is a very important reminder that Congress nearly unanimously set U.S. communications policy in 1996 "to promote competition and reduce regulation," in stark contrast to the FCC's Open Internet de-competition policy.

  • Randy is also spot on in encouraging Congress to re-fortify its extremely successful 1996 pro-competition policy by changing the burden-of-proof to assuming competition is superior to regulation, in order to counter the FCC's deep-seated bureaucratic instinct to regulate in order to perpetuate itself.

Randy is also dead right that the FCC looks backward to preserve its regulatory raison d'etre, rather than looking forward, obeying the law and trusting competition to drive consumer benefits.

We so need an FCC that genuinely encourages competition and lets consumers and the market choose market winners and losers, not the FCC.

 

 

 

 

 

The Net Neutrality Accountability Gauntlet

The House's rejection of the FCC's December Open Internet order 240-179 is just the latest in an ongoing high-profile accountability gauntlet for the FCC's unauthorized, unwarranted and unjustified net neutrality rules.

 

  • While the wheels of democracy, public accountability, and the rule of law can turn slowly, they do turn steadily.
  • And from what we have seen so far, the FCC's out-of-the-mainstream, over-reach effort to regulate the Internet for the first time, has been pummeled in our Government's accountability process gauntlet to date, and it can be expected to continue to be pummeled going forward.

 

The Net Neutrality Accountability Gauntlet:

     

     

    First, the President's January Executive Order, "Improving Regulation and Regulatory Review" to seek the "least burdensome" regulations, was a big post-mid-term election political pivot by the Administration to be more sensitive to business, economic growth and job creation concerns.

     

    • Through the new lens of the President's Executive Order, the FCC's pre-mid-term-election-mindset net neutrality rule making has been viewed as badly out-of-focus with the renewed bipartisan interest in economic growth and job creation.

     

    Implications of DOJ-Google/ITA Antitrust Settlement

    There are many major going-forward implications resulting from the DOJ's latest antitrust enforcement action against Google -- this time to mitigate the anti-competitive effects of the proposed Google-ITA transaction.

     

     

     

    Summary of Implications:

    1. Google is clearly the DOJ's main antitrust concern.
    2. DOJ is 4-0 against Google while FTC is 0-2.
    3. DOJ concludes Google is a monopoly -- again.
    4. Remarkably, Google is actively choosing a regulated future for itself.
    5. Google is choosing the trajectory of a regulated antitrust remedy long term over the trajectory of a break-up remedy.
    6. The narrow market definition is good news for those privately suing Google for antitrust violations.
    7. The Google-ITA "firewall" will prove very difficult for the DOJ to police effectively.
    8. The complaint mechanism is important.

     

    AT&T - T-Mobile: Opponents Have Competition Double Standard

    Why is there a selective political fixation on AT&T-T-Mobile's ~43% combined market share when so many related markets are dramatically more concentrated, less competitive, or even monopolized?

    • This blatant competition double standard originates from the political agenda of the FreePress/Silicon Valley net neutrality regulatory complex that seeks a broadband industrial policy -- to create an information commons and generate tens of billions of dollars in implicit bandwidth subsidies for Silicon Valley special interests.

    When the FCC does the "data-driven analysis" that it claims to value, it will discover a blatant competition double standard where broadband critics gerrymander and torture broadband market share statistics to raise the specter of a broadband "opoly" -- to justify broadband regulation.

     

    • It is telling that opponents have to bring Verizon, which has nothing to do with the AT&T-T-Mobile transaction, into the equation in order to manufacture market shares of concern.
    • The outrageous and unsubstantiated implication of opponents' "Ma Bell duopoly" narrative here is that broadband competitors will anti-competitively collude, when all the evidence is that Verizon, AT&T, Sprint, Metro PCS, Leap Wireless and others compete fiercely and relentlessly in multiple dimensions: price, value, device choice, quality, technology, plans, and innovation.

     

    AT&T - T-Mobile: A Solution to Many Problems

    Despite Sprint and Clearwire opposing the proposed AT&T-T-Mobile acquisition, expect the DOJ and FCC to approve it, because the DOJ appreciates the facts of vibrant wireless competition and because the FCC will come to appreciate how the transaction actually helps solve many of the FCC's highest priority problems.

    As a veteran analyst, who has closely covered most all of the roughly two dozen major communications mergers since the 1996 Telecom Act, it is easy to cut through the critics' standard, hyperbole and histrionics -- that they use to attack every major communications merger -- to get to the rub of this matter.

     

    • The rub here is twofold:
      • First, the market competition facts of this transaction and the DOJ's many analogous precedents from previous similar mergers, provide no basis for the DOJ to try and block this merger; and
      • Second, the communication policy facts of this transaction will help solve many of the FCC's highest priority problems: promoting universal broadband, mitigating spectrum exhaust, accelerating broadband adoption, and promoting economic growth and competitiveness.

     

    Like I blogged that the Comcast-NBCU merger would get approval when the hyperbole and histrionics were similarly over the top and not credible, this acquisition ultimately will gain government approval.

     

    FCC is Losing the Wireless Future

    It will be surprising if the Republican FCC Commissioners and a bipartisan majority of Congress do not oppose the FCC's unwarranted war on wireless competition policy.

     

    • The FCC appears to be itching to start another political battle over competition policy with its upcoming fifteenth wireless competition report to Congress, by making another political decision devoid of supporting evidence or merit, that the wireless market does not have "effective competition."
      • Such a fantastical political finding, helps the FCC to ignore Congress and the law yet again, and also to unilaterally impose new sweeping economic regulations on wireless, including net neutrality.

     

    The linchpin of the FCC's de-competition policy to restore the FCC to its pre-1996 monopoly regulation glory days, and to put the FCC in more control of the communications sector going forward, is to politically define away the existence of "effective competition," in order to justify FCC regulation of the mobile Internet.

     

    FCC Out-Europes Europe on Net Neutrality -- Why?

    "The Net Neutrality Debate in Europe is Over" per an excellent commentary by Ben Rooney in WSJ TechEurope.

    • Mr. Rooney chronicles the evolving public position of EU Digital Commissioner Neelie Kroes from an original pro net neutrality regulation mindset, to now the opposite -- a more pro-competition mindset where "the commissoner's position now [is] that a competitive market should be able to deliver an Internet to which everyone has access."

    For those who follow history, it is truly ironic, surprising, and just plain bizarre that Europe is more pro-competition on Internet policy than the U.S. FCC.

    How can this be? To understand this wierdness, look at this remarkable development through the lens of industrial policy.

    I posit the reason for this European policy outcome is the fact that Europe does not have a Silicon Valley lobby -- with an aggressive corporate welfare agenda seeking government special treatment, regulation of their competitors, and implicit bandwidth subsidies -- like the U.S. does. 

    The stark and ironic contrast between the FCC's European-style, interventionist, regulatory approach, and Europe's more American, non-interventionist, competitive approach can only be explained by the presence of the potent lobbying force of U.S. industrial policy national champions (Silicon Valley -- Google, eBay, Amazon, IAC) in the U.S. -- and the absence of European national champions seeking net neutrality in Europe.

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    Q&A One Pager Debunking Net Neutrality Myths