Tales of the Sausage Factory

The FCC Never Regulated DSL, Oceania Has Always Been At War With Eastasia, and My Offer To AT&T.

Hank Hulquist over at AT&T writes that the FCC never regulated internet access.
It’s a funny thing, because I distinctly remember going through a process where the FCC reclassified DSL from a Title II telecom service to an information service. Let me rummage for a bit . . . . ah yes. Here is the link to the FCC’s 2005 Order reclassifying DSL as an “information service.”

In fact, come to think of it, I’m old enough to remember when the telephone companies wanted DSL classified as an “interstate telecommunications service.” Can I find that link on line? Why yes! Here it is: GTE’s DSL Tariff and the Bell Atlantic, BellSouth, GTE, and PACBELL DSL Tariff. (The telcos wanted these classed as Title II telecom to preempt state regulation, if you were wondering.)

And what does the first paragraph of the GTE Tariff Order say?

In this Order, we conclude our investigation of a new access offering filed by GTE that GTE calls its DSL Solutions-ADSL Service (“ADSL service”). We find that this offering, which permits Internet Service Providers (ISPs) to provide their end user customers with high-speed access to the Internet, is an interstate service and is properly tariffed at the federal level.

Which is why carriers providing DSL paid Universal Service support (paid only by Title II telecommunications carriers) until the FCC 2005 Reclassification Order.

[Funny story. The 2005 Reclassification Order phased out USF payments over the course of a year, but in 2006, rather than dropping the USF fee, the carriers tried to keep charging customers for a fee they no lnger had to pay. Then Kevin Martin threatened to investigate the Bells for false billing, and they backed off.]

More below . . .

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Tales of the Sausage Factory

Dave Sez: AT&T Are [Bleep!]

My friend “Dave” recently moved from San Francisco to Sacramento. Being of the modern mobile generation that has “cut the cord” and lives by the cell phone, Dave wanted to get “naked DSL.” i.e., DSL (or other broadband) without any kind of telephone or video contract (Dave also refuses to pay for cable TV, on the grounds that 99% of the programming “sucks”). To his surprise and disappointment, Dave couldn’t find any naked broadband available in his neighborhood. So he wrote to me, as the known expert on all things broadband. “Isn’t there any way I can just get broadband without a telephone contract?” Dave wrote me in an email.

So I thought about it, and I said: “Is Sacramento AT&T territory?”

“Yeah.”

“Well AT&T has to offer $20 naked DSL, as a merger condition from when they bought BellSouth. Why don’t you try for that.”

So Dave dug around until he found the offer for AT&T DSL until he found the AT&T Yahoo! High Speed Internet Package With No Voice Contract:

Basic 768 kbps $19.95
Express 1.5 mbps $23.99
Pro 3.0 mbps $28.99

We talked, and I recommended the “Express” package as probably the best suited to his needs. Dave went to order it. His reactions below (warning, contains frank language and highly suggestive ASCII)….

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Tales of the Sausage Factory

I Go Away for a Week and AT&T Gets Cocky

So I trot off to enjoy my regular vacation from the 21st Century at the annual Pennsic War to discover that AT&T has taken my brief absence as an excuse to get cocky and suck up even more to the Bush Administration by block Pearl Jam’s anti-W lyrics. “Oopsie,” says AT&T. “All an honest mistake! Really!” Except — surprise! — it now appears that AT&T may also have blocked other groups during other live performances when criticizing Bush.

Isn’t it amazing how these “accidents” always seem to go in one direction rather than another? For example, wasn’t it just the most amazing coincidence last year when Comcast “accidently” snipped off an embarassing clip from a video on demand news report?

One may ask why these companies try to get away with such nonesense. The answer is (a) it doesn’t hurt them to try; and (b) they do get away with it. Especially when it comes to time sensitive speech, there is really no penalty for AT&T, Comcast, or any other megacorp with market power to engage in this form of corporate censorship.

On the other hand, as I observed recently, the potential rewards of sucking up to this administration can be quite considerable. AT&T has certainly shown it knows how to suck up to this Administration. And, in return, the Bush Administration Department of Justice let through the AT&T/BellSouth merger with a nod and a wink.

So we can expect to continue to see such “accidents” in the future, while the corporations and their cheerleaders brush off such corporate censorship as inconsequential random events that cannot possibly warrant prophylactic regulation. That we have achieved the worst excess of government censorship through the simple expedient of outsourcing is ignored and disregarded by these Libertarian defenders of the status quo in much the same way they ignore the reality that certain forms of regulation are a necessary prerequisite to genuinely competitive markets. But better the forms of free speech and the trappings of competition then actual free speech and real competition — if the cost of achieving either is to admit a flaw in the sacred dogma of the Gods of the Marketplace.

Stay tuned . . . .

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Tales of the Sausage Factory

700 MHz Endgame: Has AT&T Asked Bush to Put Thumb On Scale?

Unsurprisingly, in the swirl of folks around this week’s House Commerce “iPhone” Hearing, rumors and gossip about the 700 MHz Endgame abounded. In the nasty-but-sadly-believable category comes a rumor that the Bells have asked (through a wholly owned subsidiary in the House) for the Office of Management and Budget (OMB) to do a “study” on whether any open access condition (of any definition) or other incumbent restriction (such as the spectrum caps urged by the Public Interest Spectrum Coalition) will depress auction revenue.

To those who know how these things usually work, the first question is “Why Ask OMB and not the Congressional Budget Office (CBO) or the Congressional Research Service (CRS), which usually do this sort of thing?” And to those of us who have lived through the last 6 years of an Administration that spells “research” P-R-O-P-O-G-A-N-D-A will cynically answer, “because that way the telcos can make sure they get the ‘right’ result.” Unlike CBO or CRS, which are under the control of Congress and generally take their research pretty seriously, OMB is directly under the control of the Bush administration.

Man, Telco spying for NSA is just the gift that keeps on giving. First the Bush Justice Department behaves like a nice little lap doggie and rolls over and plays dead for AT&T buying BellSouth. Then Bush tried to give the Bells retroactive immunity for what they did. Now, according to rumor, Bush will help the telcos rig the auction to keep the status quo.

Some needed background and why the oft-repeated idea that open access will automatically reduce auction revenue is a load of nonsense below . . . .

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Tales of the Sausage Factory

The 700 MHz Endgame Part II: Assessing the Martin Offer and Manuevering Room for Replies

In part I, I wrote about Martin’s carefull PR blitz to frame the 700 MHz endgame. But its important to look at the substance of Martin’s draft order itself. Because, as always, Martin is damn clever, and has put stuff in there that is bloody tempting to go for the compromise. To keep this manageable, I will limit my discussion here to just assessing the rumored offer and how I think we could improve it, keeping in mind that this is just press reports and really doesn’t cover the panoply of issues. In Part III, I will provide my Field Guide for the Endgame, reminiscent of my original Impossibly Long Field Guide from April (how much things have changed in 3 months).

Assessment below . . . .

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Tales of the Sausage Factory

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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Tales of the Sausage Factory

Tonight, a Dramatic Conclusion for the AT&T/BellSouth Telenovella!

In the dramatic penultimate episode of the telecom world’s favorite Telenovella Death Star Reborn: The AT&T-BellSouth Merger, the forces of Network Neutrality and competition win a dramatic victory!

AT&T has submitted a new 20-page letter outlining the conditions it will accept for the merger. Unlike the previous concessions in October, which amounted to little more than a joke and a promotional offer, this set of conditions is quite thorough. The breadth and scope of the conditions leaves me positively breatheless. To mangle Woody Gutherie for a moment:
You shall be neutral, in all your networks
From the first tier backbone, to the retail last mile,
from special access, to the U-N-Es
You shall not leverage market power!

I need a couple of different posts to really cover the implications. But here are the headlines:

1) Network neutrality is required in its fullest form. AT&T cannot prioritize or degrade service based on third party payments or affiliation anywhere between the peering point and the residential “last mile.” So not only has the definition of network neutrality been solidified consistent with that advocated by Save Our Internet and others, but it has been extended from the last mile to the vertically integrated backbone.

2) Residential fixed WiMax is included in the definition of “last mile.” This is the first time net neutrality has ever been applied to a wireless network.

3) AT&T must divest the 2.5 GHz spectrum it would acquire from BellSouth. This addresses a concern raised by Media Access Project and others that AT&T/BS would have an overwhelming spectrum advanatage against other wireless players.

4) AT&T has an agressive build out schedule to provide DSL at 768 KBPS for $19.95/month throughout its coverage area.

5) AT&T agrees to numerous conditions that amount to a return to tariffs and price caps for telecom and DSL resellers and special access (commercial) customers. AT&T can no longer lock competing local exchange carriers (CLECs) or DSL resellers in non-disclosure agreements.

Bonus: AT&T agrees to “repatriate” 3,000 jobs BellSouth had shipped overseas and locate at least five hundred of these “repatriated” jobs in New Orleans.

In tomorrow’s concluding episode, expect the FCC to release the final Order on Friday December 29 and the deal to close immediately thereafter.

Roll credits. Special thanks to Commissioners Copps and Adelstein, for their amazing tenacity and skill. Free Press, Consumers Union, CFA, and the rest of the public interest community that fought like Hell. The tens of thousands of people who filled comments. And Commissioner Robert McDowell, for his amazing act of ethical fortitude.

Stay tuned . . . .

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Tales of the Sausage Factory

McDowell: “I Am Not A Pawn; Solve Your Own Damn Merger!”

In a very special Christmas episode of the Telecom worlds favorite Telenovella, Death Star Reborn: The AT&T/BellSouth Merger Commissioner McDowell gives his fellow FCC Commissioners a lesson on ethics, the power of the Christmas spirit to facilitate good will towards all men, faith in negotiations in multibillion dollar mergers, and why it REALLY PISSES HIM OFF when people try to use him as “a pawn.”

You can read McDowell’s written statement (and supporting documentation) here, and watch the archive of the video of McDowell’s press conference here. You can see the statement from my employer, Media Access Project, here.

But for my personal analysis, see below . . .

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Tales of the Sausage Factory

Latest AT&T/BS Merger Twist, and Why Bill Kennard Case is Different from Robert McDowell’s

In the latest chapter of the FCC’s most gripping “telecomnovella” Death Star Reborn: The AT&T/BellSouth Merger, FCC Chairman Kevin Martin has set in motion the process to get 3rd Republican Commissioner Robert McDowell “unrecused”. The FCC has been deadlocked 2-2 because Commissioner McDowell used to represent CompTel, one of the groups opposing the merger, creating a conflict of interest. (You can see my previous coverage explaining all this here.)

McDowell, while not champing at the bit to be unrecused, has announced he’s ready to serve if the FCC’s General Counsel tells him he has to vote to break the deadlock. So it becomes possible to get this done before the new Congress takes over. Although why this should be such a big deal is beyond me, since it’s not like Congress can directly interfere with FCC merger review, and the indirect threats for payback are already on the table.

Martin, conscious of the controversial nature of the move, wrote a letter to the Chairs and ranking members of the Senate and House Commerce Committees explaining the need for such extraordinary action. In doing so, Martin observed that the FCC General Counsel had previously authorized former FCC Chairman William E. Kennard to break a 2-2 deadlock despite Kennard’s previous recusal.

Now some months back, when folks first started wondering about the “McDowell Option,” I opined that while the FCC General Counsel could force McDowell to vote, such a move would be “extraordinary” and “To the best of my knowledge, it has never happened.” So what’s all this about Kennard then?

Art Brodsky does an excellent job explaining why the Kennard situation was radically different. But, my honor being involved and all, I decided to dig a bit deeper. As explained below, the facts on the Kennard case were so bizzare and different (starting with the fact that Kennard had not been legally required to recuse himself in the first place but had done so, in his own words “out of an abundance of caution”), that I still think my original statement stands and that, if the FCC unrecuses McDowell, and requires him to vote, it’s really breaking new ground.

More detail than you could possibly want (including a timeline and relevant quotes from Kennard’s public statement in 2000 on unrecusing himself) below….

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Tales of the Sausage Factory

The AT&T Merger Saga Continues . . .

No one could mistake last week’s twists and turns in the proposed AT&T/BellSouth merger for the excitement, titilation and hijinks of the Foley Follies. But by the staid standards of telecom policy, last week’s swirl of activity constituted a veritable Telanovella of intrigue and power politics. Duelling Congressional Committees! Kevin Martin pushes for a showdown, but Dems Michael Copps and Jonathon Adelstein hang tough! Martin stages a “strategic withdrawal,” but schedules a new vote for November 3 after he returns from his long-planned trip to Asia. AT&T offers new concessions, kicking off a fresh round of public comment and criticism of the merger. And what will happen to the Notice of Inquiry on network neutrality that Martin offered the Dems as an incentive to approve the merger? Is it still on the table?

I’m all aflutter, I tells ya. For my continued speculation, as well as my thoughts on the proposed AT&T conditions and how you can still make a difference, see below….

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