Tales of the Sausage Factory

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 Since Congress repealed the FCC’s ability to immunize phone mergers from antitrust back in 1996, the FCC cannot approve if DoJ wins in court.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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Tales of the Sausage Factory

Quick Note Re: Century/Embarq

For those who get notice of my blog but not Greg Rose’s Econoklastic, and who are interested in the Century/Embarq merger (a significant merger for rural folks), I want to direct your attention to this post about the accelerated schedule in Oregon.

Stay tuned. . . .

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Tales of the Sausage Factory

Commission Meeting Happens! Begins With Gifts To Verizon and AT&T . . . .

O.K., we finally started at 3:50 p.m. Three items left, VZ/Alltel, New Clearwire, and White Spaces. I’ll split tdo my happy dance on his in two, so I can gripe about the suckiness of the mergers while doing my happy dance on white spaces unsullied by this market consolidation.

Details of merger suckiness below . . .

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Tales of the Sausage Factory

2:30 P.M., Still No Meeting . . . .

O.K., I hope tonight’s election results go better. Rumor is the hold up is on roaming conditions in the VZ/Alltel merger. Still, after the DOJ approved the merger with a few divestitures, there was no doubt that the FCC will roll over. The only question is whether Tate or McDowell will side with the Ds to exact some additional conditions for the benefit of the rural carriers or competitors. Hence the speculation that this involves roaming. But I still expect a vote today. You can almost hear the Verizon charatcer in the Alltel ads whispering “Soon Chad . . . .soon you will share your circle for the last time . . . . you ding dong.”

While we wait, here are some preliminary thoughts about the items.

Here’s the original agenda. The FCC dropped item 1, Universal Service/Intercarrier Compensation (USF/ICC), and voted the item on distributed television systems (DTS) and closed captioning on circulation.

Of these, the voted items were fairly non-controversial. DTS is designed to address the fact that DTV signals don’t work the same way as analog, and will allow broadcasters to maintain their audience after the conversion. The only possible pitfall was whether it would allow broadcasters to expand their footprint which would (a) eat into the available white spaces, and (b) give them yet more free spectrum goodies for no good reason. My info is that the order will emphasize that the intent is to maintain the status quo ante transition. I have no idea on the closed captioning item.

That leaves USF/ICC. USF/ICC is a huge mess of biblical proportions that causes even a hardened policy wonk like me to quail and flee the room screaming. It is famously broken, everyone hates it, but no one can agree on how to fix it. There is absolutely no right answer, and any piece of it impacts all the other pieces.

What is interesting is that this created another 4-1 revolt by the other offices against Martin. While I give Martin credit for trying to get hideously controversial stuff done, you are clearly doing something wrong if you have managed to uniformly piss off all four Commissioners to the point where they are making pointed public statements that boil down to “Kevin, you ain’t the boss of me.” It is always hard for a Chairman to get stuff done in the last months of an administration, but unless Martin and the other offices figure out a way to get along, it is going to be a very viscious and unproductive couple of months until January 21.

The delay on this meeting, which caught Martin totally by surprise, is not exactly an auspicious omen.

Stay tuned . . . .

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Tales of the Sausage Factory

Live Blogging the FCC Vote — What If They Called A Vote and Nobody Came?

So here I am, waiting for the white spaces vote, votes on the merger items, and a few other things. The FCC adopted two orders on circulation already — an item on closed captioning and an item on distributed television systems, a technology that will allow digital television broadcasters to keep their current viewers after the transition (I will explain this later). Given that Martin pulled the USF/Intercarrier comp itemyesterday at the insistence of the other Commissioners, that leaves (a) The Verizon/Alltel deal, (b) the New Clearwire deal, (c) the white spaces item, and (d) Google’s pending petition to have the FCC put some teeth into the C block conditions before granting the licenses to Verizon.

The meeting was scheduled for 11 a.m. It’s now after 12:30 p.m. Martin was down here for about an hour before heading back upstairs again. He appeared surprised at the delay.

Stay tuned . . . .

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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

FCC Meeting for November 3 . . . . It Just Keeps Getting Stranger

The FCC has issued the agenda for it’s November 3 meeting. Gone is the proposed Notice of Inquiry on Network Neutrality. And a number of non-merger related items have popped up instead. Meanwhile, the trade press report a hot and heavy debate around forcing AT&T to divest wireless spectrum to create a real competitor (you can read the comments I wrote for Media Access Project here).

My thoughts on all these doings below . . .

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Tales of the Sausage Factory

FCC Staff really starting to get the hang of this “enforcement” thing . . .

In another sign that the FCC has gotten serious in crackdown on cable abuse of market power — and that this message has penetrated to the staff level — consider the case of the NFL Network and Time Warner.

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Tales of the Sausage Factory

Quick Reaction to AT&T-BellSouth Merger

Not really a surprise. The government has made clear it will accept the vicious cycle of “the previous merger you approved means I now have to merge.”

Sadly, because the regulators till think of these primarily as monopoly voice markets, and long ago gave up hope the Bells will compete with each other, they don’t worry about the increased size of the national footprint as an indicator of market power in any of the relevant service markets. If anything, it’s regarded as a plus because under the logic of “convergence,” this makes AT&T a better video competitior to Comcast, TW and other incumbent cable companies, while doing no “damage” in voice markets.

The complexity of interelated markets, the nature of market power on “upstream” internet content and service providers, and question of what the mature market looks like aludes them.

Oddly, I am at a conference on municipal broadband right now. Soon, cities may be the only competitors. I hope they will realize that they need interconnection and net neutrality to make a real go of it. Or so I will try to persuade them tomorrow.

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Tales of the Sausage Factory

Sausage Factory: a partial index to date

Here’s a nearly complete list of Harold Feld’s “Tales of the Sausage Factory” articles here on Wetmachine. Real Soon Now I’m going to get organized and use the blog software to keep track of this stuff so I don’t have to manualy copy and paste to generate lists like this. . .

On the Nader copyright case

Justin/Janet part 2

Justin/Janet part 1

The ICANN Train Wreck

Unlicensed Spectrum Access

Why Disney/Comcast Merger Sucks Rocks

On RFID

CBS Caves Again for Bush

Yet more on Fileswapping

Fileswapping — whither to in ’04

ABA article:“More than a Toaster with Pictures”

On making the Wall Street Journal’s Shit List

Golden Globes, Former Presidents, Media Ownership”

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