The mechanics of how Washington works

The DOJ’s Case Against AT&T Is Stronger Than You Think — Again.

I want to start by applauding Randal Stephenson for coming out quickly and denying the rumors that DoJ asked them to sell CNN as the price of getting the merger done. At the same time, however, he acknowledged that negotiations were “complicated,” and that he and recently confirmed Asst A.G. for Antitrust Makan Delrahim were still “getting to know each other” and “figure out the ask on the other side of the table.” He also made it clear that, if DoJ does challenge, AT&T is prepared to go to court and are confident they will win.

 

AT&T is generally pretty good at persuading everyone that DoJ doesn’t really have a case against them. As folks may recall, despite the fact that the proposed AT&T/T-Mo transaction violated just about every basic tenant of existing antitrust law, AT&T managed to convince everyone for the longest time that DoJ was just playing hardball with them and didn’t really mean it because DoJ didn’t really have a case. While Stephenson refused to discuss what was negotiated, the rumors suggest it was a demand to divest either DIRECTV or the Turner Broadcasting cable channels (which include CNN, as well as TNT, HBO and a bunch of other real popular programming.) Once again, you have antitrust experts who do not have any particular experience with cable mergers shaking their heads and predicting that DoJ has no case.

 

In  fact, demanding divestiture of either the must have content or the DIRECTV distribution platform is precisely the remedy you would expect if you believe the deal presents significant harm because of the vertical integration issues. That’s been the position of my employer, Public Knowledge, which has opposed the transaction since AT&T announced the deal. (That predates Trump’s election, for those of you wondering.) If you want a more detailed understanding of the theory of the harms, you can find it in my boss Gene Kimmelman’s testimony to Congress here. While generally true that vertical deals are hard to challenge, the cable industry has long been something of an exception, and the remedy here is similar to what the FTC imposed on the AT&T/Turner deal in 1996, where the FTC imposed stock divestitures and restructuring to eliminate the voting interest of John Malone and Liberty Media because of Malone/Liberty’s ownership TCI, which was then the largest cable operator in the United States (25% national market share). Given the massive criticism of “behavioral” remedies and a call to return to “structural” remedies from the right and the left, it’s unsurprising that DoJ would want actual divestiture rather than go the Comcast/NBCU consent decree route.

 

But as Stephenson noted, negotiations have only just begun in earnest, so we may end up with behavioral remedies after all. We’ll see.

 

I dig into details below . . . .

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My Insanely Long Field Guide To Common Carriage, Public Utility, Public Forum — And Why The Differences Matter.

Once upon a time, social conservatives used to be major allies on both limiting media consolidation and on net neutrality. Why? Because they recognized that if you had a handful of corporate gatekeepers controlling access to the marketplace of ideas, they could easily get shut out. Market forces being market forces, companies pressured to censor unpopular or controversial speech and views will do so. Add to that the belief on the part of conservatives that they face ideological bias from the “mainstream media” or “Silicon Valley,” and you had many conservatives back in the day who stood shoulder to shoulder with us back when I was at Media Access Project to oppose Powell’s efforts to relax media ownership rules in 2003 and who opposed Congress’ first attempt to gut net neutrality — the COPE Act — in 2006.

 

Then came the 2008 election and the Tea Party blowback of 2009-10. Net neutrality became a red team/blue team issue and even social conservatives who had previously supported net neutrality went silent on the issue.

 

Ironically, now that Republicans dominate all branches of government, conservatives are once again discovering the value of common carriage and government prohibition on any sort of interference with conduits of speech — at least with regard to social media platforms like Facebook, Youtube and Twitter. Why? As conservatives have once again discovered, if companies retain the right to exert editorial control based on content, they will get pressured by the market and government to use that editorial discretion to censor “harmful” speech. That, and the perception that Silicon Valley has a distinct liberal bias, have prompted some in the conservative movement to rediscover the idea that common carrier regulations actually protect and promote free speech and are not a regulation of speech. Because without access to the public square — whether the real life public square or its digital equivalent — your freedom of speech is simply a freedom to whisper to yourself.

 

I am happy to agree that the time has come to consider whether social media platforms — and other essential elements of communications such as operating systems, DNS registration, or content hosting — should have non-discrimination obligations consistent with our traditional concepts of common carriage. I believe this would also have the salutary effect of protecting companies from liability or social pressure by taking away their discretion. After all, we don’t see anyone demanding that the major mobile providers stop providing cell phones to white supremacists or that broadband providers block subscribers from accessing websites like Daily Stormer. The public accepts that these companies have no choice, because they are common carriers and must serve everyone equally as a matter of law. By contrast, we have seen successful campaigns to pressure DNS registrars to refuse to host the Daily Stormer domain name, Cloudflare, which itself decided to stop servicing Daily Stormer after Daily Stormer claimed that Cloudflare’s decision not to suspend service constituted an endorsement, posted this excellent blog post on why their actions should make people very uncomfortable.

 

So this should be a great time to reforge the Left/Right alliance on media diversity and government regulation to prevent private censorship, right? I hope so. Unfortunately, this very important conversation keeps getting muddled for two reasons.

 

1) People keep confusing the concept of “common carriage” with the concept of “public utility.” The differences actually matter a lot, despite 15 years of anti-net neutrality advocates muddling the two.

2) The most active proponents of using government regulation to prevent private censorship on the conservative side are pretty much treating common carrier regulation as a form of revenge porn rather than as a serious public policy debate. “Oh, you don’t want me? You want to break up with me? Well I’ll show you! I’ll make it so you have to carry me!” Indeed, since 2006, when Google (to my considerable annoyance) became the poster child for net neutrality for opponents and a trade press obsessed with treating every policy debate as an industry food fight, the debate about common carrier obligations or non-discrimination obligations or even privacy has always triggered a “but what about edge providers? Waaaaahhhhh!! Regulate them! Regulate them!”

 

Now I should make it very clear that I can find plenty of progressives who have conceived passionate hatreds for “Silicon Valley” platforms for various reasons, and who also get confused on the concept of “public utility.” Additionally, I can find at least some conservative free market types who understand why we need to regulate things like Internet access differently than hosting services or social media. But it’s conservatives lusting to regulate “Silicon Valley” that have been getting the headlines, and are driving the discussion among Republicans in Congress. Plus I’m getting tired of being asked the same stupid questions by the same folks on Twitter. So I’ll call out the conservatives howling for Silicon Valley blood by name.

 

Anyway, because whether and how to regulate various parts of the Internet supply chain (or, if you prefer, ecosystem), I will try to explain below why common carriage obligations, such as network neutrality, are different from public utility regulation (even though most utility providers are common carriers), which is different from natural monopoly regulated rate of return/tariffing/price regulation. I will briefly explore some of the arguments in favor of applying some sort of public forum doctrine or common carrier obligation to social media platforms, and — because this invariably comes up in telecom space — why platform or other infrastructure providers are not and should not be covered by Title II or the FCC, even if we agree they should have some sort of public forum or even public utility obligations.

 

More below . . .

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Why We Need Title II And Strong Net Neutrality Rules; Or, Fool Me Twice, Shame On Me. Fool Me Every Time — I’m the FCC!

As we slog away once again on Federal Communication Commission (FCC) Chairman Ajit Pai’s summer blockbuster reboot “Net Neutrality: The Mummy Returns!,” it’s worth noting in passing the anniversary a previous Pai celebration of industry self-regulation, #DitchTheBox. I bring this up not merely as a fairly bitter bit of Cassandrafreude, but to remind everyone why only those who most desperately want to believe ever put any faith in “industry self-regulation” — especially when that industry is the cable industry.

 

The cable operators, along with the telcos and other broadband access providers, all claim to loooove the basic idea of net neutrality and a “free and open Internet.” Mind you, we still have the occasional True Believer trying to tell us how good for us it would be if ISPs could “innovate” in exciting pricing plans like “screwing with your video streaming to charge you extra” or “blocking/degrading your efforts to access peer-to-peer applications without telling you.” But as an industry, the major broadband providers have recognized that they need some kind of fig leaf concession (preferably cemented into law by a compliant Congress). And so we have seen the cable companies falling all over themselves to swear their undying support for net neutrality and promises to do nothing to harm the open Internet.

 

So a brief review of the history of cable industry self-regulatory promises, and Chairman Pai’s willingness to believe them, seems in order for the day.

 

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Will Pai “Pull A Putin” And Hack the FCC Process? Or Will He Get Over Himself and Start Acting Like The Chairman?

In my 20+ years of doing telecom policy, I have never seen a Chairman so badly botch a proceeding as Chairman Ajit Pai has managed to do with his efforts to repeal Net Neutrality. For all the fun that I am sure Pai is having (and believe me, I understand the fun of getting all snarky on policy), Pai’s failure to protect the integrity of the process runs the serious risk of undermining public confidence in the Federal Communications Commission’s basic processes, and by extension contributing to the general “hacking of our democracy” by undermining faith in our most basic institutions of self-governance.

 

Yeah, I know, that sounds over the top. I wish I didn’t have to write that. I also wish we didn’t have a President who calls press critical of him “the enemy of the American people,” triggering massive harassment of reporters by his followers. What both Trump and Pai seem to fail to understand is that when you are in charge, what you say and do matters much more than what you said and did before you were in charge. You either grow up and step into the challenge or you end up doing serious harm not only to your own agenda, but to the institution as a whole. Worse, in a time when the President and his team actually welcomed Russia’s “hacking” of our election, and remain under suspicion for coordinating with Russia for support, Pai’s conduct creates concern and distrust that he will also “pull a Putin” by welcoming (or worse, collaborating with) efforts to de-legitimize the FCC’s public comment system and hack the public debate around net neutrality generally.

 

Fortunately, as I told former Democratic FCC Commissioner Julius Genachowski when he was in danger of making the FCC’s process a laughingstock in the public eye, Pai can still recover and rescue himself and the FCC from his self-destructive conduct. Instead of calling his critics enemies of capitalism and free speech, instead of obsessing about his own hurt feelings while displaying a troubling indifference to identity stealing bots filing comments that support his own proposal and failing to follow up on his own claims that the FCC comment system suffered a critical cyber-attack – Pai needs to follow in the footsteps of Michael Powell, Kevin Martin and Tom Wheeler when they faced similar insults (and in Powell’s case, racial slurs). Welcome robust public debate and criticism, condemn the actually illegal hacking used by his supporters, and stop whining about his own hurt feelings. Michael Powell managed to take being called a War Criminal and son of a war criminal for supposedly allowing the press to sell us on the Iraq War, as well as the same kind of racist bullshit that Pai or any other prominent person of color sadly has to endure in an America where racists feel increasingly emboldened. Pai can chose to step up in the same way his Republican and Democratic predecessors did, or continue to contribute to the overall erosion of trust in our institutions of self-governance generally and his handling of the FCC specifically.

 

I unpack all this below . . .

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Trump Keeps Us All Guessing On Telecom.

Usually in January, especially with a new Congress of new term, I like to try to do a “this year in telecom” preview. Hell, who doesn’t? (I mean, who in Telecom Policyland doesn’t. The answer for normal people is: “no one.”) But this year I can’t.

 

Oh, I can list all the issues we’ve been arguing over the last few years and guarantee we’re going to re-litigate them. We’ve already seen most of the ISP industry (joined by the Ad industry) push back on the privacy rules adopted last October.  We’ve seen a bunch of the industry submit their wish list for deregulation as part of the bienniel telecom regulatory review. And with Rep. Marsha Blackburn (R-TN) now Chair of the Telecom Subcommittee, we can expect lots of action on the Hill side on everything from FCC process reform to Telecom Act re-write. But the Trump Administration itself — its priorities, its possible pick for FCC Chair, and its general direction on telecom policy — remain as much a mystery as when I wrote about it last month.

 

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Is Net Neutrality (And Everything Else) Not Dead Yet or Pining For the Fjords? Contemplating Trump’s Telecom Policy.

The election of Donald Trump has prompted great speculation over the direction of telecom policy in the near future. Not surprisingly, everyone assumes that the primary Republican goal will be to completely roll back net neutrality and just about every other rule or policy adopted by the Wheeler FCC — perhaps even eliminating the FCC altogether or scaling back it’s authority to virtual non-existence. Why not? In addition to controlling the White House, Republicans have majorities in the Senate and the House.  Jeff Eisenach, the head of Trump’s FCC transition team (now called “Landing Teams”), has been one of the harshest critics of the FCC under both Wheeler and Genachowski. So it is unsurprising to see a spate of articles and blog posts on the upcoming death of net neutrality, broadband privacy, and unlicensed spectrum.

 

As it happens, I have now been through two transitions where the party with the White House has controlled Congress. In neither case have things worked out as expected. Oh, I’m not going to pretend that everything will be hunky-dory in the land of telecom (at least not from my perspective). But having won things during the Bush years (expanding unlicensed spectrum, for example), and lost things in the Obama years (net neutrality 2010), I am not prepared to lay down and die, either.

 

Telecom policy — and particularly net neutrality, Title II and privacy — now exists in an unusual, quantum state that can best be defined with reference to Monty Python. On the one hand, I will assert that net neutrality is not dead yet. On the other hand, it may be that I am simply fooling myself that net neutrality is simply pining for the fjords when, in fact, it is deceased, passed on, has run up the curtain and joined the choir invisible.

 

I give my reasons for coming down on the “not dead yet” side — although we will need to work our butts off to keep from getting clopped on the head and thrown into the dead cart. I expect the usual folks will call me delusional. However, as I have said a great deal over the years: “If I am delusional, I find it a very functional delusion.”

 

More below . . . .

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Can Obama Stop The Stalling On Clinton Appointees. Or: “It’s Raining Progressives, Hallelujah!”

As we end 2016, we have an unusually large number of vacancies in both the executive branch and the judiciary.  As anyone not living under a rock knows, that’s no accident. Getting Obama appointments approved by the Senate was always a hard slog, and became virtually impossible after the Republicans took over the Senate in 2015.  This doesn’t merely impact the waning days of the Obama Administration. If Clinton wins the White House, it means that the Administration will start with a large number of important holes. Even if the Democrats also retake the Senate, it will take months to bring the Executive branch up to functioning, never mind the judiciary. If Clinton wins and Republicans keep the Senate, we are looking at continuing gridlock and dysfunction until at least 2018 and possibly beyond.

 

In my own little neck of the policy woods, this plays out over the confirmation of Federal Communications Commissioner Jessica Rosenworcel (D). Rosenworcel’s term expired in 2015. Under 47 U.S.C. 154(c), Rosenworcel can serve until the end of this session of Congress. That ends no later than Noon, January 3, 2017, according to the 20th Amendment (whether it ends before that, when Congress adjourns its legislative session but remains in pro forma session is something we’ll debate later). Assuming Rosenworcel does not get a reconfirmation vote (although I remind everyone that Commissioner Jonathan Adelstein was in a similar situation in 2004 and he got confirmed in a lame duck session), that would drop the Commission down to 2-2 until such time as the President (whoever he or she will be) manages to get a replacement nominated and confirmed by the Senate. Given the current Commission, this would make it extremely difficult to get anything done — potentially for months following the election. It would also force Chairman Tom Wheeler to remain on the Commission (whether he wants to or not) for some time.

 

From the Republican perspective, however, this has advantages. If Clinton wins, it means that the FCC is stuck in neutral for weeks, possibly months. Since Republicans generally do not like Wheeler’s policies, that’s just fine. By contrast, if Trump wins, Republicans will have an immediate majority if Wheeler follows the usual custom and steps down at Noon January 20. So even though Republicans promised to confirm Rosenworcel back in 2014 when the Ds allowed Commissioner Mike O’Reilly (R) to get his reconfirmation vote, they have plenty of reasons to break their promise and hold Rosenworcel up anyway. Not that Senate Republicans have anything against Rosenworcel, mind you. It’s just (dysfunctional) business.

 

Again, it’s important to remind everyone who obsesses about communications that this is not unique to Rosenworcel. From Merrick Garland (remember him?) on down, we have tons of vacancies just sitting there without even the virtue of a bad excuse beyond “well, we’d rather the government not function if someone on the other side is running it.” While I keep hoping this will change, I don’t expect either political party to have a change of heart around this following the next election.

 

Fortunately, I have a plan so cunning you can stick a tail on it and call it a weasel.  On the plus side, if I can get the President to go along with it, it will not only keep things working between January 3, Noon, and January 20, Noon. It will also give the Republicans incredible incentive to move Clinton’s nominations as quickly as possible. On the downside, it’s not entirely clear this is Constitutional. I think it is, based on the scanty available case law (mostly Nat’l Labor Relations Bd v. Canning). But, as with test cases generally, I can’t guarantee it. Still, like the idea of preventing a U.S. default on its debt with a trillion dollar platinum coin, it can’t hurt to think about it.

 

For the details of what I call “Operation Midnight At Noon” (throwback to the Midnight Judges), see below . . .

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Farewell To AT&T’s Jim Cicconi.

It may seem odd for me to say, and meaning no offense to his replacement Bob Quinn, but I am sorry to see Jim Cicconi retire from AT&T at the end of this month. For those who don’t play in this pond, Cicconi has been AT&T’s Lobbyist in Chief here in D.C. since 2005. It may therefore seem odd that I am sorry to see him go, particularly since Cicconi was so damned good at his job. But, as I have said many times before, I’m not here because companies are evil, nor do I believe the people working for them necessarily delight in crushing consumers, strangling puppies and tossing destitute widows and orphans on the street in rags in the dead of winter. (At least not in telecom, the copyright folks, on the other hand, were ready to screw over the blind a few years back just for giggles. But I digress . . .).

 

 

More below . . .

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Update on Muni Broadband Decision. The Fate of Pinetop, N.C.

Last week, I wrote about the 6th Circuit’s decision in the muni broadband caseTN v. FCC. I mentioned in passing that the opinion pretty much keeps the status quo. Then I found from a reader about Pinetop, N.C.

 

As reported here and here, Greenlight, the muni provider of Wilson, N.C., took advantage of the FCC’s 2015 Order and began offering gigabit broadband in Pinetop, population 1400. Pinetop lies in Edgecomb County, next door to Wilson County. Under the 2010 N.C. anti-muni law, Greenlight could serve anyone in Wilson County but not go outside Wilson County to neighboring Edgecomb  County. But Wilson decided to take a shot and honor Pintetop’s request to provide service (Greenlight already provides electric service in Pinetop as a muni electric provider, so it wasn’t much of a leap).

 

The legal situation on this is now somewhat complicated. The 6th Cir. had not stayed the FCC’s preemption order in 2015, so it was totally legal for Greenlight to offer service. What is unclear now is how to read NC law now that it is “un-preempted” by the Sixth Circuit overturning the FCC. I admit I have no idea how to even begin to answer this question.

 

But it’s not an abstract legal question. The availability of broadband in Pinetop matters a great deal to the people of Pinetop.

 

Stay tuned . . . .

Also posted in Cable, How Democracy Works, Or Doesn't, Series of Tubes, Tales of the Sausage Factory | 1 Comment (Comments closed)

FCC Loses It’s Muni Broadband Test Case. What Comes Next?

Sometimes the law is clear. Sometimes it isn’t.

 

While that seems obvious, we often miss it in policy debates. But it is rather important to keep in mind when reading Tennessee v. FCCIn a case released August 10, the Sixth Circuit reversed the Federal Communications Commission (FCC) 2015 Order preempting restrictions the state of Tennessee and the state of North Carolina imposed on their municipalities with regard to providing broadband service. While Commissioners Pai and O’Reilly are certainly entitled to their victory laps, it is equally important to applaud Chairman Wheeler and Commissioners Rosenworcel and Clyburn for doing what they believed was both the right policy and the right call under the law. The petitions from the City of Wilson, NC and from the Electric Power Board of Chattanooga, TN raised novel questions of law. The FCC’s Order was a test case. On a very narrow and murky legal question, the FCC majority bet wrong — at least according to the 6th Circuit.

 

For myself, not surprisingly, I thought the FCC majority had the better argument. But I can’t say the Sixth Circuit was utterly wrong in holding the contrary. The limits of the Tenth Amendment and preemption power are generally unclear. The interpretation of Section 706 (47 U.S.C. 1302) as providing authority to the FCC remains relatively undefined. Based on the language in the dissent in Verizon v. FCC, which inspired munibroadband proponents to bring the petition and support the case, it looked like a good shot. Similarly, the facts of the case — already existing munibroadband providers, clear demand for them to expand their services, a willingness to expand service but for the relevant state laws restricting service — made this a favorable fact pattern.

 

Unfortunately, sometimes the best bet in the world doesn’t pay off. But that is why people bring test cases — to try to resolve questions in the law that move policy in the direction those bringing the case favor. It is neither an overreach nor illegal for Petitioners to bring test cases, to have an agency resolve them, and for the agency and those who brought the petition to the agency to defend them in court. To the contrary, this is how the rule of law works under the principles of the common law.

 

I stress this point because whether you bring conservative test cases to challenge laws and test limits or progressive cases to challenge laws and test limits — or cases that don’t easily fit in the conservative/progressive paradigm — we want agencies to actually address these cases in a timely fashion. As I remarked many years ago, when the FCC’s efforts to encourage competition in the 700 MHz auction resulted in a mixed result, we need  agencies to be willing to actually address novel circumstances and try new things because otherwise the law will ossify and we lose one of the most important elements of administrative law, the ability of an agency to respond to changing circumstances and provide a suitable record for Congressional action where necessary.

 

Bellow, I give a brief recap of the case and a forecast on what comes next for the muni broadband movement . . .

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