May 2011

NHMC To Oppose AT&T’s Acquisition of T-Mobile

The National Hispanic Media Coalition will file a petition to deny AT&T’s acquisition of T-Mobile.

NHMC’s decision was reached after extensive research and consideration of how this deal will impact the Latino community. To its credit, AT&T’s record in the Latino community is commendable. AT&T has a distinguished history of outreach to and philanthropic support of the Latino community, as well as an excellent record of hiring and retaining Latinos at all levels of employment. On balance, however, NHMC has determined that AT&T’s positive corporate responsibility is outweighed by the negative long-term harms that this acquisition will have on consumers, generally, and people of color in particular. “As so many Americans are struggling financially, particularly Latinos, over 25% of whom are in poverty, NHMC will ask the FCC to ensure that its decision protects the most vulnerable consumers so that they are not disproportionately harmed by higher prices,” said Jessica J. González, NHMC’s Vice President of Policy & Legal Affairs. “The evidence, unfortunately, points to the sad reality that this acquisition will lead to higher mobile phone prices, fewer consumer choices, poor customer service, and layoffs.” Latinos pay more for mobile service than any other demographic group. Latinos, on average pay $102 a month on T-Mobile, compared to $120 a month on AT&T, $117 on Sprint and $115 on Verizon. 25% of T-Mobile customers are Latino, and many of them choose T-Mobile because of its affordability, flexibility and excellent customer service.

A Stand-Alone T-Mobile Isn't an Option for the Future. So What’s Best for Consumers and Workers?

[Commentary] A stand-alone T-Mobile is not an option for the future. German parent company Deutsche Telekom had announced that it was seeking a deal and had considered a speculative offer, Sprint and AT&T for the sale.

T-Mobile did not have the cash or spectrum to invest in a next-generation, 4G LTE wireless network. And without a 4G network, there could be no future for T-Mobile, its customers and employees. AT&T and T-Mobile use the same technology. Combining T-Mobile and AT&T spectrum turns two two-lane roads into a four lane superhighway. AT&T is willing to put up $8 billion in extra investment. And AT&T, a financially healthy company, will pay for the transaction in equity and internal cash flows. In contrast, a merged Sprint/T-Mobile is simply unable to use T-Mobile’s assets to best advantage of U.S. consumers. Sprint still has not integrated its 2005 Nextel purchase, and it uses a different wireless technology than T-Mobile. Sprint’s “BB minus” non-investment grade bond rating would have increased the cost of capital that Sprint would have had to borrow for the T-Mobile purchase and network investment.

So the question that regulators must consider as they weigh the AT&T/T-Mobile transaction is not “how can we preserve the current wireless market structure?” but “will the consumer benefits from this transaction outweigh any potential reduction in competition?” In other words, will the combined spectrum and financial efficiencies of AT&T/T-Mobile enable it to build out its wireless infrastructure to more places, more quickly than would have happened without the merger? And will sufficient competition and regulatory oversight promote innovation and protect consumers? The answer is yes.

[Kohl is Communications Workers of America senior director for legislation and policy.]

Boucher Backs AT&T/T-Mobile

AT&T gained an advocate for its proposed merger with T-Mobile this week when former Rep Rick Boucher (D-VA joined the Internet Innovation Alliance, an AT&T-backed advocacy group that is working to promote the combination.

Boucher, the former leader of the House telecom subcommittee and a seasoned expert in telecom policy, adds a substantive voice to AT&T's already deep bench of policy talent selling the deal in Washington. Boucher's argument for the merger centers on the overwhelming benefits of mobile broadband, which has the potential to bring benefits ranging from job growth to revolutionary upgrades to the healthcare and education systems. This merger is in the public interest because it will achieve that very high level of broadband penetration," Boucher said.

AT&T Wants to Give You an 80s Makeover

[Commentary] If you were around in the 80s, you might be experiencing a horrible flashback right about now because AT&T, that monopoly that once lorded over your rotary phone, has resurfaced with a scheme to rule your mobile phone as well.

If regulators allow AT&T's takeover of T-Mobile, we would be left with a wireless market that is far more consolidated than the markets for oil, banking, automobiles and air travel. What does that mean? To achieve comparable consolidation in the oil industry, ExxonMobil would have to merge with BP, Shell, Chevron-Texaco and Citgo. And to make the comparison even more acute, these oil giants would not only be merged as ExxonMobil, but you would be required to buy only ExxonMobil gas for the next two years, or pay a steep termination fee. It means that a service that is becoming as critical to Americans as affordable, reliable water and electricity will be under the thumb of two companies that place their narrow profit incentive above the interests of everyone else.

Senate Judiciary Approves PROTECT IP Act, But Sen Wyden Throws Up Roadblock

The Senate Judiciary Committee didn't waste any time passing the PROTECT IP Act in a markup May 26. The bill takes aim at rogue overseas web sites pirating content, including TV shows and movies.

The bill builds on last year's proposed COICA legislation, which would have given the government power to go to court and get a website's domain name blocked from American DNS servers. Credit card companies and advertising networks would be forbidden to do business with such sites. It is supported by the major studios, unions, broadcasters and cable operators, but fair use fans still have issues with what they say are overbroad powers that could send the wrong signal to foreign governments.

Sen. Ron Wyden (D-OR) said he is placing a hold on the bill: "I understand and agree with the goal of the legislation, to protect intellectual property and combat commerce in counterfeit goods, but I am not willing to muzzle speech and stifle innovation and economic growth to achieve this objective," Sen Wyden said, arguing the bill takes an "overreaching approach to policing the Internet when a more balanced and targeted approach would be more effective. The collateral damage of this approach is speech, innovation and the very integrity of the Internet."

Sherwin Siy, deputy legal director for Public Knowledge said: “We are disappointed that the Senate Judiciary Committee today approved legislation (S. 968) that will threaten the security and global functioning of the Internet, and opens the door to nuisance lawsuits while doing little if anything to curb the issues of international source of illegal downloads the bill seeks to address. We note that a paper on the technical aspects of the bill found that the provisions to allow Internet Service Providers to cut off access to web sites by failing to direct them via the Domain Name Service (DNS) would ‘undermine the universality of domain names,’ a fundamental building block of the Internet, would be only “minimally effective’ and would frustrate security initiatives online. The paper, by leading Internet engineers, said the bill would ‘promote development of techniques and software that circumvent use of the DNS. These actions would threaten the DNS’s ability to provide universal naming, a primary source of the Internet’s value as a single, unified global communications network.’”

Tribune bankruptcy Fees Top $150 Million

The Tribune Company has paid over $150 million in professional fees related to the newspaper publisher and television station operator’s Chapter 11 case. The lawyers, advisers and bankers working on the media giant’s case were paid $10.24 million in fees and expenses from March 28 to April 24, bringing Tribune’s total bill since its 2008 filing to $157.65 million.

Last month, Tribune’s primary attorneys, Sidley Austin LLP, were paid the most among the 30 firms working on the case that submit their bills to the company. Sidley received $6.1 million in fees and expenses last month, bringing its total paid for the case to $41.7 million. The company’s restructuring adviser, consulting firm Alvarez & Marsal, had the second-highest tab in April, $795,613, court records show. Alvarez has been paid $14.7 million since the case began. Chadbourne & Parke LLP, the law firm representing Tribune’s unsecured creditors committee, has accrued the second-largest bill throughout the course of the case, $27.9 million, but did not receive a payment last month. In addition to its own attorneys and advisers, Tribune pays the bills for committees and other professionals appointed by the court.

Cablevision Makes Its Case for Retransmission

In comments filed at the Federal Communications Commission, Cablevision laid out its three keys to retransmission consent reform:

Prevent the tying of TV station carriage with co-owned cable nets. It argues that the practice has raised consumer prices by bundling must-have programming with "limited interest" offerings.
Require broadcasters to publicize their price for TV station carriage.
Prevent "discrimination" in price based on the size of an operator or satellite provider.

It also wants the FCC prevent stations not jointly owned from jointly negotiation retrans, eliminate the syndicated exclusivity and network nonduplication rules -- the FCC proposed eliminating those rules in its Notice of Proposed Rulemaking; and not to increase viewer notification requirements, which it says would "encourage broadcaster brinkmanship, confuse consumers, cause MVPDs to be more vulnerable to unreasonable retransmission consent demands, and so result in higher rates for MVPD subscribers."

NAB on Retransmission: It Ain't Broke

In comments filed at the Federal Communications Commission, the National Association of Broadcasters warns the FCC against micromanaging retransmission consent negotiations and ticks off the things it thinks would be doing just that -- 1) prohibitions on joint negotiations; 2) government-mandate mediation; 3) define good faith bargaining in terms of fees, terms or conditions of deals; 4) scrapping the syndicated exclusivity and network no duplication rules; 5) adding violations of good faith bargaining to the factors considered at license renewal time.

Comcast, NBCUniversal units form $750 million fund

Comcast's venture-capital arm has completed its merger with NBCUniversal's Peacock Fund to form a new $750 million fund, underscoring the importance media companies place on finding up-and-coming technologies to drive their core businesses. Comcast Interactive Media President Amy Banse will head the combined entity, Comcast Ventures, which will focus on digital media, e-commerce and entertainment. The fund's portfolio represents $500 million from Comcast and $250 million from Peacock.

Zuckerberg in Paris

Facebook founder and Chief Executive Officer Mark Zuckerberg said music, television shows and books will be among the next products to become “social” through the website, the world’s largest social network. These “media experiences” probably will follow the path of computer games, which have been transformed by the Facebook platform, Zuckerberg said at the EG8 technology forum in Paris. Netflix has also been talking with Facebook about ways to integrate social-networking tools, he said. “Listening to music is something people do with their friends,” he said. “Movies, TV, news, books -- those types of things are things I think people just naturally do with their friends. I hope we can play a part in enabling those new companies to get built, and companies that are out there producing this great content to become more social.”

“Our business is advertising,” said Mark Zuckerberg who, although he was the penultimate speaker at the eG8 conference in a stultifying hot hall, managed to fill the room. “Mine too,” said his interlocutor, Maurice Levy, the head of Publicis, who had organized the conference at the behest of President Sarkozy, and who saved the most famous interviewee for himself. And yet they probably did not mean the same thing about which business they were in. Curiously, there has not been much talk of advertising at the conference, even with Publicis leading the discussion, and even here, the elegant, gray-haired Levy did not seem to want to sully his conversation with the sneaker and T-shirt Zuckerberg (sweat circling under his arms) drinking his Gatorade.

Benton

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