As Tom Wheeler enters his last few months as head of the Federal Communications Commission during the Obama Administration — the next President is expected to name a new chairman — he has turned early supporters into foes and invited an expensive lobbying battle that may stymie a last-ditch pursuit of regulations that starts on Oct 27, including voting on a proposal for broadband privacy protections.
Wheeler’s last act as chairman could be overseeing the review of AT&T’s $85 billion bid for Time Warner, a mega-media deal that has already elicited protests from some politicians and consumer advocacy groups. AT&T and Time Warner will most likely try to avoid an FCC review by selling off the small number of broadcast television assets owned by Time Warner. Yet some say that even if Chairman Wheeler does not directly review the deal, his regulations have created new restrictions for AT&T and other broadband companies at a time when they are trying to find new growth beyond their internet businesses.
AT&T, in addition to its billions of dollars of capital, has another arsenal at its disposal: one of the most formidable lobbying operations in Washington. The company’s list of nearly 100 registered lobbyists already on retainer in 2016 includes former members of Congress. AT&T is the biggest donor to federal lawmakers and their causes among cable and cellular telecommunications firms, with its employees and political action committee sending money to 374 of the House’s 435 members and 85 of the Senate’s 100 members this election cycle. That adds up to more than $11.3 million in donations since 2015, four times as much as Verizon Communications, according to a tally by the Center for Responsive Politics, a nonprofit research group. AT&T has also spent decades building a national alliance of local government officials and nonprofit groups — particularly from black and Hispanic communities — that it will certainly be asking to weigh in again in Washington, as it tries to get the merger approved.
“We have seen our fair share of deals,” said AT&T’s general counsel, David R. McAtee II. “Our job is informing consumers what a good development this is for them.” But navigating this transaction will be a test of just how much influence AT&T has in Washington these days. That is particularly the case as AT&T’s lobbying team undergoes a transition after losing its longtime leader, James W. Cicconi, a former aide to President George H. W. Bush.
A cable and internet provider decides to buy an entertainment conglomerate. The merger is met with skepticism by industry analysts and outrage by consumer groups, who complain that it would thwart competition, create unfair pricing and incite more media consolidation. That was 2009, when the cable giant Comcast announced it would acquire NBC Universal. When the next administration in Washington takes up the $85.4 billion deal between AT&T and Time Warner, the Comcast acquisition will be used as the lens to examine the changing media landscape.
In the end, the Justice Department and the Federal Communications Commission approved the acquisition of NBCUniversal, requiring some small management concessions but few divestitures. But AT&T and Time Warner will probably face a much sterner test. With a huge wireless business, too, the combination would be a new kind of media juggernaut. Donald Trump has already condemned the deal. Campaigning in Gettysburg, he Trump said he would block it if he were president, “because it’s too much concentration of power in the hands of too few.” Hillary Clinton, meanwhile, has promised to be tough on corporate megapowers and consolidation. Regardless of who wins next month, the AT&T acquisition of Time Warner will be among the biggest and most important regulatory cases to await the next administration. The merger would make AT&T unmatched in its size and reach to consumers through smartphones, home broadband, satellite television and a broad portfolio of cable channels and movies. For that reason, it may raise more cautionary flags than Comcast’s merger with NBCUniversal, which did not involve a wireless carrier.
There is an axiom in technology: New products typically go to wealthy customers first, before prices eventually fall to reach the masses. With broadband now classified as a utility, telecommunication and tech companies including Sprint, Comcast and Facebook are increasingly working to make high-speed Internet accessible to every American, not just a luxury. The companies are among those that have set their sights on bringing free or cheap high-speed Internet service to low-income and rural populations in the United States, spurred by philanthropy and, for some, the hope of turning Americans who are not online today into full-paying customers in the future.
Those goals were on display, when Sprint announced that it plans to give one million low-income high school students a free device and a free high-speed data plan until graduation. Facebook is also working to bring to the United States a service known as Free Basics, which gives people free access to certain websites, including Facebook. Comcast recently loosened requirements for its low-cost broadband service, expanding it to anyone in public housing. These moves go toward closing what has been an intractable divide between broadband haves and have-nots. Low-income broadband programs have been vital to closing the digital divide, where half of all low-income Americans lack broadband, said Mignon Clyburn, a commissioner at the Federal Communications Commission. “Lowering the price for service has been instrumental in bringing millions online,” Commissioner Clyburn said.
When the Federal Communications Commission announced a plan that would free people from having to rent cable set-top boxes, the cable and television industries balked and lobbied hard to forestall the proposal. But it turns out the biggest threat to the plan, which the FCC is expected to vote on Sept 29, is a low-profile Democratic commissioner within the agency itself.
Jessica Rosenworcel, a career telecom wonk whom President Obama appointed to the FCC in 2012, has become the crucial swing vote on the cable box proposal. She is one of three Democrats of the agency’s five rule-making members, which would normally be enough to carry a vote since commissioners typically act in line with their parties. But Commissioner Rosenworcel has not fully embraced the cable box proposal like her two Democratic colleagues and instead has indicated her unease with the plan. Rosenworcel’s concerns hinge on what she views as what may be too much meddling by the FCC in the private agreements between cable providers and device makers. However, consumer groups say the FCC needs to play an oversight role in those licensing deals to ensure fairness. Commissioner Rosenworcel believes that the market for costly set-top boxes required reform. But she said the cable box proposal needed to be revised to comply with copyright and licensing laws that would not give the FCC outsize power.
Senator Ted Cruz (R-TX), who once led a government shutdown in his efforts to defund President Obama’s health care law, has turned his sights on a more obscure target: the federal government’s plan to end its oversight of the internet’s master directory of website addresses.
Sen Cruz does not appear to have the ability to inspire another insurgency so close to an election that will determine control of the Senate. He may not have the interest either. His technical theories about the registration of domain names — the “.net” and “.world” suffixes of internet addresses — have been discredited by engineers. But his move to block the Obama administration through a short-term spending bill needed to keep the government open past Sept. 30 demonstrates that the former Republican presidential candidate remains eager to keep his name in lights, even at the expense of his colleagues’ efforts to get back to the campaign trail.
The United States Court of Appeals for the Sixth Circuit upheld restrictive laws in North Carolina and Tennessee that will halt the growth of municipal broadband networks. While the decision directly affects only those two states, it has cast a shadow over dozens of city-run broadband projects started nationwide in recent years to help solve the digital divide.
In siding with the states, the court hobbled the boldest effort by federal officials to support municipal broadband networks. While the court agreed that municipal networks were valuable, it disagreed with the Federal Communications Commission’s legal arguments to pre-empt state laws. Now, cities like Wilson (NC) fear they have little protection from laws like those in about 20 states that curb municipal broadband efforts and favor traditional cable and telecom firms. City officials say cable and telecom companies that have lobbied for state restrictions will be encouraged to fight for even more draconian laws, potentially squashing competition that could lead to lower prices and better speeds to access the web. “This is about more than North Carolina and Tennessee,” said Deb Socia, executive director of Next Century Cities, a nonprofit coalition of cities exploring broadband projects. “We had all looked to the FCC and its attempt to pre-empt those state laws as a way to get affordable and higher-quality broadband to places across the nation that are fighting to serve residents and solve the digital divide.”
A look at a trend unfolding in hard-to-reach rural spots nationwide. For years, such communities have largely been left out of the digital revolution because they had only intermittent internet access, often through a patchwork of satellite, dial-up or wireless service. Telecom and cable companies shunned the areas because it was too expensive to bring equipment and service over long distances to so few people. Now high-speed internet is finally reaching these remote places, but not through the telecom and cable companies that have wired most of urban America. Instead, local power companies are more often the broadband suppliers — and to bring the service, they are borrowing techniques and infrastructure used to electrify the United States nearly a century ago. In some cases, rural municipalities are also using electrification laws from the early 1900s to obtain funds and regulatory permissions reserved for utilities, in order to offer broadband.
Federal regulators announced it has filed a lawsuit against Amazon.com for allegedly making it too easy for children to make purchases when using mobile apps without a parent's permission.
The Federal Trade Commission said Amazon charged parents millions of dollars of unauthorized payments for what's known as "in-app purchases," typically make-believe items popularly offered within mobile games such as Candy Crush Saga that enhance a game or allow a user to advance levels.
The FTC said in its suit that it seeks a court order for the company to refund families affected by the unauthorized charges that began in 2011. It also wants the court to permanently ban Amazon from charging parents for in-app purchases without their consent. Amazon, whose chief executive Jeffrey Bezos owns The Washington Post, did not immediately respond to a request for comment.
The FTC alleges that beginning in November 2011, Amazon violated the FTC Act by billing parents for charges incurred by their children without permission. Amazon's Kindle Fire tablet was used by children to play games and spend "unlimited amounts of money" to pay for virtual items within the apps such as “coins,” “stars,” and “acorns” without parental involvement, the agency wrote. The FTC said that at first, no password requirements were put in place to stop children from making the purchases.
The massive cable and telecom mergers under review may just be the start of a broader wave of consolidation to hit the entertainment industry.
Rumors are rife that Time Warner is negotiating with Vice Media, the magazine-turned-media company now known for producing edgy documentaries that air on HBO. Viacom could rejoin CBS, which it split from nearly a decade ago. Univision may be seeking a buyer and has been in talks with Time Warner and CBS, according to the Wall Street Journal.
Some lawmakers and analysts say it's inevitable that television programmers will bulk up to stand up against demands from increasingly powerful cable and telecom distributors like Comcast who want to lower their costs for programming.