Daily Digest 6/13/2018 (AT&T Defeats Department of Justice)

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Oversight of the National Telecommunications and Information Administration


AT&T’s Time Warner Takeover Wins Judge’s Approval in Defeat for Justice Dept

A federal judge approved -- without conditions -- the blockbuster merger between AT&T and Time Warner, rebuffing the government’s effort to block the $85.4 billion deal, in a decision that is expected to unleash a wave of takeovers in corporate America. Judge Richard J. Leon of the United States District Court in Washington said the Justice Department had not proved that the telecommunication company’s acquisition of Time Warner would lead to fewer choices for consumers and higher prices for television and internet services. Judge Leon took the unusual step of warning the government not to try to seek a stay, saying it would hurt the defendants, which had already gone through an 18-month regulatory and legal battle for their review. The companies face a June 21 deadline to close their deal. The ruling is a major setback for the Justice Department and its antitrust chief, Makan Delrahim, whose decision to sue to block the deal broke with convention. Deals such as this one, in which the two companies are in related industries but do not produce competing products, are usually approved by federal regulators. Delrahim had insisted that the two companies sell some major parts before getting government approval, a demand that the executives rejected. That led to the Justice Department’s lawsuit, filed in November. Judge Leon’s opinion may also increase the chances that other deals already reached, like CVS’s bid for Aetna and T-Mobile’s proposed merger with Sprint, will survive regulatory scrutiny.

AT&T-Time Warner Judge Fires Starting Gun in the Battle Against Tech

As long as the big tech is the enemy, companies are pretty much free to buy, sell and trade assets to keep from falling behind. Judge Richard Leon said as much when he approved when he approved AT&T's acquisition of Time warner. He isn’t wrong that Silicon Valley giants pose real threats to media companies. For consumers, that may mean higher prices for services they buy from AT&T and Time Warner now, all in the name of competition. For investors, this means a wave of deals in which companies will invoke threats from tech giants as excuses to spend billions ostensibly to fight back. 

Aiming at AT&T and Time Warner, President Trump shot from the hip and missed

President Donald Trump knew right away how he felt about AT&T’s proposed $85 billion acquisition of Time Warner. He hated it. “It’s too much concentration of power in the hands of too few,” Trump said on the day the deal was struck in October 2016, adding that, if he were elected, his administration would block the purchase. Judge Richard Leon considered the matter for several months and in a lengthy opinion June 12 ruled that President Trump’s take, shot from the hip, was off the mark. The merger of media giants can move forward, despite legal objections by the Justice Department. It is hard to imagine that Attorney General Jeff Sessions, left to his own devices, would have brought such an unusual case that eschewed Republican business principles. President Trump made a snap judgment, as a candidate, and when the Justice Department followed through on his wishes, the result was a major loss.

AT&T Has Had Many Run-Ins With the Government

AT&T, one of the world’s largest telecommunications companies, figures prominently in the annals of antitrust law. Since the late 19th century, under various names and configurations, the entity once known as Ma Bell has often been targeted by regulators trying to rein in its size and keep it from amassing monopoly power.  On the afternoon of June 12, a federal judge is expected to issue a ruling in AT&T’s latest battle with the Justice Department, which is attempting to block the company’s $85.4 billion takeover of Time Warner. The current courtroom battle is a reminder of the complicated balancing act the government must strike in regulating ever-changing companies. “AT&T has been a dominant company from the very beginning and has sought to maintain its dominance through varying government interactions,” said Gerald Brock, a former Federal Communications Commission staff member who is a professor of public policy at George Washington University. “That’s been the sense of AT&T through the ages — that they seem to have a lot of power, but people also want to be able to communicate in a way that AT&T allows them to do.”

Stand By Me: The Consumer Welfare Standard and the First Amendment

[Speech] In America we want institutions that make our democracy strong—that seems like a no brainer. So as one line of thinking goes, antitrust enforcers should step beyond consumer welfare and think about what would be good or bad for our democracy, or for values like the free speech the First Amendment protects. The suggestion is that perhaps enforcers should broaden the consumer welfare lens to think about effects on democracy or expression. I’d like to focus my remarks today on two responses to that suggestion. First, we shouldn’t go down that road, because enforcement actions purportedly aimed at supporting our democracy carry too great a risk of inadvertently undermining our constitutional values. Second, we don’t need to go beyond the consumer welfare standard, because it can get the job done on its own.  As you consider the health of our democracy and the role of media platforms and other institutions in it, I urge you to recall the surest path to undermining the First Amendment: exercising government power based on viewpoint. The consumer welfare standard does not blind us as enforcers; it focuses our decisions on appropriate considerations like price, output, innovation, quality, and choice. Enforcement of the free markets for the benefit of consumers can be achieved with greater success, and greater fidelity to the rule of law, within the contours of the consumer welfare standard, than without.  

[Makan Delrahim is the United States Assistant Attorney General for the Antitrust Division]

The Trump appointee making Silicon Valley sweat

Makan Delrahim, who heads the Justice Department’s antitrust division, has spent months laying out a case for greater scrutiny of the country’s powerful technology industry, making the argument in speeches from Chicago to Rome. And his rhetoric — he told an audience at the University of Chicago in April that "enforcers must take vigorous action" if digital platforms harm competition — is being closely watched in the tech industry amid fears that Washington's souring view on Silicon Valley could eventually result in a crackdown. “At the end of the day, my job is policing the free market system to make sure you have competition to create innovation and ultimately help consumers," he said. Delrahim’s talk is raising hopes among some progressives that they have an unlikely ally in the Trump administration. Still, those agitating for a tougher approach to tech companies say they’re not clear whether the antitrust chief is planning to take action — or simply floating ideas.


The basis for killing network neutrality rules is bogus, studies say

When Federal Communications Commission Chairman Ajit Pai decided to do away with the widely popular “network neutrality” rules that governed the Internet, his justification was that the regulations were slowing deployment. But a new analysis by the Center for Public Integrity plus other factors cited by industry experts show that reasoning to be shallow at best and ridiculous at worst. Most pointedly, while wireline deployment did slow while network neutrality rules were in place, it was due to at least one reason that had nothing to do with regulation: carriers were running out of potential customers, according to a Center analysis of Census and FCC data. Between December 2012 and December 2014, the average population density of areas to which providers deployed wireline Internet access for the first time was 4,467 people per square mile. Between December 2014 and December 2016 — by the time regulatory talk surfaced — the average population density of areas to which providers deployed wireline Internet access for the first time was a sparse 1,593 people per square mile. Another aspect to consider regarding the slowdown in deployment is that household income in areas receiving wireline connectivity post-Title II was slightly lower than income in the more urban areas serviced earlier, between 2012 and 2014, according to the Center's analysis. Other data crunchers have shown that certain deployments of broadband, which the FCC defines as a download speed of at least 25 megabits per second, actually increased in the wake of net neutrality regulation.

Comcast, AT&T, Verizon say they have no paid prioritization plans

The repeal of federal network neutrality rules became official June 11, giving broadband providers the right to block or throttle Internet traffic or to prioritize traffic in exchange for payment. But at least for now, some major ISPs are saying they won't do any of those things. The Comcast, Verizon, and AT&T websites all say they aren't doing any blocking, throttling, or paid prioritization. By contrast, Charter's network management disclosure only promises that it won't block or throttle, while making no promises about paid prioritization. That doesn't mean Charter has immediate plans to charge websites and online services for priority access to consumers. ISPs are required to disclose paid prioritization publicly, so we'll find out if it happens as long as the companies follow the disclosure requirements. Comcast, Charter, AT&T, and Verizon are the four biggest home Internet providers in the US. ISPs can make their disclosures either on their own websites or on the FCC website, but so far only two small ISPs have used the FCC site for their disclosures.

Commissioner O'Rielly Remarks Before the Philadelphia Federalist Society

I would like to explore three rather divergent policy issues, unified by my views on what I see as being in the best interests of American consumers.

  1. Regulatory Free Arena: [T]he app economy is stealing consumers by the millions, eviscerating operating and profit margins, attracting the best and brightest employees, and setting the entire marketplace on its head. In my view, the only logical take-away from this information is to either support greater deregulation of Federal Communications Commission regulatees that must compete with these services or advocate for new Congressional powers to regulate these services, which would seem futile and unnecessary in a thriving market. 
  2. Net Neutrality: [B]ecause the FCC order restored a light-touch approach through deregulation, any action by states to increase regulatory burdens on broadband providers would run directly counter to our efforts. State efforts to enact net neutrality rules are legally flawed and would impose substantial and unnecessary compliance burdens on providers. The rules and the costs they impose could chill innovation and curtail the broadband deployment we’ve all been working so hard to promote.
  3. 9-1-1 Fee Diversion: With the responsibility for funding and operating 9-1-1 chiefly being a state-level responsibility, a concerted effort is going to be required against recalcitrant states and territories. For now, naming and shaming is one of my best tools against this practice but I could certainly use more voices in utilizing this to its fullest potential. 

Why it's getting harder to find sharable federal spectrum

The government is sitting on a goldmine of radio spectrum that could be used to accelerate 5G deployment, but crafting a coordinated policy to get there is complicated. One obvious way is to provide incentives for federal agencies to relinquish their spectrum holdings for commercialization. But too often that's presented as a zero sum game rather than a win-win. Agencies are looking for more innovative ways to share their holdings and perhaps get better capabilities too, said experts at a June 12 spectrum meeting in Washington. Even finding spectrum that can be easily vacated is becoming harder and harder, said David Redl, the Commerce Department's assistant secretary for communications and information and director of the National Telecommunications and Information Administration. NTIA and other federal agencies are looking to collaborate with industry on how to create a guiding national strategy to implement next-generation wireless services, particularly 5G. Sharing spectrum will be a big part of that push, according to Redl and other spectrum resource and wireless industry experts at the event.

via FCW

Senator Markey: Facebook Responses About Children's Online Privacy Leave Families Unprotected

Senator Ed Markey (D-MA) released the following statement after Facebook provided responses to questions posed by Sen Markey in the wake of the Facebook-Cambridge Analytica privacy breach. In his questions, Sen Markey asked Facebook to commit to not include advertising in children’s offerings and to commit to not share children’s information for targeted advertisements, once young users turn 13. “Our youngest and most vulnerable Americans should be able to navigate the digital world without being bombarded by advertisements at every turn,” said Sen Markey, House author of the Children’s Online Privacy Protection Act (COPPA). “I am disappointed that Facebook once again refuses to promise that it will never include advertising in Messenger Kids, an offering specifically targeted to children ages 12 and under. It is equally concerning that while Facebook has stated it will not ‘automatically’ share kids’ data with advertisers when users turn 13, the company stops short of declaring that it won’t share this data at all, automatically or otherwise. Companies like Facebook should not be able to cash in on children or teen’s personal information.”

Universal Service

FCC Chairman Pai Responds to Congress on Lifeline

Federal Communications Commission Chairman Ajit Pai sent letters to Rep. Bobby Rush (D-IL) and six other members of Congress and Rep. Anna Eshoo (D-CA) and 67 members of Congress on June 1, 2018, to respond to their letters regarding the Lifeline program. Chairman Pai said the 2017 Lifeline Order increased consumer choice by eliminating restrictions that barred Lifeline consumers from changing Lifeline providers for a year and protected consumers by barring low-quality services that offered mobile broadband in theory, but failed to do so in practice. Chairman Pai also answered specific questions on the Lifeline National Verifier.

FCC Chairman Pai Responds to Congress on Tribal Lands Lifeline Program

Federal Communications Commission Chairman Ajit Pai sent a letter to Rep. Raul Ruiz (D-CA) and 31 other members of Congress on June 1, 2018, to respond to their letter that urged the FCC to halt its effort to cut off support for low-income tribal families through proposed changes to the Tribal Lands Lifeline program. Chairman Pai said closing the digital divide is one of his top priorities, and said claims that the changes in the 2017 Lifeline Reform Order would cut off support to tribal members living in urban areas and the FCC did not consult with tribes before adopting the Order are false.


Senators Move to Sink Trump’s ZTE Deal

In a rare rebuke of President Donald Trump, Republican Senate leaders set up a vote for the week of June 11 that would undo the White House deal to revive Chinese telecommunications company ZTE Corp. Commerce Secretary Wilbur Ross was on Capitol Hill late June 11 to lobby against the move. But Democratic and Republican lawmakers said that an agreement had been reached to wrap into the National Defense Authorization Act an amendment that would ban ZTE from buying components from US suppliers. The Commerce Department in mid-April had banned exports to the company as punishment for breaking a settlement to resolve sanctions-busting sales to North Korea and Iran. In private meetings with Republicans recently, the president argued in favor of the agreement, which saved ZTE by allowing the Chinese company to resume buying components from U.S. suppliers. The Trump administration agreed to lift the ban as part of a larger deal in which ZTE would pay a $1 billion fine and allow US enforcement officers inside the company to monitor its actions. Cutting off access to US components was essentially a death knell for the company.  The defense-authorization bill is a must-pass measure that typically clears Congress with bipartisan support. As a result, language that is tucked in the defense bill is much harder to block than legislation introduced independently or tied to other, less popular bills. Senators predicted that the measure would clear Congress and be signed into law by President Trump because the underlying defense measure contains many popular items. Ultimately, “I would expect that there wouldn’t be a ZTE,” said Sen Tom Cotton (R-AR) “The death penalty is an appropriate punishment for their behavior.”

Senators Schatz and Wyden Question FCC on Reported 2017 Cyberattack

Senators Brian Schatz (D-HI) and Ron Wyden (D-OR) called on the Federal Communications Commission to share more information about the reported distributed denial-of-service (DDoS) attack on the FCC’s website while it was open for comments on net neutrality in 2017. The letter comes over a year after reports of a DDoS attack on the FCC’s website, which prompted an initial letter from Sens Wyden and Schatz that questioned FCC’s ability to defend against such an attack and blunt any impact it could have on people’s participation in the debate around net neutrality. “Beyond your initial internal analyses that you reference in your June 15, 2017, response, have any subsequent FCC or third-party (e.g., vendor, contractor, or government agency) analyses or investigations verified that a cyberattack on ECFS occurred in 2017 and, if so, that the attack is best classified as a DDoS attack?” the Senators wrote. “If not, why was no investigation conducted?  Please provide any and all reports, findings, and other relevant details of any such investigations.”


Chairman Pai's Remarks at M-Enabling Summit

[S]o long as I am Chairman, I will continue to prioritize ensuring that people with disabilities are not left behind as communications technologies advance. We want people with disabilities to be full participants in the digital revolution. I find this to be a perfect segue to tonight’s event: the Chairman’s Awards for Advancement in Accessibility. Through these awards, we can recognize accessibility innovations and initiatives that help us reach our goal of full inclusion. And when innovations like these are developed today for those with disabilities, they set the stage for tomorrow’s cutting-edge technologies designed for the general public. As always, this year we had many superb nominations. I thank all of the applicants for making a difference in the lives of individuals with disabilities worldwide. This year, we have four excellent winners.

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Benton (www.benton.org) provides the only free, reliable, and non-partisan daily digest that curates and distributes news related to universal broadband, while connecting communications, democracy, and public interest issues. Posted Monday through Friday, this service provides updates on important industry developments, policy issues, and other related news events. While the summaries are factually accurate, their sometimes informal tone may not always represent the tone of the original articles. Headlines are compiled by Kevin Taglang (headlines AT benton DOT org) and Robbie McBeath (rmcbeath AT benton DOT org) -- we welcome your comments.

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