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Posts Tagged ‘Telecom’
August 2nd, 2019 at 1:33 pm
Texas A.G. Paxton Irrationally Joins Leftist A.G. Colleagues in Multistate Lawsuit Opposing T-Mobile/Sprint Merger
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Inexplicably, Texas Attorney General Ken Paxton has elected to join leftist state attorneys general in their multistate lawsuit opposing a T-Mobile/Sprint merger that the Department of Justice (DOJ) has approved, and a majority of Federal Communications Commission (FCC) commissioners support.

That lawsuit took the unprecedented step of challenging the proposed merger before the federal agencies had even completed their review process, demonstrating that their opposition had less to do with the facts and market realities of the case than political grandstanding.  Clearly, their state-level lawsuit centers not on the merits of the merger, especially in light of the DOJ’s announcement this week, which would introduce even greater network capacity and competition to the telecom marketplace.

By indefensibly choosing to join that lawsuit, Paxton now seeks to halt an extraordinary opportunity to accelerate innovation and 5G deployment in the U.S., bridge the digital divide in rural and urban communities and boost high-paying American jobs.

We at CFIF have long supported the proposed merger for all of these reasons and more, and we hope that Paxton and anyone else considering such a needlessly unwise position reconsider.

June 13th, 2018 at 3:59 pm
Let the AT&T/Time Warner Ruling Be a Lesson Against Needless Federal Market Interference
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Hopefully this will serve as a deterrent lesson to the U.S. Department of Justice, and the federal government more generally.

Yesterday, Federal Judge Richard Leon delivered his decision rejecting the Justice Department’s misguided lawsuit to prevent AT&T and Time Warner from merging.  The government had no business even bringing the suit, as the merger poses no threat of consumer harm.  To the contrary, as noted in today’s Wall Street Journal by Michael D. Smith and Rahul Telang, it promises more choices and greater market competition for American consumers.  Because the merger was “vertical” in nature, rather than a “horizontal” merger of direct market competitors, federal bureaucrats would only inflict harm by delaying or denying its fruition:

[T]he unique characteristics of digital markets have allowed a small number of internet giants – among them Amazon, Google, Netflix and Facebook – to dominate their industries and forestall entry by competitors.  These companies have put serious money into customer connections, data analytics and back-end systems, and these investments scale very well.  Netflix has penetrated more than half of U.S households.  Google and Facebook control almost three-quarters of online advertising.  Amazon does nearly half of all online retail sales.  These are astonishing numbers.

Now that these tech giants have established their downstream power in the distribution business, they are beginning to amass upstream power by getting into the content-creation business…  Given the dominance of Silicon Valley’s internet giants, it makes no sense to prevent AT&T and Time Warner from merging.  These companies aren’t trying to join forces because they want to take control of a dying industry;  they want to be allowed to compete in a new one.”

The American economy has accelerated since President Trump’s election as a consequence of his deregulatory and tax-cutting agenda, and that same logic should apply to the realm of market mergers between mutually bargaining parties.

As one example, Comcast recently announced a bid for certain assets of 21st Century Fox.  In the same way as described above regarding the AT&T/Time Warner merger, Comcast’s acquisition would greatly benefit consumers.  The film and television businesses have never been more competitive, dynamic or creatively rich, and consumers possess more entertainment choices than ever before.  Free markets work, and federal bureaucrats have zero business interfering in this matter.

As Judge Leon noted in his decision, federal government decisions to interfere come at great cost:

The government has had this merger on hold now since October of 2016 when it launched its investigation.  In that 18-plus month period, the companies have twice extended the break-up date to accommodate the government’s litigation of this case.  During that same period, the video programming and distribution industry has continued to evolve at a breakneck pace.  The cost to the defendants and the government to investigate, litigate and try this case has undoubtedly been staggering – easily in the tens of millions of dollars.”

That same logic applies to Comcast’s proposed acquisition.  Let’s not be forced to repeat yesterday’s harsh lesson to the Justice Department, after needless waste of time and taxpayer resources in meritless litigation that only serves to harm American consumers and competitive marketplaces.

June 13th, 2018 at 3:01 pm
In Good News for Consumers, Federal Judge Rejects DOJ Attempt to Block AT&T/Time Warner Merger
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In a decision that came as no surprise but nevertheless merits celebration, a federal judge yesterday rejected the Justice Department’s needless lawsuit attempting to block AT&T’s acquisition of Time Warner.

Whenever federal bureaucracies seek to disrupt functioning markets by prohibiting mutual agreements between two willing parties, they carry a heavy burden of proof to establish impending consumer harm.  In this case, the opposite was true – the federal government’s needless interference, not the proposed acquisition, would result in consumer harm.  Accordingly, Judge Richard Leon ruled that Justice’s allegations “do not come close to answering the question before the Court.”

So why is yesterday’s ruling important going forward?  Hopefully, it provides federal bureaucrats an abject lesson against future destructive campaigns of a similar sort.

As one immediate example, consider the proposed merger between T-Mobile and Sprint announced recently.  Although the T-Mobile/Sprint proposal involves characteristics unique to it, it offers the consumer market similar sorts of benefits.

Namely, T-Mobile/Sprint prospectively offers an enhanced array of consumer services in comparison to what is available today.  For example, the two current companies’ differing but complementary assets would create a new network with enhanced capacity, wider coverage and more effective wireless performance for customers than currently exists.  It also promises network upgrades, lower prices and job creation.  In particular, the proposed merger offers significant potential benefits through deployment of the first 5G wireless network in the U.S.

Through that $40 billion investment in 5G, consumers will enjoy data delivery at a lower cost, and the incentive for competitors to similarly lower prices to consumers.  That will also prompt market competition to expand spectrum in rural areas in addition to urban centers, as well as capacity improvements for consumers.

That’s how market competition works.  A T-Mobile/Sprint merger and its 5G deployment would also mean billions in new private infrastructure investment and countless new jobs.  In contrast, the absence of a T-Mobile/Sprint merger would mean slower deployment of a 5G nationwide network, and the absence of a market competitor of greater scale.  Ultimately, that means consumers would lose.

The Trump Administration has demonstrated to date how deregulation can turbocharge the economy and benefit American consumers.  That logic applies with added potency to the ever-evolving telecommunications market, and the Justice Department should learn its lesson and refrain from future needless interference that will only cost consumers and trigger embarrassing legal defeats.

March 10th, 2016 at 8:16 pm
Mississippi Should Not Gamble With Taxpayer Dollars

Five things Mississippi taxpayers should know and worry about the Gulf Coast “Fiber Optic Ring”

1)  A new plan proposes to use a portion of Mississippi’s British Petroleum (BP) oil spill settlement to build a government-owned broadband network in South Mississippi. The network or “Fiber Ring” would, in theory, connect a dozen Gulf Coast cities across three counties. Local officials estimate that it could cost over $100 million.

2)  So far, the state has promised $5 million of the BP funds towards the Fiber Ring, though it is not a fiscally sound proposal.  In fact, there’s no indication of where the additional $95 million needed to finance this project will come from, but taxpayers will likely foot the bill.

3)  Government-owned networks rarely succeed, and residents already have access to high-speed Internet provided by private companies. Competing with the private sector will only force taxpayers to subsidize a costly failure.  Private Internet Service Providers (ISPs) already bring high-speed broadband to 97 percent of Harrison County residents, according to BroadbandNow.com.

4)  When the government enters a broadband market, prices for consumers do not decrease.  In fact, government-owned broadband networks have been found to charge consumers more than private firms, for similar services.

5)  Other regions have tried (and failed) at building and running government-owned broadband networks.  Here’s a look at some of the results:

Burlington Telecom, VT
Burlington Telecom was started in 2008 to provide telecommunications services to the citizens of Burlington, VT.  The network floundered, and by 2014, it owed $33.5 million to Citibank.  The city reached a final settlement in which it agreed to pay about a third of what was owed, and turned to the private sector for help financing the settlement.

Memphis Networx, TN
Memphis Networx was started as a public-private partnership by Memphis Light, Gas, and Water Division (MLGW) in 1999.  By 2007, the network had failed and MLGW sold Networx to Colorado holding company Communications Infrastructure Investments for $11.5 million after losing about $28 million in public funds on the venture.

UTOPIA, UT
UTOPIA was started in 2002 to provide Internet services to 11 cities in Utah.  The network’s initial capital investment was $135 million, and by 2014 the debt had climbed to $500 million.  The cities involved have been looking for a private buyer to take over their network for several years.

CDE Lightband, TN
CDE Lightband was started in 2007 with a $16 million loan from the Clarksville Electric Power Board’s electric division to its broadband division.  In 2009, the utility was approved to take an additional $4.5 million in loans to finance the network, leaving taxpayers and utility ratepayers on the hook for the debt.

Help CFIF spread the word.  Email this link to your colleagues, friends and family members in Mississippi and/or share it on social media.  To download a copy of CFIF’s educational fact sheet about the Gulf Coast “Fiber Optic Ring,” click here (.pdf).

October 14th, 2013 at 3:08 pm
CFIF Technotes
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(1)  A new study from the Internet Innovation Alliance (IIA) shows how American consumers continue to abandon old-fashioned wireline telephone service, but Federal Communications Commission (FCC) bureaucratic inaction in the transition to all Internet Protocol networks (the “IP Transition”) threatens harm to consumers, our economy and market competition:

To ensure that ILECs can continue to provide innovative solutions for consumers and compete effectively against other platforms, they must be free to make the best use of their capital. That, in turn, means dedicating their capital to IP – and fiber – based broadband networks, rather than tying it up in obsolete copper-based circuit-switched networks.  At the end of 2012, the ILECs’ share of the consumer voice, broadband-access, and video markets was 34%, 14%, and 10% respectively.  It is time to stop treating the ILECs as monopolies that must be hobbled and start treating them as useful assets whose health is important to this nation’s economy and global competitiveness.”

(2)  Similarly, Raymond J. Keating of the Small Business & Entrepreneurship Council (SBE Council) summarizes how the FCC’s upcoming auction of low-frequency spectrum currently used by TV broadcasters over to wireless firms is fraught with bureaucratic overreach and market interference, citing a study by Duke University’s Leslie Marx:

This incentive auction would have the TV broadcasters getting a split of the proceeds from the auction.  But some, like the Justice Department’s Antitrust Division in a filing with the FCC, argue that the auction rules should be set to provide an advantage for smaller carriers – such as Sprint and T-Mobile – over the largest mobile service providers, i.e., AT&T and Verizon.  Unfortunately, some fail to understand the competitive market process and how businesses gain market share.  Others more cynically are attempting to use government to manipulate the rules of the game in their own favor.”

(3)  Bloomberg.com reports on more positive news for the FCC, however, courtesy of the U.S. Supreme Court:

The U.S. Supreme Court turned away a challenge by five power companies to new federal rules that lower the fees telecommunications companies must pay to attach lines to electric utility poles.”

(4)  Over at The Wall Street Journal, meanwhile, Holman Jenkins puts on his usual must-read clinic.  In his latest piece, Jenkins details successful Internet service providers’ efforts to “tunnel under the regulatory morass that inhibits physical broadband deployment”:

All this renders even more quaint the scrap over ‘net neutrality.’  Verizon is battling in a U.S. appeals court the FCC’s effort to impose this regulatory conceit on the broadband industry – with certain bloggers insisting that if Verizon wins, it will represent “the end of the Internet,” because, you know, there’s not enough competition to make sure broadband operators don’t “censor” the Internet in their own interest by blocking access to websites that compete with their own services.  Uh huh.  The truth is, competition has been more than adequate so far to police the Internet, and now competition is getting jacked up a serious notch as the video explosion stimulates a deluge of new investment. Now if the regulatory establishment would just take ‘yes’ for an answer.”

(5)  USA Today highlights how mobile communications advances have improved natural disaster relief:

Natural disasters are on the rise.  Reported incidents have more than doubled since 1980, and in 2010 alone, the combined impact of earthquakes, hurricanes, floods and other calamities forced 42 million people to flee their homes.  Thankfully, advances in mobile communications have spread to all corners of the globe, providing the victims of disasters much easier contact with relief workers, and each other.”

(6)  The Hill’s Technology Blog details House Energy and Commerce Committee Vice-Chairwoman Marsha Blackburn’s (R – Tennessee) comments on FCC interference with private telecom investment:

The Federal Communications Commission (FCC) has a ‘regulatory addiction and … penchant for picking winners and losers’ and the laws governing the agency need a ‘substantial overhaul,’ House Energy and Commerce Vice-Chairwoman Marsha Blackburn (R – Tenn.) said Wednesday.  The agency is hurting the telecommunications industry and crowding out private investment because it ‘is fixated on growing its jurisdictional footprint and expanding its influence in other areas,’ Blackburn said, speaking at a Telecommunications Industry Association event.”

(7)  Fiercetelecom.com reports on the TIA 2013 tradeshow, where keynote speakers from AT&T and Verizon lamented the federal regulatory murkiness that inhibits the TDM-to-IP transition:

AT&T and Verizon envision a blended wireless and wireline service world, but regulatory executives from both telecos said during a policy keynote session at the TIA 2013 tradeshow that a lack of regulatory clarity in transitioning their legacy TDM networks to IP is a key barrier.

‘In 2009, the FCC set some very ambitious objectives, one of which was a complete shutdown of the TDM architecture and merge to IP by 2017,’ said James W. Cicconi, Senior Executive Vice President of External and Legislative Affairs for AT&T.  ‘We’re here in 2013, and no single thing that I can discern has been done to advance that objective.’  Cicconi said that he has gotten little, if any guidance from the FCC on the next step.

And Craig Sillman, Senior Vice President of Public Policy for Verizon, said that while the telco has benefitted from a ‘light touch’ regulatory approach for advancing its wireless business, legacy voice service regulations have hindered its wireline moves.”

(8)  Finally, Mobile World Live reports on a wide range of CEOs repeating their call for lighter regulation:

The opening keynote session at Mobile World Congress brought together the chief executives of AT&T, China Mobile, Telecom Italia, Telefónica and Vodafone.  Under the theme of mobile operator strategies, talk of digital revolution and unprecedented industry transformation – spurred on by LTE and cloud-based technologies – was dominant…   But if the rapid development of networks and digital eco-systems is to continue, and help boost GDP in the process, much more investment will be required.”

The biggest takeaway from this week’s Technotes?  The FCC has its work cut out for it if it truly seeks to advance innovation and modernization.

January 31st, 2012 at 3:15 pm
Protecting Taxpayers from Public Broadband Boondoggles
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In today’s world of crushing deficits and bureaucratic overreach, government has no business venturing into the world of operating communications networks.  That sort of adventurism merely competes with private investment dollars and creates even more debt for which struggling taxpayers are ultimately liable.

Broadband expansion itself is obviously a good thing, but the history of public broadband is simply one of failure.  The city of Marietta, Georgia provides just another example.

In 1996, Marietta entered the marketplace as an Internet Service Provider (ISP). Predictably, the city struggled to keep pace with rapidly-changing technology and developments in the broadband arena. Eight years later, the city realized the effort was lost, so it sold its broadband network, FiberNet, for $11.2 million.  Unfortunately, that boondoggle meant a huge loss for Marietta taxpayers: the city had sunk $35 million into FiberNet before unloading it.

Marietta’s experience is far from isolated.  As I pointed out in testimony last year to the North Carolina legislature, from Taiwan to Sydney and Houston, Texas to Burlington, Vermont, recent history is rife with public broadband network failures.  North Carolina lawmakers wisely approved legislation placing additional requirements on cities and municipalities entering the broadband market.  Elsewhere, however, government-owned networks (GONs) continue to place taxpayers at great risk, stifling private sector investment and job creation and paradoxically causing fewer Americans to have access to broadband.

Because they are at such risk of failure, GONs also receive tax and regulatory advantages by the governments that ultimately build and operate them.  That is not only unfair, it’s highly destructive.  It discourages private owners from expanding their networks and bringing jobs to an area.  Furthermore, GONs have a particularly damaging effect on rural broadband access.  After all, private investors are less likely to risk precious capital in areas where they will have to compete directly with the government, not to mention compete on a tilted playing field.  That leaves consumers with fewer choices – the public network – for broadband.  And when the public network fails like the one in Marietta did – and like most do – these consumers are left with a big bill and diminished broadband.

Fortunately, some leaders recognize the problem and take action.  Georgia State Senator Chip Rogers  recently introduced legislation (SB 313) that would make Georgia cities and politicians answer the tough questions before betting millions of taxpayer dollars on costly broadband networks.  The legislation would require cities and municipalities to hold hearings on proposed GONs, and then put their plans to an actual vote.  Those requirements seem more than fair considering that public broadband networks have failed virtually everywhere they’ve been attempted.  Indeed, taxpayers and consumers would be best served if cities and municipalities stayed out of the broadband market altogether.  Nonetheless, we applaud Sen. Rogers and call on his colleagues to swiftly pass the legislation he has introduced.

January 26th, 2012 at 6:31 pm
Time to Rein In FCC’s Regulatory Overreach

For the past three years, those of us who eat, sleep and breathe the principles of limited government and free enterprise have been banging our heads against the wall because of the devastating and rampant overreach of executive departments and agencies in the Obama Administration.

The Environmental Protection Agency (EPA)… the National Labor Relations Board (NLRB)… the Department of Justice (DOJ)… Enough said.

But perhaps there has been no agency more guilty of abusing its power and imposing its regulatory overreach than the Federal Communications Commission (FCC).  After all, it is the FCC that unilaterally – by a 3-2 party-line vote – imposed so-called “Net Neutrality” regulations against a bipartisan majority in Congress, a unanimous federal court of appeals and 2-1 public opinion.  It is the FCC that, despite acknowledging a national spectrum crisis as more and more consumers use smart phones and tablet computers, continually works to block any and all productive efforts to relieve said crisis.

So it was refreshing to read earlier today that AT&T’s CEO Randall Stephenson is calling out the FCC’s overreach, charging that the Commission is “intent on picking winners and losers rather than letting these markets work.” 

For too long the FCC has interfered with the free market, which has created an unlevel playing field that unfairly props up politically-favored companies less likely to invest their own capital in new job-creating and economy-enhancing infrastructure at the expense of others that will. 

And, that’s precisely why Congress must act, not only to refrain from granting the FCC’s request for additional flexibility on spectrum auction authority, but also to tighten the reins on the FCC in order to prevent it from further skewing the wireless market. 

Instead of permitting the FCC to, by definition, pick “winners and losers” in the wireless marketplace by unfairly limiting and excluding certain companies from participating in spectrum auctions, Congress must pass legislation that that will facilitate the proper and fair functioning of spectrum auctions that are open to all willing buyers. 

That the FCC thinks otherwise, coupled with its recent history of abusive regulatory overreach, should spark a long overdue and serious discussion about clearly defining its proper authority once and for all.

January 6th, 2012 at 4:25 pm
Time Running Short for NJ Legislature to Enact Meaningful Telecom Reform
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With the New Jersey state Senate session ending this coming Monday, January 9, time is running short for it to enact common-sense telecom reform.

This past year, state Senator Raymond Lesniak (D) introduced S-2664, which would modernize New Jersey government rules for the telecommunications industry by eliminating unnecessary and costly red tape that hampers investment and growth.  The bill passed in the New Jersey State Assembly with overwhelming bi-partisan support, but now the State Senate must act.

The proposed legislation preserves important consumer protections, but at the same time modernizes the outdated regulatory structure developed when the primary means of communication was a rotary telephone.  In our modern marketplace, regulations must reflect evolving realities, but without these reforms New Jersey risks losing valuable ground.  Unless changes are made, telecommunications providers will be discouraged from increasing investment and innovation in New Jersey, so it’s in the state’s best interest to stay on the cutting edge of telecommunications technologies and the jobs they provide.

Accordingly, the Senate should enact S-2664 in the time that remains.  There is simply no reason to delay the reforms outlined in Senator Lesniak’s legislation, which New Jersey needs to ensure a more prosperous future.

December 16th, 2011 at 2:30 pm
Meaningful New Jersey Telecom Reform In Sight, If Legislature Acts Soon
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Earlier this year, state Senator Raymond Lesniak (D) introduced a bill (S-2664) to modernize New Jersey government rules for the telecommunications industry by eliminating unnecessary and costly red tape that hampers investment and growth.  The State Assembly passed the bill with overwhelming bi-partisan support, but the measure has yet to be considered in the State Senate.  With only weeks left in New Jersey’s legislative session, lawmakers must therefore act swiftly to pass these much needed reforms.

The proposed legislation exemplifies smart reform.  It preserves important consumer protections, while modernizing the outdated regulatory structure developed when the primary means of communication was a rotary telephone.  Regulations must reflect the realities of the modern marketplace, but that is unfortunately no longer the case in New Jersey.  Unless changes are made, telecommunications providers will therefore remain unable to expand investment and innovation in the state, and it’s in New Jersey’s own best interest to stay on the cutting edge of telecommunications technologies and the jobs that provides.

So before lawmakers in Trenton call it quits on yet another legislative session, they should enact S-2664.  There is simply no reason to delay the reforms outlined in Senator Lesniak’s legislation, which are exactly what New Jersey needs to ensure a more prosperous future.