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Broadband Roundup: FBI after Chinese Hackers, AT&T after DirecTV, Congress after FCC Chairman Wheeler




WASHINGTON, May 20, 2014 - On Monday, tensions with China over cybersecurity increased as the U.S. Justice Department indicted five Chinese military officers for stealing trade secrets from six United States companies.

The Guardian quoted Attorney General Eric Holder as saying, “The range of trade secrets and other sensitive business information stolen in this case is significant and demands an aggressive response.”

CNN reports that victims of hacking included U.S. Steel Corp., Westinghouse, Alcoa, Allegheny Technologies, the United Steel Workers Union and SolarWorld. Many of them operate in Pennsylvania, with SolarWorld being a German company that has operations in Oregon. The investigations and prosecutors emanated from the U.S. attorney’s office in the Western District on Pennsylvania, based in Pittsburgh.

Holder said that five People's Liberation Army officers "maintained unauthorized access to victim computers to steal information from these entities that would be useful to the victims' competitors in China."

USA Today reports that the hackers were traced by federal authorities to a building in Shanghai. Federal authorities stated that the hacking "began in 2006 and continued until last month." The situation was referred to by Holder as "economic espionage."

Among the data stolen was "cost, pricing and strategy information" from SolarWorld, and which Chinese competitors allegedly used to undercut SolarWorld and gain market share.

CBS News reported that American companies are currently losing $250 billion every year in intellectual property,  "much of that to the Chinese."

Reactions continue to pour in to AT&T's potential merger with DirecTV. Broadcasting & Cable said that Sen Al Franken, D-Minn., called for scrutiny through congressional hearings.

"We're witnessing a major transformation of the telecom industry - and it's going in exactly the wrong direction," Franken said in a press statement. "We're moving toward an industry with fewer competitors - where corporations are getting bigger and gaining more and more control over the distribution of information. This hurts innovation, and it's bad for consumers, who have been getting squeezed by higher bills."

The Augusta Chronicle reported that hearings are already planned on the merger, and that legislators plan to bring in top company executives.

A Sunday night statement from House Judiciary Chairman Bob Goodlatte, R-Va. and Rep. Spencer Bachus, R-Ala., and Reps. John Conyers, D-Mich., and Hank Johnson, D-Ga., read, "The proposed AT&T and DirecTV merger would be the fourth largest telecommunications merger in history."

Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., shared Franken's worry that a merger between AT&T and DirecTV would favor big companies and neglect the needs of consumers, the Chronicle reported.

Trade group American Cable Association said that it was "troubled" by consolidation within the subscription video marketplace, according to C21 Media. The National Association of Broadcasters, meanwhile, voiced similar complaints.

"It is hard to see how decreasing competitors in the pay TV marketplace - while increasing regulatory restraints on local TV stations - truly benefits consumers," said NAB spokesman Dennis Wharton.

ReCode said that AT&T is arguing that its merger with DirecTV would actually give consumers more choices.  As for net neutrality, Recode also reported that AT&T has pledged to abide by the laws now-overturned by a federal court "for at least three years after closing."

FCC Chairman Tom Wheeler released a copy of the written testimony that he will be giving on Tuesday before the Subcommittee on Communications and Technology Committee on Energy and Commerce about the FCC's involvement in amending rules on net neutrality.

"I believe that the Section 706 framework set forth by the Court of Appeals in [the Verizon case] is sufficient to give us the authority to adopt and implement robust rules to protect the open Internet," Wheeler said.


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