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Senators Grill Mobile CEOs on AT&T/T-Mobile Merger

WASHINGTON May 12, 2011- The Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights assembled leading mobile CEOs Wednesday to explore the proposed merger between AT&T and T-Mobile.

“The proposed merger between AT&T and T-Mobile will bring together two of the four remaining national cell phone carriers to create the nation’s largest cell phone network, with an estimated 43 percent market share,” said Sen Herb Kohl (D-WI), Chairman of the Subcommittee, setting the tone for the hearing. “Should this deal be approved, AT&T and Verizon will control close to 80 percent of the national cell phone market.”

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WASHINGTON May 12, 2011- The Senate Subcommittee on Antitrust, Competition Policy and Consumer Rights assembled leading mobile CEOs Wednesday to explore the proposed merger between AT&T and T-Mobile.

“The proposed merger between AT&T and T-Mobile will bring together two of the four remaining national cell phone carriers to create the nation’s largest cell phone network, with an estimated 43 percent market share,” said Sen Herb Kohl (D-WI), Chairman of the Subcommittee, setting the tone for the hearing. “Should this deal be approved, AT&T and Verizon will control close to 80 percent of the national cell phone market.”

Kohl highlighted that the wireless industry is increasingly become concentrated among only four national providers, T-Mobile, AT&T, Verizon and Sprint. Kohl fears that the merger will allow AT&T to have a stranglehold on the already scarce spectrum market.

Sen. Patrick Leahy (D-VT) along with Kohl asked AT&T to guarantee that if the merger was approved the company would meet its promise of expanding mobile broadband to 97 percent of Americans.

“I want assurances that these requirements will be met,” Leahy said. “AT&T represented to me that within two years, this acquisition will result in 250,000 more Vermonters having access to its 4G service than would otherwise be serviced by either company on its own – but I am naturally skeptical.”

Leahy was also curious as to why AT&T needed T-Mobile to expand its spectrum holdings since AT&T is one of the nation’s largest spectrum holders. During her testimony Gigi Sohn, Co-Founder of Public Knowledge, said that AT&T does not use one third of the spectrum the company owns in the top 25 markets.

Randall Stephenson, CEO of AT&T, said that the company needs the spectrum owned by T-Mobile to expand its coverage into rural America and further expand 4G Long Term Evolution coverage.

Stephenson also responded to Sohn’s comment by saying that AT&T will exhaust its current spectrum holdings over the next two years in those large markets. Additionally, the firm needs to maintain older networks while it transitions its users.

With the newly acquired spectrum, AT&T claims it will be able to expand its 4G coverage to 97 percent of the population, which will cover 50 million more people than the firm would be able to cover using its current spectrum holdings.

T-Mobile USA’s CEO Philipp Humm said that if it does not merge with AT&T, T-Mobile customers will not be able to gain access to 4G Long Term Evolution. T-Mobile does not possess the necessary spectrum to develop a LTE network and its parent company, Deutsch Telekom, does not have the funding to purchase additional spectrum.

Humm also assuaged the Senators’ concerns about the potential rise in prices  for consumers with the decrease in competition.

“Due to the complimentary nature of the T-Mobile and AT&T networks, when the firms merge the costs to operate the networks will decrease, creating price savings for consumers,” Humm said.

Kohl pressed Stephenson on the price issue, asking if current T-Mobile customers would be able to keep their lower price plans. Stephenson said that AT&T would allow for the maintenance of current prices for T-Mobile customers and that prices could potentially drop for all of its customers due to the gained efficiencies.

Daniel Hesse, CEO of Sprint Nextel, refuted the claim that prices would drop saying that the newly formed duopoly would not have a viable competitor to drive prices down. Currently both Sprint and T-Mobile are able to drive down prices by offering competitive nationwide plans.

Hesse also believes that this new duopoly will limit handset availability and decrease overall innovation.

“Competition drives innovation, and innovation is vital to maintaining the prosperity and leadership of this country,” Hesse said. “Because wireless communication has become a fundamental gateway to so many other related industries, it is imperative we advance competitive, market-driven policies that maximize this engine of innovation and economic growth. Handset manufacturers will be less likely to partner with anyone other than the duopolists, because access to their nearly 80 percent of the market’s customer base will be sufficient.”

Cellular South CEO, Victor Meena, echoed Heese’s fears that the new duopoly would lock out smaller regional carriers from gaining access to new smartphones. Regional carriers already struggle to gain access to these handsets.

“AT&T already uses their market power to enter into exclusive contracts preventing others from getting access,” Meena said. “By acquiring T-Mobile, [AT&T] will only become more powerful,”

Sen. Al Franken (D-MN) pressed Stephenson on the issue of handset exclusivity, asking if the firm would stop entering into these agreements. Stephenson said that these agreements provide handset makers with production guarantees that allow for large production runs that decrease overall price.

 

Rahul Gaitonde has been writing for BroadbandBreakfast.com since the fall of 2009, and in May of 2010 he became Deputy Editor. He was a fellow at George Mason University’s Long Term Governance Project, a researcher at the International Center for Applied Studies in Information Technology and worked at the National Telecommunications and Information Administration. He holds a Masters of Public Policy from George Mason University, where his research focused on the economic and social benefits of broadband expansion. He has written extensively about Universal Service Fund reform, the Broadband Technology Opportunities Program and the Broadband Data Improvement Act

Broadband's Impact

House Commerce Committee Aligned on Telecom, Mapping and Supply Chain Security, Says Ranking Member

Derek Shumway

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Photo from Rep. Cathy McMorris Rodgers' website

March 18, 2021 – House Energy and Commerce Committee Ranking Member Cathy McMorris Rodgers, R-Washington, said Wednesday that the committee was among the most bipartisan on issues including telecom.

Rodgers, who was speaking at the Internet Innovation Alliance with co-chair Bruce Mehlman, said that her Republican colleagues have put forth 28 solutions that would remove regulatory barriers and streamline broadband processes yet demonstrate funding is being spent wisely. She called on the government to ensure cost-effective ways to spend federal dollars.

She said the committee’s priority must be on accurate broadband mapping. That requires funding for more granular data. She also argued for national security against China, including on solar and wind energy products.

Rodgers also said she was excited about low-earth orbit satellites and the potential future they bring in connecting parts of the country with internet that have been “economically unfeasible in the past.”

Asked of her thoughts on virtual learning from home, especially how her 14-year old son with down syndrome is faring, Rodgers said she was completely in favor of reopening schools safely because not all parents have the means to provide optimal learning spaces at home.

Calling herself a working mother who could afford to provide an assistant to help her son through his school day, Rodgers said it was not the best way to learn when compared to in-person schooling.

This came after she said the country has the best networks and “some of the fastest speeds at the lowest prices in the world for internet service.”

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Congress

Former FCC Commissioners Reflect on Changes Since 1996 Telecommunications Act

Tim White

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Former Federal Communications Commissioner Mike O'Rielly on the webinar

February 9, 2021 – As 2021 marks the 25-yearanniversary of the Telecommunications Act, former Federal Communications Commissioners Mike O’Rielly and Harold Furchtgott-Roth reminisced Monday on their time in Congress as staff members when the law was passed. The Hudson Institute hosted the conversation.

The Telecommunications Act was the first major update to telecommunications law since 1934, and the two former commissioners reflected onhow much the internet has shifted the focus of technology legislation.

O’Rielly said the “heart of the legislation” was looking at local and long-distance telephone company markets and opening them to more competition, but “no one knew at the time that the internet would go in a different direction,” he said.

“No one really figured out at the time what was going to happen as broadband and online technology would take over from circuit-switch technologies,” agreed Furchtgott-Roth.

“These markets that we thought were so important back in 1996, long-distance services, they don’t exist anymore,” he said. “Technology has changed and provided a different and a superior form of competition than the [Act] could have ever imagined,” he said.

Four of the biggest tech companies today—Amazon, Google, Facebook, Tesla—didn’t even exist 25 years ago, Furchtgott-Roth said, using them as examples of how much technology and the market has changed. “All of which have a very active role directly or indirectly in the communication space,” he said.

The two also expressed surprise at how prominent some of the law’s provisions have become, and how rarely the FCC uses other provisions.

O’Rielly said that even though the preamble to the law was written as a description and had no legal merit, that language “has been abused” by courts and by the FCC even though, in his view, the preamble is “something that has no statutory weight.”

Section 230 a new focus for concern

In recent months Section 230 of the Act, which grants immunity to online platforms for content provided by their users, has become a major conversation for Congress and in public discourse, due to controversial topics like the election, COVID-19, and the U.S. Capitol riot on January 6, which led to Donald Trump’s ban from Twitter and Facebook, and the shutting down of Parler, a conservative-led competitor to Twitter.

“Everyone agrees that Section 230 is worthy of review or some type of reform, but they come from different perspectives,” O’Rielly said. Republicans and conservatives are worried about censorship on the online platforms, while Democrats on the other side are worried about the spread of misinformation without any correction or policing, he said. “Those two things make it really hard to find a middle ground, even if everyone agrees on the overall premise of some type of reform,” he said.

Furchtgott-Roth mentioned two parts of the Act that he thought would have been used more often. First, the forbearance clause from Section 10, which gives the FCC the option to not enforce parts of the Act if certain conditions are met by entities. Second, regulatory review from section 11, which allows the FCC to review its own rules.

On being questioned about reforming the Telecommunications Act, O’Rielly said that Congress needs to be forward thinking, not constantly fixing previous legislation, and that they need to be specific in their statutes for what they want and do not want federal agencies to do.

The anniversary also received praise from members of Congress and industry groups on Monday. Rep. Anna Eshoo, D-Calif, and Sen. Ed Markey, D-Mass and co-author of the Act, said Congress must revisit the law to bring up-to-speed demands for better broadband.

Meanwhile, FirstLight Fiber CEO Kurt Van Wagenen and Incompas CEO Chip Pickering suggested the new-look White House and Federal Communications Commission make broadband deployment a top agenda item to usher in connectivity in underserved areas.

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House of Representatives

Emphasis on Combating COVID-19 and Rebuilding Infrastructure at First Energy and Commerce Meeting

Derek Shumway

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Photo of Rep. Frank Pallone, Jr., Chairman of the House Energy and Commerce Committee, by Bonnie Cash used with permission

January 28, 2021—During the first organizational meeting of the House Commerce Committee of the 117th Congress, Chairman Frank Pallone of New Jersey welcomed the newest members of the House Energy and Commerce Committee.

The bulk of the Committee’s first meeting was dedicated to discussing best practices to reduce healthcare and prescription drug costs, rebuild and modernize the nation’s infrastructure, and combat climate change.

Members further discussed rebuilding and restoring the essential functions of key agencies. Strengthening the Center for Disease Control and the Environmental Protection Agency were deemed essential. Members considered the waning of the two agencies to be at “the very heart” of creating some of the nation’s most pressing current legislative and policy issues.

Members also approved governing procedures and announce subcommittee chairs, ranking members, and other subcommittee assignments.

Republican Rep. Cathy McMorris Rodgers of Washington is  the new ranking member, and the first woman in that role for the committee.

Pallone further announced Democratic members joining the Committee, including Rep. Kathleen Rice of New York, known for her interest in climate change and infrastructure. Rep. Angie Craig, of Minnesota, was touted for work on the Affordable Care Act. Rep. Kim Schrier of Washington was recognized for her work as a pediatrician.

Rep. Lori Trahan of Massachusetts has an interested in the opioid pandemic and the environment. Rep. Lizzie Fletcher of Texas is focused on first responders and firefighting foams.

Pallone addressed members of the committee in the 117th Congress

Pallone thanked members and reiterated the need to enact policies to combat COVID-19 through vaccine distribution. He criticized former President Donald Trump for lacking effective implementation strategies to vaccinate more Americans sooner.

He said policies were needed that “provide critical assistance to struggling families, rebuild our economy, and bring an end to the pandemic, so people can begin to safely return to regular practice of life.”

Pallone praised President Joe Biden’s executive orders on vaccine distribution, expanded access to testing, and utilization of the Defense Production Act, which allows continued access to medical supplies and personal protective equipment for testing and vaccination.

The committee also took time to celebrate its own 225th birthday, which occurred last month. It is the oldest committee in the House.

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