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Executives at AT&T and DirecTV Defend Their Broadband Merger Against its Critics

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WASHINGTON, July 1, 2014 – AT&T and DirecTV have no doubt their merger will actually strengthen broadband, competition and consumer choice, contrary to naysayers. Both companies had to fend off fears of market consolidation in back-to-back hearings on Tuesday, June 24, before the House Judiciary Committee and Senate Judiciary Committee.

This proposed merger isn’t like that of Comcast and Time Warner Cable, said AT&T Chairman and CEO Randall Stephenson. AT&T and DirecTV offer mostly complementary services with little overlap. A merger would allow both companies to “respond to consumer demand.”

Specifically, DirecTV doesn’t have the broadband platform to adapt to the modern Internet landscape, said DirecTV Chairman and CEO White. By the same token, AT&T doesn’t have DirecTV’s programming. It hardly makes any money at all from its U-Verse video service, Stephenson said.

A merger with AT&T would let DirecTV integrate video with broadband, serve users with complementary over-the-top offerings, optimize video service, and manage content cost increases, White said. What’s more, Stephenson said AT&T could cut video subscriber costs by 20 percent or more.

“When complementary providers join forces, the net result is downward pressure on prices and increased incentive to invest in innovation, integration, and infrastructure,” Stephenson said. .

AT&T would also be able to build out a “fixed wireless” solution at 15-20 Megabits per second (Mbps) and “enhance high-speed broadband service to at least 15 million customer locations, most of them rural, within four years of the transaction closing,” Stephenson said. AT&T’s Gigapower offering could be expanded to two million locations in the U.S.

“Combining with AT&T will enable us to meet our greatest challenge and better compete in today’s marketplace,” White said. “We will unlock new growth opportunities to provide new services to customers at a better value. As we offer subscribers better and more innovative services, cable operators and other competitors will have to respond in kind. The result will be more competition and a better video experience for all Americans.”

Others at the hearing weren’t as thrilled. Michigan Democratic Rep. John Conyers said the merger may spur “too much” and “too rapid” consolidation in the telecommunications industry.

“I am concerned about the loss of a competitor for paid television services in many of the largest markets,” Conyers said. “We should also consider whether smaller video providers in the aftermath of the sheer size of a combined AT&T-DirecTV, could face increased content prices, potentially driving some of them out of business.”

Public Knowledge senior staff attorney John Bergmayer questioned the sincerity of AT&T’s promises to provide fiber to 15 million customers, and even more so, building out Gigabit to two million homes. He called these “marginal upgrades and not new build-out.”

“The remaining two million of AT&T’s 15 million number likewise does not consist of new buildout, but instead references fiber-to-the-premises upgrades to AT&T’s existing network,” he added. “These upgrades are for the most part already in the planning.”

Ross Lieberman, Senior Vice President of Government Affairs at the American Cable Association, also expressed concern that while AT&T can “buy its way out of programing cost problems” by acquiring DirecTV, small and medium-sized operators “without AT&T’s financial resources and scale” will be forced out of business.

And in rural communities with few competitors, a merger would further reduce options for residents, incentivizing AT&T to inflate prices.

Both Lieberman and Bergmayer suggested that AT&T “actually invest” rather than make empty promises.

Stephenson fired back, saying that “two million with fiber to the home is a significant capital investment” and not something to be scoffed at.

In the merger’s defense, Sen. Mike Lee, R-Utah, said regulators should be wary of acting against AT&T and DirecTV.  Doing so may backfire and cause as much harm to consumers as consolidation. In fact, Lee agreed that in some cases like AT&T’s, mergers represent intelligent decisions on part of telecom companies adapting to the industry.

“It’s essential in considering important transactions, such as the one before us, that we apply rigorous economic analysis,” Lee said. “By ensuring we protect competition, and not any individual company or competitor, we can help to create market conditions that benefit the consumers.”

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Broadband Mapping & Data

Robocalls, Rip and Replace, Pole Attachments: More Notes From the FCC Oversight Hearing

Commissioners and House lawmakers discussed key topics at a contentious hearing.

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Screenshot of commissioners at the hearing Thursday.

WASHINGTON, December 1, 2023 – All five Federal Communications Commissioners took part in a lengthy and at times contentious House oversight hearing on Thursday.

Commissioners urged Congress to restore the FCC’s authority to action spectrum, which expired in March and left the nation’s airwaves in limbo, and to fund the Affordable Connectivity Program, the low-income internet subsidy set to dry up in April of next year. 

GOP lawmakers FCC Republicans also took the chance to slam efforts by the commission’s Democratic majority.

The discussion touched on other issues including robocall prevention, rip and replace funding, and pole attachments.

Robocalls

The commission has been taking action on preventing robocalls this year, kicking off an inquiry into using artificial intelligence to detect fraud, blocking call traffic from 20 providers for lax enforcement policies and issuing hundreds of millions in fines. In August the commission also expanded the STIR/SHAKEN regime – a set of measures to confirm caller identities – to all providers who handle call traffic.

FCC Chairwoman Jessica Rosenworcel asked multiple times for three Congressional actions she said would help the commission crack down on scam calls: a new definition for “autodialer,” the ability to collect fines, and access to Bank Secrecy Act information.

The Supreme Court limited the definition of autodialers in 2021 to devices that store or produce phone numbers with random or sequential number generators. That leaves the scope of the Telephone Consumer Protection Act, which guides the FCC’s authority, “stuck in the nineties,” according to Rosenworcel.

“A lot of scam artists are using technologies no longer covered” by the act, she said. “We can’t go after them.”

On collecting robocall fines, that authority currently rests with the Department of Justice, and Rosenworcel is not the first to tell Congress the agency’s enforcement has been lax. Industry groups at an October Senate hearing cited slow DOJ action as a major reason FCC fines on the issue often go uncollected.

The Bank Secrecy Act requires financial institutions to keep records on certain transactions to help law enforcement agencies track money laundering and other criminal activity. The FCC cannot access information governed by the act, which Rosenworcel said would help the commission go after repeat scammers.

“These scam artists set up one company, we shut them down, they go and set another one up,” she said.

Rip and replace

Commissioners urged Congress to fund the rip and replace program. Congress allocated $1.9 billion to reimburse broadband companies for replacing network equipment from Chinese companies deemed to be national security threats, mainly Huawei and ZTE.

The FCC was tasked with overseeing the program and found in 2022 that another $3 billion would be needed to get the work done. The Biden administration joined a chorus of lawmakers and broadband companies in calling for Congress to fill the gap, but legislation on the issue has yet to be passed.

“We’re providing 40 cents on the dollar to a lot of small and rural carriers,” said Rosenworcel. “They need more funds to get the job done.”

The commission has been granting extensions to providers unable to get the work done on time. In addition to supply chain issues, some small providers cite a lack of funding as the reason they’re unable to replace insecure equipment.

Pole attachments

Commissioners expressed a willingness to shift some of the burden of utility pole replacements off of broadband providers as they attach new equipment.

“If a pole is getting replaced,” Commissioner Brendan Carr said, “there’s probably a role for the FCC to say that the pole owner should bear somewhere north of the cost of $0.”

The commission has authority in 26 states over most pole attachment deals between utility pole owners and telecommunications companies looking to expand their networks. The issue of who pays for poles that need to be replaced to accommodate more communications equipment is contentious, with telecoms arguing utilities force them to pay for replacing already junk poles. 

After spending years sifting through thousands of comments, commissioners have apparently been persuaded. Rules up for a vote at the commission’s December meeting would limit the scenarios in which utilities could pass full replacement costs on to attachers.

Broadband funding map

Rosenworcel repeatedly asked lawmakers to work with the commission on ensuring its broadband funding map is kept up to date.

The FCC launched its funding map in May to keep track of the myriad federal broadband subsidy efforts and avoid funding the same areas multiple times. The Department of Agriculture, the FCC, and the Treasury Department each oversee separate broadband funding programs, in addition to the Commerce Department’s upcoming $42.5 billion broadband expansion effort.

The commission has signed memoranda of understanding with those agencies on providing data for the funding map, but Rosenworcel asked the subcommittee for help ensuring the agencies follow through and respond to FCC requests for their funding data. 

“If you could help us make sure those other agencies respond to us with data, you’ll see where there are problems, duplication, areas we haven’t reached,” she said.

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Broadband's Impact

House GOP Uses Oversight Hearing to Criticize FCC Actions

Partisan disputes return to FCC policies after years of a 2-2 split on the commission.

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Screenshot of Rep. Cathy McMorris Rodgers at the hearing Thursday.

WASHINGTON, December 1, 2023 – GOP lawmakers took the opportunity to slam recent Federal Communications Commission efforts at a House oversight hearing on Thursday.

That did not come as a surprise, with the communications and technology subcommittee branding the hearing as overseeing “President Biden’s broadband takeover.” Partisan disputes have resumed around FCC policies since the appointment of commissioner Anna Gomez, who gave Democrats a 3-2 majority on the commission.

The hearing also touched on spectrum policy and the Affordable Connectivity Program, which is still set to dry up in April 2024 despite months of calls for its renewal.

Digital discrimination

The FCC voted along party lines on November 15 to instate rules addressing gaps in broadband access along racial and class lines. Those rules are taking an approach industry groups opposed and allow the commission to take enforcement action against companies for practices that do not intentionally withhold broadband from protected groups.

Technology and Communications Subcommittee members and Republican commissioner Brendan Carr echoed talking points from an industry lobbying push that characterized the rules as a “micromanagement” effort to scrutinize routine business practices. 

Rep. Cathy McMorris Rodgers, R-Washington, said “burdensome requirements like these will discourage deployment and harm our efforts to close the digital divide.”

Rodgers sparred with FCC Chairwoman Jessica Rosenworcel on the issue, interrupting her answers to questions to reclaim time.

Rosenworcel, for her part, stuck to her argument that the rules are in line with the Infrastructure Act, which mandates the commission take action “preventing discrimination of access based on income level, race, ethnicity, color, religion, or national origin.” 

“The language in this statute is exceptionally broad,” she said.

The act also directs the commission to take into account technical and economic feasibility of deploying networks in poor and rural areas, but Rosenworcel’s assurances that the FCC will do so have not convinced industry or Republicans.

Net neutrality

The commission also moved forward on plans to reinstate net neutrality rules in October. The rules would classify broadband internet as a telecommunications service under Title II of the Communications Act of 1934, opening the industry up to more expansive regulatory oversight from the FCC. 

Similar rules were in place for two years before being repealed by the Trump FCC in 2017.

Republican committee members grilled the commission on Democratic warnings that the repeal would result in widespread traffic throttling, which did not materialize at scale in Title II’s absence.

Subcommittee Chairman Rep. Bob Latta, R-Ohio, asked Rosenworcel “when the so-called net neutrality rules were repealed, did it end the internet as we know it today, yes or no?”

The commission chairwoman answered a string of similar questions by saying the anticlimactic end to Title II broadband rules was “a result of more than about a dozen states stepping in and developing their own net neutrality laws.”

Commissioner Carr also argued with Rosenworcel on Title II’s impact on national security, talking over each other at points. Carr said there had been “one briefing” in his six year tenure in which he was told about a security issue the government could not address without Title II oversight over broadband. 

Rosenworcel said she has told national security authorities “over and over again” that without Title II authority, she cannot take requested actions to stop bad actors from hijacking traffic.

The commission is taking public comments on the proposed net neutrality rules until January 2024.

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FCC Pushes Congress on Spectrum Auction Authority, ACP Funding at Oversight Hearing

Commissioners from both parties emphasized the issues to the House Communications and Technology Subcommittee.

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Screenshot of FCC Chairwoman Jessica Rosenworcel at the hearing Thursday.

WASHINGTON, November 30, 2023 – The Federal Communications Commission asked Congress to move on renewing the agency’s auction authority and funding the Affordable Connectivity Program at a House oversight hearing on Thursday.

“We badly need Congress to restore the agency’s spectrum auction authority,” said FCC Chairwoman Jessica Rosenworcel at the hearing. “I have a bunch of bands that are sitting in the closet at the FCC.”

Rosenworcel pointed to 550 megahertz in the 12.7-13.25 GHz band. The commission would “be able to proceed to auction on that relatively quickly” if given the go ahead, she said.

The commission’s authority to auction spectrum expired for the first time in March after Congress failed to extend it. Auction authority lets the commission auction off and issue licenses allowing the use of certain electromagnetic frequency bands for wireless communication.

Repeated pushes to restore the ability, first handed to the commission in 1996, have stalled in the face of gridlock on Capitol Hill.

Opening up spectrum is becoming more necessary as emerging technologies and expanding networks compete for finite airwaves. The Joe Biden administration unveiled a plan this month to begin two-year studies of almost 2,800 MHz of government spectrum for potential commercial use.

FCC Commissioner Brendan Carr said that’s not fast enough. “I would have had the spectrum plan actually free up more than zero megahertz of spectrum,” he said.

Rosenworcel said the FCC was in talks with the National Telecommunications and Information Administration, the agency that wrote up the plan, during the drafting process. When asked if the NTIA followed her recommendations, she said she would “like everyone to move faster and have a bigger pipeline in general.”

Commissioners expressed support for a House bill that would give the FCC temporary authority to issue the licenses it already auctioned off for 5G networks in the 2.5 GHz band. An identical bill passed the Senate in September.

T-Mobile took home more than 85 percent of the 8,000 total licenses in the band for $304 million, but the company and other winners cannot legally use their spectrum until the FCC issues the licenses.

Affordable Connectivity Program

Also at the top of commissioners’ minds was the Affordable Connectivity Program. Set up with $14 billion from the Infrastructure Act, the program provides a monthly internet subsidy for 22 million low-income households.

The program is expected to run out of money in April 2024.

“We have come so far, we can’t go back,” Rosenworcel said. “We need Congress to continue to fund this program. If it does not, in April of next year we’ll have to unplug households.”

The Biden administration asked Congress in October for $6 billion in the upcoming appropriations bill to keep the ACP afloat through December 2024. The government has been funded since September by stop-gap measures, with House Republicans ousting former Speaker Kevin McCarthy, R-CA, over his unwillingness to cut spending and making similar demands of his replacement. 

A coalition of 26 governors joined the chorus of calls to extend the program on November 16. Lawmakers, activists, and broadband companies have been sounding the alarm on the program’s expiration for months as the $42.5 billion Broadband Equity, Access and Deployment effort gets underway. Without the subsidy, experts have said, households could be unable to access the new infrastructure built by BEAD.

Representative Yvette Clarke, D-NY, said of the ACP shortfall that she is “looking forward to introducing legislation on that very subject before Congress concludes its work for the year.”

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