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Antitrust

T-Mobile’s Acquisition of Sprint Passes Federal Muster, But 16 States Press On in Opposition

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Photo of event at the Capitol Forum by Masha Abarinova

WASHINGTON, November 14. 2019- Despite the approval of the T-Mobile-Sprint merger by the Federal Communications Commission and the Department of Justice, 16 state attorneys general are still determined to block the acquisition. Policy experts at Thursday’s Capitol Forum conference advocated both the benefits and drawbacks of the merger, as well as how it will affect competition in the wireless industry.

The state AGs will have a hard time proving that the merger is harmful to consumers, said Former FCC Commissioner Robert McDowell. A substantial amount of competition analysis, he said, is necessary to show that higher pricing and other adverse effects may arise.

The agencies’ decision is the correct call, McDowell continued, because the FCC has the public interest standard in mind, whereas the DOJ has the antitrust expertise to support it.

Sprint alone cannot build a nationwide coast-to-coast 5G wireless network, said McDowell. The carrier has deployed the service in only nine cities so far, and T-Mobile is expanding their 5G coverage at a much more rapid pace.

Competition is ultimately the best enforcer of the merger, he said, with customers leading the drive-testing for innovation.

INCOMPAS Chief Advocate and General Counsel Angie Kronenberg argued that the merger will benefit the wholesale wireless market and particularly DISH Network Corporation’s contract with T-Mobile.

DISH holds a unique place in this transaction, she said, because unlike other merger participants, it will develop its own 5G wireless network and subsequently help users transition from 4G services.

A fourth major wireless network, Kronenberg added, is necessary to help consumers get the service they need. Moreover, DISH has a history of disrupting entrenched markets, such as broadcast radio and satellite services. It doesn’t seem far-fetched for DISH to enter the wireless market as a full-fledged, 5G facilitated network, she said.

Billions of dollars are at risk if DISH fails to meet its buildout requirements in the allotted timeframe, Kronenberg said. That’s why the company has huge incentives to increase 5G rollout rates that can put immediate downward pressure on pricing.

On the opposing side of the merger, Deborah Goldman, director of Research and Telecommunications Policy at Communication Workers of America, argued that it may not deliver the services promised and have unilateral anticompetitive effects.

Goldman referred to Commissioner Jessica Rosenworcel’s past statement about the harm the merger may bring to the distribution of mid-band spectrum. The FCC can better serve the public interest, she said, if it explored alternative options to a price-rising, competitor-killing merger.

DISH Network has also been underperforming in sales the past few years, Goldman continued, making it unlikely that DISH can replace the competition lost by the merger.

Market structure, Goldman said, is key in disruption. Even if there is an excess capacity of spectrum, the wireless market is still highly influenced by competitors. It’s also not entirely certain that Sprint alone is unable to rollout 5G services, she said, as the company possesses thousands of small cell tower leases and spectrum assets from its corporate owner, SoftBank.

Regarding the litigation process itself, legal experts at the conference said that the states have a tough case to make and that the attorneys present must be careful not to politicize the trial.

A horizontal merger has the presumption that the judge will defer to the state, said Corey Roush, partner at Akin Gump. State AGs will need ample time to prove that the merger is anticompetitive and establish a counter-narrative to what the government is putting forward.

However, Roush added, since the trial will not take place in D.C., where judges are more deferential to the federal government, the state clients have a slightly better chance of winning the case. The defendants need to prove that they have the right market to build upon the merger, he said.

The federal government can make a case that Sprint is ill-equipped to move forward with 5G alone, said Baker Botts Partner Michael Perry, if the company’s current shares do not reflect the wireless market’s competitive reality.

Moreover, the current presidential administration has not been aggressive as it would like with antitrust enforcement, Perry added. It would be unwise for the federal defendants to take a partisan stance against the state AGs, since state antitrust enforcers may have different political interests.

It would be a big loss for states, Roush said, if the court makes it appear that the White House is influencing its decision. It may cause states without a predominant Democratic population, such as Texas, to pull out of the trial and have unforeseen complications on the national wireless market.

Antitrust

CES 2022: Patreon Policy Director Says Antitrust Regulators Need More Resources

To find the best way to regulate technology, antitrust regulators need more tools to maintain fairness in the digital economy.

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Larent Crenshaw (left), head of Patreon's global policy team

LAS VEGAS, January 7, 2021 – The head of Patreon’s global policy team said federal regulators need more resources to stay informed about technology trends.

Laurent Crenshaw told CES 2022 participants Friday that Congress should provide tools for agencies like the Federal Trade Commission to enforce consumer protection standards.

“I’m not going to say that big tech needs to be broken up, but there should be appropriate resources for federal regulators to understand the digital marketplace,” he said. “We’re are still living in a world that is dominated by big actors, and we’re debating about whether to even give federal regulators the power to understand how the marketplace is moving toward digital.”

Crenshaw of Patreon said that more resources were necessary at the FTC in order to understand the digital marketplace. Patreon is a membership platform that provides a subscription service for creators to offer their followers.

Such resources would empower the agency to place appropriate safeguards for smaller technology innovators. “So in 10 [or] 20 years, it’s not just the replacements of the current Google, Apple, or Facebook, but something entirely new,” he said.

Panelists echoed Crenshaw’s point that consumer welfare should guide competition policy. Tyler Grimm, chief counsel for policy and strategy in the House Judiciary Committee, said that antitrust should bend to the consumer welfare standard. “Antitrust should leave in its wake a better economy,” he said.

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Media Ownership

LeGeyt Appointed President and CEO of National Association of Broadcasters

LeGeyt was the organization’s executive vice president of government relations and COO.

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Curtis LeGeyt

WASHINGTON, January 4, 2022 – The National Association of Broadcasters has appointed Curtis LeGeyt to serve as president and CEO, replacing Gordon Smith.

“It is an honor to lead this great organization and advocate for the local television and radio broadcasters that inform, entertain and serve their communities every day,” said LeGeyt in a statement. “I am grateful to our Board of Directors for placing its trust in me and look forward to working alongside them, the entire NAB team and our members to ensure a vibrant future for broadcasting.”

LeGeyt was previously the executive vice president of government relations and chief operating officer of NAB. He holds a JD from Cornell Law School.

“We are excited to now have Curtis at the helm to guide the organization into its next chapter. He is a proven leader and skilled fighter on behalf of broadcasters, and we are thrilled to have him serve as our voice in Washington and around the world,” said David Santrella, NAB joint board of directors chairman and CEO of Salem Media Group.

The previous president and CEO, Gordon Smith, served in this role for 12 years. Smith will remain with the NAB, albeit in an “advisory and advocacy” capacity. During his tenure, NAB took a hardline on big technology companies, condemning them as a threat to small TV and radio stations that make up local media, and called for citizens to voice their concerns to legislators.

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Antitrust

Jason Boyce: Washington Cannot Let Amazon Water Down Consumer Protection Legislation

It is in Amazon’s interest to twist the arm of lawmakers and prevent protections against internet scams.

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Jason Boyce
The author of this Expert Opinion is Jason Boyce, founder of Avenue7Media

The holiday season is a reminder that with more Americans than ever heading online to do their shopping, lawmakers must continue taking action to prevent consumers from falling prey to internet scammers. That is why it was welcome news when Amazon recently reversed course on its longstanding opposition to bipartisan consumer protection legislation in Congress that would require third-party online marketplaces to verify independent sellers, with the goal of reducing counterfeits and stolen goods from these platforms.

But while Amazon’s public change of heart seemingly paves the way for the eventual passage of the bill, known as the INFORM Consumers Act, lawmakers must ensure that the retail giant and other tech companies do not work behind the scenes to water down the legislation and render it toothless. Counterfeits pose great harm to consumers and small third-party sellers, and Congress must pass strong, comprehensive enforcement mechanisms to adequately protect both groups.

Amazon’s decision to endorse INFORM was certainly a surprise. Just this summer, Amazon launched an aggressive lobbying campaign to kill a more robust version of the legislation. But while Amazon ostensibly supports the current bill, it has reportedly unleashed its lobbyists in the Beltway to weaken it. While lawmakers such as Sen. Dick Durbin, D-Ill., one of the bill’s co-sponsors, say they refuse to let this happen, they should remain on high alert.

This is because we have seen Amazon’s playbook for publicly supporting legislation while simultaneously working to weaken it behind the scenes. For instance, Amazon CEO Jeff Bezos won praise earlier this year when he embraced President Joe Biden’s plan to raise the corporate tax rate. But behind the scenes, the company enlisted an army of lobbyists to maintain the research and development tax credit, which has been estimated to save the company hundreds of millions of dollars a year. As I have said before, Bezos’s support for a corporate tax hike is meaningless if the company can continue to engage in egregious tax avoidance schemes.

And it is not just Amazon; other Big Tech companies have resorted to similar “two-faced” tactics to weaken legislation. In April, an investigation by The Markup uncovered how some of the country’s most powerful technology companies, including Facebook and Google, advocated for mostly toothless privacy protection legislation in statehouses across the country — all with the intention of preempting state lawmakers from taking stronger action in the future.

Now with the prospect of a comprehensive consumer protection measure being signed into law, Congress must resist Amazon’s arm twisting. Counterfeits are far too serious of a threat, and watered-down legislation will fall short of creating the bold transparency measures that are desperately needed. Online counterfeiters have been known to peddle toys and children’s products, putting those most vulnerable in grave danger. These products fail to go through robust safety testing, meaning there is potential for serious health consequences.

But what many may not realize is the impact that counterfeits have on third-party sellers. As someone who works with Amazon sellers every day, I know exactly how legitimate businesses suffer when criminals sell fakes at below the market value. Small businesses are doing everything they can to fight these criminals — even if it means spending hundreds of thousands of dollars to do so.

Many of those selling fakes from the comfort of their own homes and hurting American businesses are overseas. According to the Department of Homeland Security, a staggering 85 percent of contraband items seized by U.S. Customs and Border Protection came from Hong Kong and China. Nonetheless, Amazon’s marketplace has become a hub for China-based sellers.

Amazon has no problem touting all of the measures it has taken to clean up its third-party marketplace. But, as I have explained, it is a common tactic of Amazon’s PR department to just share the numerator — and not the denominator. Thus, the $700 million it invests to fight fraud is pennies in the bucket when you consider that Amazon’s worldwide gross merchandise volume is estimated to be $490 billion.

It is critical that Congress advances the INFORM Consumers Act as it stands today. While I welcome Amazon’s endorsement of the common-sense measure — along with the other third-party marketplaces that recognize the benefits it would bring to e-commerce shopping — I can only hope it is sincere. Working behind the scenes to weaken this bill will be devastating to the millions of shoppers and sellers who have come to depend on Amazon’s third-party marketplace.

Jason Boyce is the author of “The Amazon Jungle” and founder of Amazon managed services agency, Avenue7Media. Previously, Boyce was an 18-year Top-200 Amazon seller. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views reflected in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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