November 2011

AT&T, T-Mobile Mull Plan B

AT&T and Deutsche Telekom AG, the parent of T-Mobile USA, have discussed an alternative transaction -- forming a joint venture that would pool network assets from the two U.S. wireless carriers -- if their current acquisition deal falls apart, people familiar with the matter said.

These discussions aren't advanced and were described by the people as a plan the two companies have on the back burner. Still, the people added, AT&T and Deutsche Telekom are likely to take a closer look at a joint venture as AT&T's planned $39 billion purchase of T-Mobile USA faces mounting opposition. A joint venture could help solve some of the wireless-capacity constraints both companies are expected to face in the coming years while avoiding the competitive concerns voiced by the Justice Department. Much would depend on how the deal is structured and the details, but a proposal that left T-Mobile USA as a truly viable competitor might pass muster with the Justice Department. The nature of the joint venture that AT&T and Deutsche Telekom have discussed is unclear.

Analysts have suggested that under a joint venture, the two companies could jointly use the T-Mobile spectrum that AT&T covets while Deutsche Telekom holds onto its T-Mobile customers. It's unclear whether under such a scenario AT&T would still be on the hook for the full breakup fee -- including $3 billion in cash and spectrum with a book value of $1 billion -- that it agreed to pay Deutsche Telekom should regulators block the merger. At the same time, the nation's largest wireless carrier is in talks with smaller players to divest itself of some assets, including customers and spectrum, in hopes of satisfying regulators' concerns that the proposed deal will be anti-competitive. Such divestitures, ideally to one buyer, are intended to help build a stronger wireless player that could compete with the behemoths and preserve choice for customers.

FCC Chair Defends Release of Draft AT&T–T-Mobile Report

Federal Communications Commission Chairman Julius Genachowski indicated that the FCC did not release a staff report detailing its objections to the AT&T/T-Mobile deal to reduce the deal's chances at the Justice Department, but because it was always meant to be public and to release it was only fair to all parties.

AT&T has argued the release of the draft report was improper. The report, which was released even though the FCC withdrew the merger application at AT&T's request, questioned the premise that AT&T's upgrade of its mobile wireless service would create jobs. A reporter asked the chairman at a press conference after the FCC's public meeting whether that presumed job creation wasn't also part of the FCC's presumption in pushing for a national broadband plan and spectrum auctions. Chairmen Genachowski said they were two different situations. One was a horizontal merger with billions of dollars of claimed efficiencies, and the other modernization of programs to get broadband to millions of people who don't already have it. FCC staffers in a briefing on the report the day before had also made the point that there was a difference between job claims from simply boosting speeds and ones from going from no broadband to broadband.

Asked whether the FCC released the report as a way to decrease the odds that the deal would be approved by Justice, Genachowski said that the report was released because it had been "developed for public release in an important matter that remains highly relevant." He pointed out that AT&T had signaled it planned to re-file the application at a later date. "The FCC still has the responsibility ultimately to approve any transaction," he said. "The reasons to release it were fairness to all the parties that have participated in the proceeding, and transparency."

Democrats ask to postpone vote on spectrum bill

Reps. Henry Waxman (D-CA) and Anna Eshoo (D-CA) urged their Republican counterparts to postpone a vote on spectrum legislation scheduled for Dec 1. But the Republicans don't plan to budge.

"After almost a year of hearings and extensive meetings, the committee looks forward to convening the markup tomorrow at 10 a.m.," Debbee Keller, a spokeswoman for the committee Republicans, said. In a letter sent to House Commerce Committee Chairman Fred Upton (R-MI) and Communications and Technology Subcommittee Chairman Greg Walden (R-OR), Reps Waxman and Eshoo said they need more time to review the Republicans' spectrum legislation, which was released on Nov 29. They also encouraged the Republicans to resume negotiations over the bill, which they say were cut off in October.

Tech trade group questions FTC privacy settlements

A technology industry trade group that counts Google, eBay and Microsoft among its members questioned the length of recent privacy settlements reached by the Federal Trade Commission with firms accused of violating consumers' privacy.

The Computer & Communications Industry Association issued a statement in response to the settlement between Facebook and the FTC that requires the social network to implement a comprehensive privacy program and submit to 20 years of outside privacy audits. A similar settlement between Google and the FTC earlier this year covers the same time frame. “Regardless of the merits of this latest settlement, we have some concern that the 20 year oversight provisions seem to be becoming the norm. This may be unnecessarily long when dealing with dynamic companies that have competitive reasons to be responsive to the privacy demands of their customers," said CCIA president Ed Black.

Google rips Senate's online piracy bill: 'This is what is wrong with Washington'

Google is exhorting senators to oppose an online piracy bill, arguing it would threaten national security, shackle the Internet with regulations and imperil free speech.

The memo that is being circulated on Capitol Hill lists five reasons not to co-sponsor the legislation. It argues the bill puts at risk “the ability for free speech and the ability of political parties to spread their message” while creating a “thicket of new Internet regulations similar to the administration’s net-neutrality rules.” It also calls the legislation “a trial lawyer’s dream” and claims it seeks to “regulate the Internet.”

Post-Newsweek Station Offer Free Airtime

Post-Newsweek Stations, in preparation for the 2012 elections, announced plans to make free airtime available to candidates on its six television stations: WDIV Detroit; KPRC Houston; WPLG Miami; WKMG Orlando, Fla.; WJXT Jacksonville, Fla.; and KSAT San Antonio, Texas. Post-Newsweek Stations are located in the key battlegrounds states of Florida, Texas and Michigan. In addition to the Presidential race, each of these states has important senatorial and congressional races.

The key elements of the offer are as follows:

Free airtime and free Web time opportunities to candidates in the 30 days preceding the general elections.
Each station will devote at least 10 minutes per weekday to locally-produced political news coverage during the political season. The coverage will continue throughout the entire broadcast day.
Stations will look for opportunities allowing candidates to participate in on-air debates and community-driven town hall meetings televised on the stations during key time-periods and live-streamed video on the stations' websites.
Internet sites operated by Post-Newsweek Stations will feature comprehensive election related material with a high-profile political section featuring candidate biographies, political blogs, streaming video and The Ultimate Voter Guide.
Public service announcements encouraging voting participation in the election will be given priority clearance in each station's inventory of public service announcements throughout the election season.

FCC empowers broadband and health IT to transform health care for patients

The Federal Communications Commission adopted rules that will enable a new generation of wireless medical devices that could be used to restore functions to paralyzed limbs.

Medical Micropower Networks (MMNs) are ultra-low power wideband networks consisting of multiple transmitters implanted in the body that use electric currents to activate and monitor nerves and muscles. The FCC initiated this proceeding in response to a petition from the Alfred Mann Foundation, which has built prototype MMN systems and conducted extensive testing that demonstrates that this new medical technology can reliably operate in shared spectrum to deliver vital therapies. The action the FCC takes today will allow devices such as those being tested by Alfred Mann to proceed on the path to patient use as well as inspire researchers to begin work on the next generation of implanted medical radio networks.

FCC Presentation on Broadband Adoption Efforts

At the Federal Communications Commission’s Nov 30 open meeting, FCC staff made a presentation on broadband adoption efforts, noting the economic opportunities of improving the broadband adoption rate which rests at 68%.

One third of Americans (100 million people) do not have broadband at home. The three top reasons for non-adoption are 1) Cost, 2) Digital literacy, and 3) Relevancy. The FCC has many efforts to address the issue: it formed the Broadband Adoption Taskforce; created the Connect America Fund; mandated the Comcast Internet Essentials and CenturyLink Internet Basics programs; and is considering a Digital Literacy Corps and including broadband in its Lifeline program. The presentation also highlighted the Connect to Compete program, focused initially on making broadband more affordable and accessible for low-income families with school-age children.

FCC Chairman Julius Genachowski used the update to thank the private sector and nonprofits -- One Economy is housing the Connect to Compete adoption effort -- for stepping up and saying adoption was a national challenge and they wanted to be part of the solution. He added that he was looking for others to step up as well in the coming months.

Recap: Constitutional Limitations on States' Authority to Collect Sales Taxes in E-Commerce

The House Committee on the Judiciary held a hearing on Internet sales taxes on Nov 30.

Paul Misener, Amazon’s vice president for global public policy, urged Congress to set standards for collecting state sales taxes from online commerce. Any exceptions to the tax should be kept “very low” for fairness reasons, Misener said. Amazon, the largest online retailer, has long battled attempts by states to levy sales taxes on Internet transactions. Now it’s backing efforts to create a federal standard for states to collect sales tax on online purchases. A 1992 U.S. Supreme Court decision exempted businesses from collecting sales taxes in states in which they don’t have a physical presence, or “nexus,” such as a store or warehouse.

That ruling has given Internet-based sellers an edge in the marketplace over brick-and-mortar retailers, said Rep John Conyers (D-MI). John Otto, an accountant and state representative from Texas, urged lawmakers to set ground rules for requiring the collection of online sales taxes. If the 1992 Supreme Court decision “is allowed to remain the law of the land, are we not picking winners and losers within the retail sector?” Otto said. “The marketplace has changed in 19 years and we have not.” The National Governors Association estimated that states are currently missing out on collecting more than $22 billion each year in sales tax on goods sold online or through catalogues.

Gov. Haley Barbour endorses online sales tax

Gov. Haley Barbour (R-MS) endorsed the Marketplace Fairness Act, which would allow states to tax online purchases.

“I am writing to congratulate you on the introduction of the Marketplace Fairness Act and offer my support for its timely passage," Gov Barbour wrote in a letter to Sens. Mike Enzi (R-WY) and Lamar Alexander (R-TN), two co-sponsors of the bill. Sen. Dick Durbin (D-IL) is also a leading supporter. The bill would close what its supporters characterize as a loophole that treats online retailers differently than brick-and-mortar stores. Under current law, people who buy goods online are supposed to declare those purchases on their tax forms, but few do. As a result, most people do not pay taxes on their online purchases. “Fifteen years ago, when e-commerce was still a nascent industry, it made sense to exempt startups like Amazon.com from collecting and remitting sales taxes in states where they had no facilities," Gov Barbour wrote. "But today, e-commerce has grown, and there is simply no longer a compelling reason for government to continue giving online retailers special treatment over small businesses."

Benton

Search