Democracy and Technology Blog

AT&T/T-Mobile merger debate

41802_11272407594_9840_n.jpgOver at Technology Liberation Front, several colleagues and I recently “debated” the proposed merger between AT&T and T-Mobile from a free market perspective. For a skeptical take on the merger, see the item by Milton Mueller. The rest of us are more optimistic.
The AT&T – T-Mobile Merger: Beyond the Arithmetic, by Larry Downes (Apr. 18, 2011)
Why I fear the AT&T-T-Mobile merger, by Milton Mueller (Apr. 18, 2011)
Open minded on the AT&T/T-Mobile merger, by Hance Haney (Apr. 19, 2011)
Information Control, Market Concentration, and the AT&T/T-Mobile Deal, by Ryan Radia (Apr. 20, 2011)
For The Last Time: The Bell System Monopoly Is Not Being Rebuilt, by Steven Titch (Apr. 22, 2011)

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End Time Follies

Does the rise of Facebook portend the end of the real world, the collapse of dictatorships, the fall of Google, and the rise of love and peace and network neutrality?
Do smart pods and pads and Edenic walled social networks mean the end of the Web?
From Money, Fortune, the Economist, and Technology Review to a galore of blogs and newsletters, pundits predict the collapse of the web. Last September, Wired put it all together behind a lustrous eye-blasting pink cover, with Chris Anderson-Michael Wolff grafitti declaring “The Web is Dead.” Many see Facebook, Twitter, and Apple’s mediacopia as bringing about the decline and fall of Google, the outbreak of world revolution, or the revival of the U.S. economy of innovation.
As an extension of policy based networking tools from the enterprise to the dating scene, Facebook has no security to speak of, and no significant new technology. Yet it is treated as both an answer to the decline of the U.S. economy of innovation and a threat to the existing networking industry. Twitter is seen as a threat to mullahs in Iran and on American TV news. Apple’s mobile pods and pads are said to portend an end to the old worldwide web and the ascent of fire-walled gardens of delightful earthly aps.
The nub of such mindbending but brain-bent observations is the eclipse of the web by walled content, which is media “controlled” by one menacing company, like Apple or Comcast or Newscorp. As conceived by Tim Berners-Lee, the World Wide Web, by contrast, was open to all. At CERN in Geneva, the Web inventor specified the HTML mark-up language for the creation of standard web pages that could be read on a browser on any computer attached to the net. Transmission across the net was accomplished by HTTP (hypertext transport protocol). Berners-Lee was concerned less with the network that delivered the bits and bytes on what is called “layer 3” than with the desktop experience and linkage to other pages.

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Netflix seeks piece of the action

Remember how network neutrality regulation was supposed to be for the limited purpose of preventing broadband providers (aka Internet Service Providers) from blocking or degrading access to unaffiliated web sites? Those of us who feared a “slippery slope” have been attacked as cynical, idiotic and hysterical. So now along comes Netflix. NN regulation won’t help Netflix, according to CEO Reed Hastings. The firm is not worried about being blocked or degraded. It’s worried about being charged for the huge volume of video traffic it hopes to deliver over the Internet in place of the DVDs it now sends through the mail. Netflix wants free access to the customers of the broadband providers. We don’t think ISPs should be able to Read More ›

Block a wireless merger because regulators might be able to produce a superior outcome?

The Wall Street Journal quotes two high-ranking former officials from the Federal Communications Commission who are skeptical of the AT&T/T-Mobile merger. AT&T is citing the need for more spectrum in urban areas to keep up with the increasing amount of wireless data traffic. As the article points out, data traffic is up 8,000% on AT&T’s wireless network over the past 4 years. Meanwhile, T-Mobile’s network uses the same technology as AT&T’s, and T-Mobile’s spectrum is underutilized. A former chief technology officer at the FCC shares his thoughts on the best way to fix the shortage. The correct way to do it is to change policy and release a huge amount of spectrum. Spectrum is in short supply where you want Read More ›

Going, going, gone: the telephone

Wired telecommunications carriers are one of 10 doomed industries, according to Toon Van Beeck at IBISWorld. Of the 10 chosen industries that are dying, Wired Telecommunication Carriers is by far the largest, at $154.0 billion in turnover. While this number may sound sizeable, it’s considerably smaller than the $341.8 billion at the end of 2000. Since then, this industry has declined in every year, and it is now close to 55% smaller than it was at its peak; with an additional decline of 37.1% expected in the next six years. While major players like AT&T and Verizon continue to dominate the industry, they are generating lower returns each year as consumers switch to VoIP and wireless products. That’s a far Read More ›

A cyber-security dictator?

It’s no secret that hackers can penetrate networks which deliver essential products and services. At the Los Angeles Times, Ken Dilanian writes: The U.S. is vulnerable to a cyber attack, with its electrical grids, pipelines, chemical plants and other infrastructure designed without security in mind. Some say not enough is being done to protect the country. * * * * The basic roadblocks are that the government lacks the authority to force industry to secure its networks and industry doesn’t have the incentive to do so on its own. Not so fast. Government itself played an important role in the design of the networks. Traditionally, most of them were and/or still are subject to pervasive government regulation designed to provide Read More ›

Kill the messenger?

According to this report, The liberal group Media Matters has quietly transformed itself in preparation for what its founder, David Brock, described in an interview as an all-out campaign of “guerrilla warfare and sabotage” aimed at the Fox News Channel….Media Matters, Brock said, is assembling opposition research files not only on Fox’s top executives but on a series of midlevel officials. It has hired an activist who has led a successful campaign to press advertisers to avoid Glenn Beck’s show. If their opponents are spreading false or misleading arguments, couldn’t “progressives” disprove those arguments? If progressives have a sound case to make, why would these thuggish tactics be necessary?

Why would Sprint oppose AT&T/T-Mobile merger? What could Sprint hope to gain?

Sprint’s CEO, Dan Hesse, worries that “too much power” would be in the hands of AT&T and Verizon Wireless if AT&T acquires T-Mobile USA.
sprint_nextel.03.gifSprint has been losing customers and revenues ever since its own problematic merger with Nextel in 2005. The carrier lost about $3.5 billion last year alone. Although Sprint’s troubles would not be solved if regulators block a merger between AT&T and T-Mobile, Hesse’s words suggest the possibility that Sprint may nevertheless urge policy makers to block the deal.
This is not sour grapes; it is a shrewd abuse of the regulatory process, which provides a golden opportunity for struggling competitors and others who are well-connected politically to practice legal extortion. For example, AT&T could be forced by the Federal Communications Commission and the Department of Justice or the Federal Trade Commission to sell assets at firesale prices, or to provide services to Sprint at overly-generous prices. AT&T could literally be forced to subsidize its competitor.
This raises the question whether government can and should intervene to preserve the wireless industry as a whole? As a general matter, when government intervenes to protect weak competitors it risks diverting private investment away from enterprises that are well-managed and efficiently-configured to firms that couldn’t otherwise proposer in a free market.

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Time for Tennessee’s hidden phone tax to go

In Tennessee, legislation to eliminate the hidden subsidies in intrastate access charges applied to long-distance calls which originate and terminate within the state has passed the Senate Commerce Committee and the House Sub-Commerce Committee. The votes in the two panels were overwhelming: 8-1 and 12-1. It has taken real leadership by the bills’ sponsors — Sen. Mark Norris and Rep. Gerald McCormick — and others to write and pass legislation dealing with this matter over committed opposition. As amended, SB 0598 would prohibit telecommunications providers from charging intrastate access charges that exceed interstate access charges. The amendment includes a 5-year transition, beginning in April 2012. The House bill is HB 0574. As I’ve blogged about here and here, eliminating the Read More ›

AT&T + T-Mobile = ?

Talk about gutsy. AT&T is set to buy T-Mobile for $39 billion. AT&T is a giant corporation. When AT&T acquires T-Mobile, the number of national wireless providers will go from 4 to 3. And struggling no. 3 (Sprint) may not have anyone with which to partner. Is this a disaster? Can government protect the little guy? T-Mobile is dead in the water. It has run out of gas. It can’t make money. T-Mobile and AT&T are a natural fit because their networks rely on similar technology. Not true for Verizon Wireless and Sprint. If the government blocks this merger it will force an economically inefficient (and ultimately unsustainable) outcome. Politicians cannot alter the laws of economics. This merger is likely Read More ›