Antitrust

Verizon Wireless and Google plan to co-develop several devices based on the Android system that will be preloaded with their own applications — plus others from third parties, a possible contender to Apple’s huge iPhone application store. They will market and distribute products and services, with Verizon also contributing its nationwide distribution channels. If the network neutrality mandates in the Markey-Eshoo bill were to become law, I don’t see how VZW and GOOG could preload applications, if the applications favor certain content on the Internet when they are used. That would seem to violate the “duty” of Internet access service providers to not block, interfere with, discriminate against, impair, or degrade the ability of any person to use an Internet Read More ›

Wired has a good article by Robert Capps, “The Good Enough Revolution: When Cheap and Simple Is Just Fine.“ Cheap, fast, simple tools are suddenly everywhere. We get our breaking news from blogs, we make spotty long-distance calls on Skype, we watch video on small computer screens rather than TVs, and more and more of us are carrying around dinky, low-power netbook computers that are just good enough to meet our surfing and emailing needs. The low end has never been riding higher. So what happened? Well, in short, technology happened. The world has sped up, become more connected and a whole lot busier. As a result, what consumers want from the products and services they buy is fundamentally changing. Read More ›

The Department of Justice is looking into whether large U.S. telecommunications companies such as AT&T Inc. and Verizon Communications Inc. are abusing the market power they have amassed in recent years, according to the Wall Street Journal. One area that might be explored is whether big wireless carriers are hurting smaller rivals by locking up popular phones through exclusive agreements with handset makers. Lawmakers and regulators have raised questions about deals such as AT&T’s exclusive right to provide service for Apple Inc.’s iPhone in the U.S. The department also may review whether telecom carriers are unduly restricting the types of services other companies can offer on their networks, one person familiar with the situation said. Public-interest groups have complained when Read More ›

George S. Ford and Lawrence J. Spiwak at the Phoenix Center conclude in a new paper that government intervention is not warranted in the market for special access services purchased by businesses and institutions (which I discussed most recently here). They note that the rates of return a prominent study estimated AT&T, Qwest and Verizon are currently earning either are similar to or less than the rates of return these companies used to earn when the market was fully regulated. NRRI bases this analysis on ARMIS rates of return, a perplexing approach once one calculates ARMIS rates of return from the period in which all special access services were price regulated. In 1999, for example, the average rate of return Read More ›

The European Union issued the opinion explaining its decision to fine Intel $1.45 billion for offering discounts to large purchasers (see this and this), a common and typically procompetitive business practice. Although antitrust originated in the U.S., antitrust enforcement has become more active in other parts of the world where awareness of the limitations and dangers of overly-aggressive antitrust enforcement is still in the embryonic stages. This has created a regrettable forum-shopping opportunity for less-successful U.S. and foreign competitors. According to one report, Many smaller companies complaining of abusive practices by their larger rivals were so frustrated that they went overseas to the European Commission and to Asian authorities to find receptive enforcement officials. The Obama administration plans more aggressive Read More ›

From a recent column in the New York Times: “You almost feel sorry for Google,” said Danny Sullivan, editor in chief of Search Engine Land. “They’re doing a good job and people are turning to them. But when they pass 70 percent share, people are going to be uncomfortable about Google becoming a monopoly.” * * * *”I have no beef with Google,” said Jeff Atwood, a co-founder of Stack Overflow. “I like Google. But I’m concerned. If you project this trend forward four years, just follow the graph. A world in which there is no competition strikes me as unhealthy.” It is clear from the column that nobody is accusing Google of unfairly sabotaging its competitors; in fact, it Read More ›

Should antitrust enforcers be concerned about entry barriers in the search ad market? Some believe the market exhibits “network effects,” according to the New York Times. Although traditionally applied to Industrial Age industries with high fixed costs like railroads and telephone exchanges, anything now exhibits a network effect if its value increases because more people use it. Network effects are “everywhere,” according to a top former antitrust official. Coke and Pepsi drinkers, for example, “benefit from the network of their fellow consumers because Coke and Pepsi are widely available in restaurants and in vending machines,” claims Timothy J. Muris. A preexisting network of vending machines is admittedly tough for soft drink imitators to replicate. But a barrier to imitation can Read More ›

The Rural Cellular Association wants the FCC to eliminate exclusivity arrangements between cellphone carriers and manufacturers of popular handsets. For many consumers, the end result of these exclusive arrangements is being channeled to purchase wireless service from a carrier that has monopolistic control over the desired handset and having to pay a premium price for the handset because the market is devoid of any competition for the particular handset. Exclusivity deals are common throughout the business world and often serve procompetitive purposes. And there is no way to condemn AT&T-Apple iPhone, Verizon Wireless-LG Voyager or Sprint Nextel-Samsung Ace without condemning exclusivity generally. For one thing, there are five major cellphone carriers and many smaller competitors. AT&T (Mobility), the largest, has Read More ›

Comcast and BitTorrent are working together to improve the delivery of video files on Comcast’s broadband network. Rather than slow traffic by certain types of applications — such as file-sharing software or companies like BitTorrent — Comcast will slow traffic for those users who consume the most bandwidth, said Comcast’s [Chief Technology Officer, Tony] Warner. Comcast hopes to be able to switch to a new policy based on this model as soon as the end of the year, he added. The company’s push to add additional data capacity to its network also will play a role, he said. Comcast will start with lab tests to determine if the model is feasible. Over at Public Knowledge, Jef Pearlman argues that the Read More ›

John Conyers, Jr. If broadband providers turn the Internet into a “world where those who pay can play, but those who don’t are simply out of luck,” current antitrust law can solve the problem says House Judiciary Chairman John Conyers, Jr. (D-MI). I believe that antitrust law is the most appropriate way to deal with this problem — and antitrust law is not regulation. It exists to correct distortions of the free market, where monopolies or cartels have cornered the market, and competition is not being allowed to work. The antitrust laws can help maintain a free and open Internet. The comment came at a Congressional hearing yesterday. Of course the broadband market isn’t characterized by monopoly or cartel, so Read More ›