The FCC should refocus on intermodal competition and if it won’t, Congress should require it to, said Free State Foundation Research Fellow Seth Cooper in a paper released Thursday (http://bit.ly/1000FDI). The commission’s recent wireless competition report “provides perhaps the latest example of the FCC’s apparent disinterest in consumer welfare dynamics of wireless versus wireline competition,” Cooper said. “Likewise, the FCC’s 14th Video Competition Report, lacking a hard look at increasingly common cross-platform competitive effects, contained few meaningful insights to inform regulatory policy.” The FCC should “take a more rigorous and empirical approach to intermodal competition,” he said. “It has ample authority to do so. Yet, the agency’s apparent reluctance to apply intermodal competition insights in its regulatory policymaking suggests the need for a Congressional response. One modest reform proposal would be to require a single FCC report on the communications market that seriously assesses intermodal competition. A unified competition report would be better suited to capturing the competitive effects of substitutes and cross-platform rivalry that should be essential to informing digital age communications policy."
AT&T must provide local competitors with transit traffic service under the Telecommunications Act of 1996 at regulated rates, the 2nd U.S. Circuit Court of Appeals ruled Wednesday (http://1.usa.gov/12X3ELK). Connecticut regulators had required AT&T in 2009 to provide transit service to competitors at the lower regulated rates, but a federal district court in 2011 said that requirement would undermine the Act’s preference for voluntary negotiations. The unanimous circuit court reversed, finding that most new entrants interconnect indirectly through direct interconnection with the ILEC. “Transit service is essential to ensuring that directly interconnected entrants can exchange traffic,” wrote Circuit Judge Barrington Parker. As an interconnecting carrier, AT&T is obligated under Section 251(c)(2) to provide this routing of traffic at “lower TELRIC rates” rather than charging “higher negotiated rates,” the court wrote. “It would be inconsistent with the stated purpose of the [Act] to allow AT&T to charge higher negotiated rates for this service because this would impose additional costs and competitive disadvantages upon new entrants. Such an imposition would allow AT&T to further exploit its status as a former monopolist.” The ruling “establishes a precedent in the Second Circuit for other CLECs to seek regulated rates for transit from state regulators if their new commercial negotiations are unsuccessful,” said Stifel Nicolaus analyst Christopher King. But it does “not allow them to automatically enjoy such relief if they had negotiated higher rates,” he said. The other judges on the case were Rosemary Pooler and Richard Wesley. AT&T could appeal the ruling to the full circuit en banc, or directly to the Supreme Court, but “such appeals are generally uphill,” King said. AT&T did not comment by our deadline.
PCIA President Jonathan Adelstein and other PCIA members updated FCC officials on the “state of play” on backup power deployment at cell sites, in a meeting at the agency. “PCIA explained that wireless service providers and infrastructure providers are committed to deploying backup power systems for wireless facilities as quickly and efficiently as possible,” said an ex parte filing (http://bit.ly/18qUDLA). “A pervasive barrier to that deployment is regulatory regimes at the federal, state, and local levels that govern the installation and operation of backup power technologies. PCIA suggested that tailoring regulations to account for the unique requirements of wireless facilities could hasten the pace of the deployment of backup power systems.”
John Legere, CEO of T-Mobile US -- the combined carrier that emerged from Tuesday’s combination of T-Mobile USA and MetroPCS -- helped ring the opening bell at the New York Stock Exchange Wednesday to mark the combined carriers’ first day trading on the exchange under the ticker TMUS. T-Mobile USA had not traded as a separate entity because it was a wholly-owned subsidiary of Deutsche Telekom, which owns 74 percent of the combined carrier. The carriers that now form T-Mobile US had a combined 43 million subscribers at the end of Q1, with spectrum holdings that “provides a path to at least 20X20 MHz of 4G LTE in approximately 90 percent of the top 25 metro areas in 2014 and beyond,” T-Mobile US said. It said the combined T-Mobile US is headquartered in Bellevue, Wash., and will maintain a “significant presence” in Richardson, Texas, where MetroPCS had been based. Standard and Poor’s said it believes the combined carrier’s operations are at “good scale but still well behind” No. 1 U.S. carrier Verizon Wireless and No. 2 AT&T, and to a “lesser extent” No. 3 Sprint Nextel. The combined carriers’ subscriber base is comprised of 50 percent contract customers, 34 percent no-contract customers and 16 percent wholesale, S&P said. The carrier will continue to “remain disadvantaged” against the larger carriers in competing for the most data-intensive customers and will have a comparatively larger rate of customer turnover, S&P said. T-Mobile US stock closed up 6.2 percent Wednesday at $16.52.
Liberty Media has completed its acquisition of $2.6 billion worth of shares of Charter Communications, representing a 27.3 percent “beneficial ownership” of the cable provider, according to a release from Liberty Wednesday (http://bit.ly/13N6wux). The release said the deal is the result of a previously announced (CD March 20 p16) stockholders’ agreement that allows Liberty to designate four directors to be appointed to the Charter board. The release said that with the deal’s completion, Liberty Chairman John Malone, Liberty CEO Gregory Maffei, Liberty Global Chief Technology Officer Balan Nair, and Barnes & Noble Chief Financial Officer
The FCC Media Bureau granted a Comcast petition Wednesday to exempt the cable provider from municipal rate-setting for basic-video and some other prices in five California communities, said filings posted in FCC docket 12-1 (http://bit.ly/ZWr5Gk). Comcast’s petition cited video competition from DirecTV, AT&T, and Dish Network. The deregulation will affect just under 45,000 households including the communities of Napa, Sonoma and American Canyon.
The FCC International Bureau dismissed five letters of intent from ViaSat regarding the planned ViaSat-2 satellite. ViaSat wanted to use the satellite, operating under the authority of the U.K., “to access the U.S. market using portions of the Ka band, including the 18.3-19.3 GHz and 19.7-20.2 GHz frequency bands” at 69.9 degrees west, the bureau’s Satellite Division said in a letter to an attorney for ViaSat (http://bit.ly/18dgokE). The commission made the 17.8-20.2 GHz band at 69 degrees west available for assignment pursuant to the FCC’s first-come, first-served licensing process effective 2 p.m. EDT on March 19, it said. A public notice specified that “applications for this spectrum filed prior to this date and time would be dismissed as premature without prejudice to re-filing.” ViaSat filed the letters of intent before that time, it said. The company has re-submitted their letters of intent, a ViaSat spokesman said.
Netflix on Wednesday played down the loss of more than 1,000 movies from its streaming service. “The vast majority” of the titles that expired Wednesday are “older features that were aggregated” by Epix, said Netflix spokesman Joris Evers. But Netflix is a “dynamic service,” and “we constantly update the TV shows and movies that are available to our members,” he said, telling us it was also adding more than 500 titles Wednesday. That “ebb and flow happens all the time,” he said, pointing to recent addition to the service that included Universal’s ParaNorman and Hunger Games via Epix.
The government, as evidenced by a recent Department of Justice report on spectrum and competition, is taking a “unique, consumerless” approach to competition, said Jonathan Lee, a former Justice lawyer who does work for carriers, in a blog post (http://bit.ly/17y1iFg). “Like most tin foil hat [paranoia] theories, this one has a small kernel of logic,” Lee said of the DOJ filing on spectrum and competition (CD April 15 p7). “For a smaller carrier, especially a new entrant, low-frequency spectrum provides a lot more value per cell site -- and requires a lot less cell sites -- for a carrier to achieve adequate coverage. But do the FCC and DOJ want to promote smaller carriers or new entrants? Of course not; that might provide consumers with some value.” The government’s view of competition is based on “a lot of flawed premises -- all of which come from the same flawed premise: consumer preferences don’t count,” he said. “The relevant geographic market is national, not because this is the way consumers actually purchase wireless service, but because this is the way the government likes to look at it.”
Allbritton Communications will consider business alternatives for its seven ABC-affiliated TV stations and metropolitan Washington cable news channel that may include selling those businesses, the parent company said. The company may use the money to invest in Politico, Allbritton CEO Robert Allbritton wrote. The company hired Moelis & Co. as a financial adviser and Paul Hastings and Dow Lohnes as legal counsel, it said in a Wednesday news release. A sale is possible because “demand” for TV properties is “high, given their strong and stable financial performance,” the CEO wrote. “There is an unmistakable trend towards consolidation in this industry, as the largest media groups see clear benefits in holding multiple properties.” He said his “plan is to use the resources and expanded mindshare that such a move would make available to increase my commitment to POLITICO.” His father, the late Joe Allbritton (CD Dec 14 p19), “bought the television stations some 30 years ago as part of a deal to get The Washington Star,” the son noted. “There is no chance, none, I will sell POLITICO as part of the deal.” The stations include WJLA Washington.