AT&T/T-Mobile Triggered ‘Red Lights’ as Regulators Looked at Deal, Genachowski Says

"We've staked our free enterprise system on having vibrant competition that leads to innovation that leads to better service that leads to better prices,” Genachowski said of AT&T’s proposed buy of T-Mobile. “That was an example of a transaction … that was clearly over the line if you believe that competition is at the core of our free enterprise system.” Genachowski said regulators looked closely at various market power indicators and “all the red lights were flashing.” But he also said neither the FCC nor Department of Justice “prejudged” the deal. “Both of the agencies did a lot of hard, fact-based, data-based work, a lot of listening to the arguments,” Genachowski said. “In the end, I'm convinced that we did the right thing.”

The FCC needs to look more closely at receiver standards, Genachowski said, without offering specifics when asked by former Office of Engineering Chief Dale Hatfield, now at Silicon Flatirons, who has raised the issue repeatedly. The FCC launched an inquiry on receiver standards to much fanfare under former Chairman Michael Powell in 2003. It was formally ended by former Chairman Kevin Martin four years later (CD May 4/07 p2).

"There is an issue here that we all still have to wrestle with,” Genachowski said. “I'm not sure what the answer is. … We do need to figure it out and we do need to recognize that the demand curve is such that we can’t allow any band of spectrum anywhere to be inefficiently utilized.” The world has “changed dramatically” the last few years, he said. “Everything we know about the next decade or more suggests that this [growth] curve will accelerate."

The Internet will be a big factor behind GDP growth and job creation, Genachowski said, touching on what are likely to be a huge issue in the 2012 election. Jobs created by companies like eBay should be counted as jobs created by broadband, he said. “There are over a million entrepreneurs who are using the platform to sell more stuff to people at lower costs, creating jobs all over the country,” he said. The jobs created go well beyond “engineering jobs in Silicon Valley,” he said. “Think about companies like Groupon and LivingSocial,” he said. “Those two companies together in the last three or four years … have created between them over 10,000 jobs."

Genachowski also emphasized the importance of international agreements and cooperation to the future of the Internet. The World Trade Organization agreement on basic telecom was “the biggest accomplishment of the Clinton Administration that you've never heard of,” he said. Many questions have been raised about the decision of the authorities to shut down the Internet during recent protests, he said. “Fewer people ask, ‘How did Egypt get to a point where it had a mobile infrastructure and an Internet worth shutting down?’ There’s a straight line between this international agreement … and that fact.”

The FCC was able to approve Universal Service Fund reform last year because it followed a different approach than previous commissions’ that fell short, Genachowski said. “We didn’t go into the USF reform with an approach that said, ‘Well, let’s figure out where everyone’s position is and let’s see if can draw the lines and figure out where the perfect point of compromise is,'” he said. “We were very insistent on every conversation being about how do we solve this problem. … We may have been able to create an atmosphere that was highly substantive where the discussions, the conversations we had, were on solving problems."

The FCC’s National Broadband Plan was the first Internet plan by any nation “that treated wireless broadband as important as wireline,” Genachowski said. But, he said, no past FCC could have anticipated the massive demands on spectrum made by smartphones and tablets. Incentive auctions for broadcast spectrum will be critical to getting more spectrum online for wireless broadband, he said.