Jimm Phillips

The FCC’s role in regulating the communications industry needs to be reduced to reflect a more competitive marketplace, said Robert Litan, director of research at Bloomberg Government, in an interview for C-SPAN’s The Communicators which was set for telecast Saturday. Litan and Hal Singer, managing director at Navigant Economics, were on the program to discuss their book, The Need for Speed: A New Framework for Telecommunications Policy for the 21st Century. There was a case for more regulation within the industry 30 years ago because of monopolies within the industry, but “times change,” Litan said. “But in a world in which now we have convergence and we have a lot more competition, there’s less need for regulation” on issues like net neutrality. The FCC’s net neutrality order is “too radical, too harsh” in dealing with possible issues of discrimination in priority delivery contracts between network providers and websites, Singer said. He argued the order should be reversed, with discrimination issues dealt with “after the fact” by administrative law judges. There is more competition in the telecom industry than when AT&T had a monopoly on telephone service, but that “doesn’t necessarily mean that there is adequate competition,” Michael Weinberg, senior staff attorney at pro-regulatory Public Knowledge, told us. “If that’s your bar, then all sorts of things are going to look competitive. It is more competitive than an absolute monopoly, but I don’t think that means it’s adequately competitive.” While Litan and Singer are critical of the FCC in The Need for Speed, they note that the commission is only carrying out Congress’s instructions, Singer said. “The direction is going to have to come from Congress in recognition of the new landscape,” he said. Congress needs to reduce the FCC’s merger review authority within the wireless industry, Singer said. Since the FTC and Department of Justice’s Antitrust Division already examine those mergers for antitrust issues, “what is the FCC doing in this second, duplicative review?” he said. The FCC is then in a position to “give away things to the competitors who complain the loudest about a particular merger,” Singer said. “So long as you vest the agency with that kind of power, to move around millions or billions of dollars to special interests, you are going to get hordes of lobbyists walking around the halls of the agency looking for handouts.” The FCC should have a role in reviewing mergers within the wireless industry because of its expertise within the space, but “shouldn’t have a supplemental vote,” he said. Congress gave the FCC merger review authority under a public interest standard, which is important but different from the antitrust issue, Weinberg said. Public Knowledge has “been concerned in the past about the FCC’s interest in following through with enforcement of its merger conditions,” he said. “But that doesn’t necessarily mean that the FCC shouldn’t have a role in mergers or that there’s absolutely no situation in which conditions make sense.”

If U.S. government approval of SoftBank’s proposed purchase of 70 percent ownership of Sprint Nextel “is contingent upon agreement to restrict purchase of telecommunications equipment from select venders by virtue of geography, then it is a sad day for free and open global trade,” Huawei spokesman Bill Plummer told us in an email. House Intelligence Committee Chairman Mike Rogers, R-Mich., has said SoftBank and Sprint told him they will not integrate Huawei-manufactured telecom equipment into the Sprint network if the government approves the deal. The companies also said they plan to reduce Clearwire’s use of Huawei-manufactured equipment; Sprint is seeking government approval of its plan to buy out the carrier. SoftBank and Sprint were addressing concerns that Huawei posed a potential national security risk (CD April 1 p5). Excluding a manufacturer based on geography will do little to address network security concerns “given that every telecom gear vender relies on common global supply chains and faces common cyber-challenges,” Plummer said. “Such a contingency would mean little more than the unfair market-distorting penalization of a globally-respected company that meets the highest standards of network security, is a trusted vendor to 45 of the world’s top 50 network operators, and is an active investor and employer in the U.S.”

MetroPCS’s board urged shareholders to approve a proposed merger with T-Mobile USA, noting in a letter Monday that there’s “no assurance that MetroPCS will be able to deliver the same or better stockholder value as a stand-alone wireless company in the future.” MetroPCS said it believes merging with T-Mobile “will create the value leader in the U.S. wireless marketplace and provide significantly more value and potential equity upside to MetroPCS stockholders than could be achieved by MetroPCS on a stand-alone basis” (http://bit.ly/XmcELo).

Sprint Nextel and SoftBank have told House Intelligence Committee Chairman Mike Rogers, R-Mich., “they would not integrate Huawei in to the Sprint network and would take mitigation efforts to replace Huawei equipment in the Clearwire network,” Rogers said in a statement Thursday. SoftBank is seeking federal government approval for its planned buy of 70 percent ownership of Sprint; the government also needs to approve Sprint’s plan to purchase full control of Clearwire. The SoftBank and Clearwire deals have received additional attention because of both companies’ use of Huawei-manufactured equipment -- Huawei and fellow China-based telecom equipment manufacturer ZTE are helping build SoftBank’s 4G network in Japan, while Clearwire uses Huawei equipment on the edges of its network. Clearwire has previously said it’s reducing its use of Huawei-manufactured equipment.

Proxy advisory firm Institutional Shareholder Services (ISS) said MetroPCS shareholders should vote against the proposed merger with T-Mobile USA, arguing Wednesday in a report that MetroPCS shareholders would receive a “lower equity split than justified” and that MetroPCS could “continue to thrive” as a standalone company. Under the current deal, MetroPCS shareholders would receive $1.5 billion in cash and 26 percent ownership of the merged carrier (CD Oct 4 p1). The ISS recommendation will likely prompt T-Mobile owner Deutsche Telekom to modify the current deal terms in order to win approval when MetroPCS shareholders meet April 12, industry analysts say.

T-Mobile USA is “canceling our membership to the Wireless Carrier Club,” T-Mobile CEO John Legere said at a press conference Tuesday, saying the carrier will begin selling the iPhone 5 on April 12 and start a series of other steps to brand T-Mobile as the “Un-carrier.” T-Mobile said it will be selling the iPhone 5 for $99.99, plus a monthly $20 fee over the course of two years. The carrier will offer the iPhone 4S for $69.99 plus a $20-per-month fee over two years, and the iPhone 4 for $14.99 and a $15-per-month fee over two years. The fee is in addition to the cost of a customer’s voice, text and data plan. T-Mobile said it will offer other new smartphones on similar fee schedules (http://t-mo.co/ZqQaqh).

Broadband is the fastest-growing segment of Comcast’s business, but innovation will change Comcast’s traditional cable base “more in the next five years than it has in the past 50,” Comcast CEO Brian Roberts told the Washington Economic Club Thursday. When Microsoft invested $1 billion in Comcast in 1997, Roberts said Bill Gates told him then that Comcast’s business would expand far beyond delivering TV service. That prediction has held true, Roberts said. Comcast has about 22 million video customers and 20 million broadband customers, he said. “Those lines will cross some time in the next couple of years and we will have just as many -- if not more -- broadband customers than we have video customers,” he said. Comcast faces a “different broadband every year,” he said. “We change the speeds, the nature of it, so Wi-Fi is now … part of our definition of broadband. So we want to have the fastest Wi-Fi as well as the fastest pipe. We want to offer you access outside of your home."

States should increase their role as a partner with the federal government to address Internet privacy issues, said Steve Ruckman, Maryland assistant attorney general and director of the Maryland Office of the Attorney General’s Internet Privacy Unit, at a joint FCBA-American Bar Association Forum on Communications Law event Wednesday. Maryland Attorney General Doug Gansler has made Internet privacy protections a priority -- both in his in-state work and in his role as president of the National Association of Attorneys General NAAG), Ruckman said. Gansler was originally scheduled to speak at the FCBA event, but needed to testify at a Maryland General Assembly hearing.

There has been little movement in the debate over the Marketplace Fairness Act (HR-684, S-336) since it failed to pass the Senate in December, eBay Senior Director of Global Public Policy Brian Bieron told us. The Senate had rejected including the bill’s provisions as an amendment to the 2013 Defense Authorization Act. The bill would allow state governments to collect sales taxes when an in-state resident makes an online purchase from an out-of-state retailer. “It seems like the same people who were for [the bill] before are for it now, the same people who had objections to it before have objections to it now,” Bieron said. “It seems to be pretty much the same debate it’s been for some time now, only louder.” The bill effectively gives states a “new power” to tax people outside their own borders, he said during an Information Technology & Innovation Foundation event Tuesday. EBay has been an active opponent of the Marketplace Fairness Act -- the company organized a gathering of small business owners on Capitol Hill earlier this month to voice their concerns about the bill.

Congress should take its time in considering the Cyber Intelligence Sharing and Protection Act (CISPA) and other cybersecurity legislation that may involve information sharing, said Ryan Radia, the Competitive Enterprise Institute’s (CEI) associate director-technology studies, at a joint CEI-TechFreedom event Monday. Both groups were part of a free market-oriented coalition that opposed CISPA when it was being considered last year (WID April 24/12 p5). The bill passed the House then but did not get a vote in the Senate amid strong White House opposition. There has been pressure for Congress to move quickly on legislation to augment President Barack Obama’s recent cybersecurity executive order, but a slower process won’t make the situation “much worse off” than it is already, Radia said. “This is the time to do something, but let’s do something right. This is going to be on the books for a long time, and a problematic law … will create bad precedent.” Radia and other experts said they were concerned about the implications of information sharing provisions in the current version of CISPA.