The government's chief economic expert's predictive model actually shows AT&T's buy of Time Warner as a net plus to consumers if that model takes into account Turner's arbitration offer to MVPDs and the FCC's program access rules, testified University of California, Berkeley economics professor Michael Katz Monday in U.S. v. AT&T and TW. That DOJ expert Carl Shapiro didn't account for those is "a fatal error," Katz said.
Notable CROSS rulings
Actual empirical evidence from past vertical mergers and splits shows consumer pricing ultimately goes down, the exact opposite of the harm DOJ is projecting in the proposed AT&T buy of Time Warner, the companies' economic expert testified Thursday. DOJ hasn't rested, but U.S. District Judge Richard Leon of Washington said he was letting University of Chicago economics professor Dennis Carlton testify out of order so his testimony comes a day after that of Justice's own economics expert, University of California, Berkeley economist Carl Shapiro (see 1804110025).
Senate Commerce Committee members' concerns about Facebook's data privacy policies and the Cambridge Analytica data scraping controversy spilled over into their questioning of FTC nominee Rebecca Slaughter during a Wednesday confirmation hearing, a day after the committee and the Senate Judiciary Committee grilled Facebook CEO Mark Zuckerberg (see 1804100054). President Donald Trump said last month he intended to nominate Slaughter, until recently chief counsel to Senate Minority Leader Chuck Schumer, D-N.Y., sending her nomination to the Senate Monday (see 1803260049, 1803270046, 1804100049 and 1804100050).
The judge overseeing U.S. v. AT&T and Time Warner questioned DOJ's assertion that New AT&T would run its MVPD and programming arms in concert, coordinating their behavior. Justice's economic expert testified Wednesday that New AT&T could mean consumers paying $571 million more a year by 2021 in video subscription costs than they would otherwise.
USTelecom will “aggressively challenge” state and municipal net neutrality efforts that are inconsistent with the FCC’s December order, USTelecom CEO Jonathan Spalter said Monday. Many expect industry lawsuits challenging state actions including a Washington state law and five gubernatorial executive orders (see 1803230041). Acknowledging litigation is likely, a Massachusetts Senate special committee said Monday “there are strong arguments to support state action in this area and the uncertainty of the Federal legal landscape should not prevent states from acting.” Democratic lawmakers in Colorado and Baltimore also unveiled proposals.
Section 7 of the Clayton Act says a deal shouldn't go through if there's reasonable probability it harms consumers, and New AT&T's ability to do that via Time Warner content and its incentive to do so due to its "massive investment" in the traditional MVPD space shows that probability, said DOJ antitrust trial attorney Craig Conrath during opening argument Thursday in DOJ v. AT&T and Time Warner in the U.S. Court of Appeals for the D.C. Circuit. By ignoring over-the-top competitors and digital advertising, DOJ is "fundamentally stuck in the past," companies' outside counsel Dan Petrocelli of O'Melveny replied. A Washington executive says similar.
With the FCC facing one apparent unauthorized satellite constellation put into orbit, it's unclear whether others follow. Satellite experts we talked to were split on whether the agency will need a strong response or if the launches by Swarm Technologies are clearly a mistake unlikely to be replicated. Satellite IoT connectivity startup Swarm had the first unauthorized commercial satellite launch, and there are likely few if any amateur radio service or research satellites that have gone up without authorization, said telecom tech regulatory lawyer Mitchell Lazarus of Fletcher Heald. He said it's unlikely other satellite operators will follow: "Nobody does this on purpose."
The FCC ruled vague phone fee descriptions may violate truth-in-billing rules and the Communications Act, with Commissioner Mike O'Rielly partially dissenting. Responding to questions raised by a 2010 order from the U.S. District Court for the Eastern District of Michigan, an FCC declaratory ruling Thursday in docket 98-170 stressed "a final determination will require the court to apply our ruling to the facts at issue in the case," Gregory Manasher and Frida Sirota v. NECC Telecom, No. 2:06-cv-10749. Plaintiffs' petition to the agency alleged NECC violated the rules and the act "by billing, charging, and collecting monies" that "were unjustly, unreasonably, and deceptively billed as 'recurring fees' and 'other fees,'" the FCC said. "Plaintiffs also alleged NECC billed plaintiffs 'for amounts in excess of the actual cost for telephone services.'" NECC disputed the allegations. Both parties cited the Supreme Court's Global Crossing v. Metrophones, disagreeing whether the FCC had addressed whether a Section 64.2401 rule violation is unreasonable under the act's Section 201(b). The court referred the legal issue and eight questions on billing details to the FCC. The agency sought comment in 2012, drawing responses from two telco trade groups and consumer advocates. The commission ruling provided answers. O'Rielly said he's concerned the ruling could limit carrier discretion under 1999 truth-in-billing rules intended as "broad, binding principles" rather than detailed rules. "I disagree with the portions of this item that suggest that clarifying information must be contained on the bill itself," he said. He's "troubled" by the FCC action because the "flourishing voice market" is giving consumers various options: "This item should strike a more careful balance. Instead, its effort to explicitly or implicitly constrain billing practices could make compliance more burdensome for providers of legacy services or confuse consumers with more billing detail than helpful." NECC didn't comment.
Chairman Ajit Pai said the FCC hopes to hold an auction of the 28 GHz band in November, followed immediately by a 24 GHz auction. But Pai, at the Mobile World Congress, Monday, said doing so relies on Congress passing legislation by May 13 giving the agency the ability to handle upfront payments. On a third band, NTIA Administrator David Redl said Monday his agency will study the 3450-3550 MHz band for wireless broadband. It sits just below the 3.5 GHz Citizens Broadband Radio Service frequencies, a focus of the commission.
Congress needs to reach agreement on cross-border data seizures before the Supreme Court rules in U.S. v. Microsoft, the Information Technology and Innovation Foundation said Monday. The high court is scheduled to hear oral argument Tuesday, to decide whether a law enforcement warrant can force a U.S. service provider to produce customer's emails stored abroad (see 1710160009). ITIF Vice President Daniel Castro said if Congress fails to act, U.S. competitiveness will feel negative impacts no matter what. If the court supports use of search warrants in obtaining data abroad, it will fuel incentives for storing data overseas with non-U.S. providers, he said. Conversely, if search warrants are ruled illegal overseas, foreign governments may force companies to store data domestically to block U.S. search warrants, he said. Castro said lawmakers should reach a legislative solution, describing the Clarifying Lawful Overseas Use of Data (Cloud) Act as the “best option” (see 1802050057). The bill would establish a formal framework to resolve disputes over law enforcement access to communications and data stored on overseas servers via international bilateral agreements.