Tech Law Journal Daily E-Mail Alert
Alert No. 2,320, December 20, 2011.
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AT&T and T-Mobile Abandon Merger Effort

12/20. AT&T announced in a release on December 19 that "after a thorough review of options it has agreed with Deutsche Telekom AG to end its bid to acquire T-Mobile USA".

T-Mobile USA stated in a release that "AT&T and Deutsche Telekom (DT) have mutually decided to terminate their agreement for AT&T to acquire T-Mobile USA. This announcement effectively ends the acquisition process launched March 20."

AT&T and T-Mobile announced their merger plans on March 20, 2011. See, story titled "AT&T to Acquire T-Mobile USA" in TLJ Daily E-Mail Alert No. 2,205, March 21, 2011.

On August 31, the Department of Justice's (DOJ) Antitrust Division filed a complaint [25 pages in PDF] in the U.S. District Court (DC) against AT&T, T-Mobile USA and Deutsche Telekom that seeks an injunction against AT&T's acquisition of T-Mobile USA on the grounds that it would would substantially lessen competition in violation of Section 7 of the Clayton Act, which is codified at 15 U.S.C. § 18. See, story titled "DOJ Files Complaint to Block AT&T Acquisition of T-Mobile USA" in TLJ Daily E-Mail Alert No. 2,298, August 31, 2011.

The Federal Communications Commission (FCC) has not issued a final order denying applications associated with the proposed merger. However, it has taken actions directed at obstructing the merger. See, stories titled "Genachowski Proposes That FCC Designate AT&T T-Mobile Merger for Administrative Hearing" in TLJ Daily E-Mail Alert No. 2,313, November 22, 2001, and "FCC Staff Releases Items in AT&T T-Mobile Merger Proceeding" in TLJ Daily E-Mail Alert No. 2,315, November 29, 2011. This FCC's proceeding is WT Docket No. 11-65.

AT&T stated in its release that the actions of the FCC and DOJ "to block this transaction do not change the realities of the U.S. wireless industry. It is one of the most fiercely competitive industries in the world, with a mounting need for more spectrum that has not diminished and must be addressed immediately. The AT&T and T-Mobile USA combination would have offered an interim solution to this spectrum shortage. In the absence of such steps, customers will be harmed and needed investment will be stifled."

AT&T also stated that "To reflect the break-up considerations due Deutsche Telekom, AT&T will recognize a pretax accounting charge of $4 billion in the 4th quarter of 2011. Additionally, AT&T will enter a mutually beneficial roaming agreement with Deutsche Telekom."

Randall Stephenson, Ch/CEO of AT&T, stated that policymakers "should allow the free markets to work so that additional spectrum is available to meet the immediate needs of the U.S. wireless industry, including expeditiously approving our acquisition of unused Qualcomm spectrum currently pending before the FCC."

Also, "policymakers should enact legislation to meet our nation's longer-term spectrum needs", said Stephenson.

Sharis Pozen, acting Assistant Attorney General in charge of the DOJ's Antitrust Division, stated in a release that "Consumers won today. Had AT&T acquired T-Mobile, consumers in the wireless marketplace would have faced higher prices and reduced innovation. We sued to protect consumers who rely on competition in this important industry. With the parties' abandonment, we achieved that result."

FCC Chairman Julius Genachowski stated in a release that "The FCC is committed to ensuring a competitive mobile marketplace that drives innovation and investment, creates jobs and benefits consumers. This deal would have done the opposite. The U.S. mobile industry leads the world in mobile innovation, and we agree with AT&T that Congress should pass incentive auction legislation that will unleash new spectrum for mobile broadband."

Ed Black, head of the Computer and Communications Industry Association (CCIA), stated in a release that "When AT&T announced this takeover plan, most antitrust attorneys knew this would violate the laws set up to maintain a competitive marketplace. AT&T was clearly counting on its political muscle and influence conglomerate to tilt the system’s decision makers in their favor and to shy away from vigorous enforcement of the law. For once the 99% have reason to be pleased that the most entrenched special interest didn't win."

He added that "The Department of Justice, FCC, and the Obama Administration deserve praise for standing up to an awesome political assault from influence peddlers and the various groups heavily encouraged or threatened to support this takeover merger."

Harold Feld of the Public Knowledge (PK) stated in a release that "In this age of cynicism, it is important for the American people to see that Washington does not always go to the highest bidder. The Department of Justice and the Federal Communications Commission stood up to tremendous lobbying pressure as AT&T spent tens of millions of dollars trying to push this merger through."

The Tech Freedom (TF) stated in a release that "Nearly two years ago, the Obama FCC declared a spectrum crisis. But Congress has refused to authorize the agency to reallocate underused spectrum from television broadcasters and government agencies--which would take years anyway."

The TF continued that "The AT&T/T-Mobile merger would have eased this crisis and accelerated the deployment of next-generation 4G networks. Yet the government killed the deal based on formalistic and outdated measures of market concentration--even though the FCC's own data show dynamic competition, falling prices, and new entry. The disconnect is jarring. Those celebrating the deal's collapse will wake up to a sober reality: There is no Plan B for more spectrum."

FSF Paper Criticizes FCC Handling of AT&T T-Mobile Merger

12/20. The Free State Foundation (FSF) released a paper on December 20 by Randy May and Seth Cooper titled "The FCC Staff's Report Against the AT&T/T-Mobile Merger: A Critical Analysis".

They wrote that "The FCC's release of its staff's analysis and findings regarding the AT&T/T-Mobile merger has raised some questions about administrative and procedural impropriety. Of equal concern, however, are the substantive problems besetting the FCC's staff report and what these problems say about the staff's mindset concerning competitive analysis."

The FSF authors wrote that "The staff report employs a static analysis ill-suited to today's dynamic wireless marketplace. Unfortunately, the staff puts primacy on market concentration indicators such as existing market share and spectrum holdings, all the while seemingly oblivious -- seemingly deliberately oblivious -- to market conditions and factors that might detract from its conclusions.

They added that "the staff report is a one-sided document. The report outright dismisses or significantly discounts every conceivable public benefit from AT&T/T-Mobile. And it readily and uncritically accepts nearly every alleged potential harm from the merger. As a result, the report appears almost completely devoid of even-handedness in its analysis and application of the FCC's public interest standard."

Spectrum Legislation Update

12/17. A version of the House Commerce Committee's (HCC) spectrum bill, the "Jumpstarting Opportunity with Broadband Spectrum (JOBS) Act of 2011" was added as Title IV to HR 3630 [LOC | WW], which the House passed on Tuesday, December 13, 2011. However, these spectrum provisions were not included in the Senate version of the bill, passed on Saturday, December 17.

HR 3630 is a huge and broad year end bill that addresses numerous issues, including payroll taxes, and unemployment benefits.

Sen. John Rockefeller (D-WV) stated in a release on December 17 that "I'm deeply disappointed that measures to create a first responder communications network were not included in the larger year-end package".

Sen. John RockefellerSen. Rockefeller (at right) continued that "Our police officers, firefighters, and emergency personnel across America need to be able to rely on a nationwide, interoperable communications network when the unimaginable happens. Although we didn’t get this done within today's agreement, I intend to push hard in the coming weeks to work out a suitable compromise with the House. Build out of a public safety communications network is in our national interest. We cannot afford further inaction."

This HCC bill would, among other things, give the Federal Communications Commission (FCC) voluntary auction authority, and provide for broadcasters relocation expenses out of auction proceeds. It would also provide for allocation of the 20 MHz of contiguous spectrum known as the D Block for a public safety network, funding for that network, and a governance model.

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In This Issue
This issue contains the following items:
 • AT&T and T-Mobile Abandon Merger Effort
 • FSF Paper Criticizes FCC Handling of AT&T T-Mobile Merger
 • Spectrum Legislation Update
 • House Judiciary Committee Continues Mark Up of SOPA
 • Senate to Consider Its Rogue Web Sites Bill in January
Washington Tech Calendar
New items are highlighted in red.
Saturday, December 17

The House will not meet.

The Senate will meet at 9:00 AM. It will resume consideration of HR 3630 [LOC | WW], a huge bill that includes at Title IV the "Jumpstarting Opportunity with Broadband Spectrum Act of 2011". The bill also addresses numerous tax and spending topics, and the Keystone XL pipeline. The Senate will also consider HR 2055 [LOC | WW], an omnibus appropriations bill, HR 3672 [LOC | WW], the "Disaster Relief Appropriations Act, 2012", and HConRes 94, a resolution to provide offsets for emergency disaster funding.

Monday, December 19

The House will meet at 10:00 AM for legislative business. It will consider the Senate version of HR 3630 [LOC | WW]. See, Rep. Cantor's schedule.

The Senate will not meet. The Senate will next meet to conduct business on January 23, 2012.

Tuesday, December 20

The House will meet at 9:00 AM for legislative business. It will continue its consideration the Senate version of HR 3630 [LOC | WW]. See, Rep. Cantor's schedule.

The Senate will meet at 11:00 AM in pro forma session only.

12:15 - 1:30 PM. The Federal Communications Bar Association's (FCBA) Young Lawyers Committee will host a brown bag lunch to plan 2012 activities. For more information, contact Mark Brennan at mark dot brennan at hoganlovells dot com or Brendan Carr at bcarr at wileyrein dot com. Free. Location: Hogan Lovells, 555 13th St., NW.

Wednesday, December 21

9:00 AM. The House Judiciary Committee (HJC) will continue its mark up HR 3261 [LOC | WW], the "Stop Online Piracy Act". See, notice. See also, amendment in the nature of a substitute [71 pages in PDF] offered by Rep. Lamar Smith (R-TX). Location: Room 2141, Rayburn Building.

Thursday, December 22

No events listed.

Friday, December 23

The Senate will meet at 9:30 AM in pro forma session only.

Sunday, December 25

Christmas Day.

Monday, December 26

This is a federal holiday. See, OPM list of 2011 federal holidays.

House Judiciary Committee Continues Mark Up of SOPA

12/16. The House Judiciary Committee (HJC) continued its mark up of HR 3261 [LOC | WW], the "Stop Online Piracy Act" or "SOPA", on Friday, December 16. Continuation of the mark up is scheduled for Wednesday, December 21, 2011.

The HJC is considering an amendment in the nature of a substitute [71 pages in PDF], which is also known as the manager's amendment, and amendments thereto. See also, HTML copy.

The HJC resumed its mark up at 10:00 AM. However, with numerous floor votes, Rep. Lamar Smith (R-TX), the sponsor of the bill and Chairman of the HJC, adjourned the mark up Friday afternoon after a total of about two hours of consideration.

Rep. Lamar SmithRep. Smith (at right) stated at that time that the mark is adjourned, and that the HJC will "reconvene at the earliest practical day that Congress is in session". He added that the mark up will adjourn "until members are notified that the mark up will resume". He spoke only briefly to reporters as he departed for floor votes.

On Monday, December 19, the HJC added a notice in its web site that the mark up will resume at 9:00 AM on Wednesday, December 21.

Sherwin Siy of the Public Knowledge (PK), which opposes this bill, stated in a release that "Continuing a markup on December 21, when many members may well be absent, demonstrates a clear desire to continue dodging the questions raised by experts, members, and the public. This unwillingness to take expert evidence, listen to constituents, or conduct due diligence in investigating the extraordinary harms risked by SOPA shows a process divorced from representation, responsibility, and reality."

Most of the amendments being considered are offered by opponents. However, the HJC debated a some length on December 16 a technical amendment offered by Rep. Bob Goodlatte (R-VA) that pertains to the bill's Domain Name System blocking scheme. DNS blocking is one of the aspects of the bill which opponents of the bill criticize with the most vehemence.

The HJC rejected on a vote of 8-20 an amendment offered by Rep. James Sensenbrenner (R-WI) that would have removed the private right of action provisions of the bill. He attempted to stir up the traditional animosity that many members have for private rights of action, abusive and meritless lawsuits, and the plaintiffs' bar.

This bill contains a limited private right of action for intellectual property rights holders. Private rights of actions is how holders of property rights enforce their property rights. The animosity for lawsuits is directed largely at tort litigation. Hence, this amendment only garnered the votes of eight members, and followed the voting trends disclosed by the other roll call votes at this mark up.

Rep. Chaffetz offered, promised to withdraw, but debated at length, an amendment that would have required a Government Accountability Office (GAO) study on the cyber security implications of this bill.

Committee Filibuster. Rep. Jared Polis (D-CO) and the other leading opponents of the bill repeated their statements that they are not offering and debating amendments for the purpose of delay. Rep. Smith repeated his statements that he accepts that the opponents are acting in good faith.

However, the actions of the opponents bear many attributes of a filibuster. Rep. Smith is allowing an unlimited number of amendments to be offered. Opponents have produced a huge supply of pending amendments. Opponents have offered, and are prepared to offer, amendments that contain redundant content. They are also advancing the same rhetorical arguments in repetition.

Rep. Smith is allowing any member to speak for five minutes on any amendment. The leading opponents are availing themselves of this opportunity, and often asking for additional time, which Rep. Smith is granting.

Opponents are also demanding that time consuming roll call votes be held on many of their amendments, even though the outcome of these votes is not in doubt.

Also, on Thursday, December 15, opponents engaged in dilatory tactics rarely invoked in the House Judiciary Committee, such as demanding a full reading of the amendment in the nature of a substitute.

In addition, opponents have repeatedly argued for another public hearing, and a closed briefing on cyber security from the Department of Homeland Security (DHS). Granting these requests could result in further delay.

The HJC has already spent over twelve hours in public mark up session. Yet, it is far from completing its consideration of amendments. The ongoing and seemingly limitless debate may have the affect of preventing the HJC from completing its mark up before members leave for the Christmas and New Year's break. Mark up might not resume until late January.

Also, 2012 is an election year for the entire House of Representatives, one third of the Senate, and the Presidency. While control of the House is not generally perceived to be at stake, control of the Senate and the Presidency may switch. Opponents of this bill might be acting with a cognizance of the general tendencies that it is harder to move controversial legislation closer to election day, and in critical election years.

Senate to Consider Its Rogue Web Sites Bill in January

12/19. The full Senate is scheduled to begin consideration of S 968 [LOC | WW], the "Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act of 2011" or "PROTECT IP Act", on January 23, 2012.

This bill is related to HR 3261 [LOC | WW], the "Stop Online Piracy Act" or "SOPA", which is currently under consideration by the House Judiciary Committee (HJC).

Sen. Patrick Leahy (D-VT) and others introduced S 968 on May 12, 2011. The Senate Judiciary Committee (SJC) amended and approved this bill on May 26, 2011.

Sen. Leahy stated in a release that "I am pleased the Majority Leader has filed a motion to proceed to the PROTECT IP Act. The costs of online infringement are American jobs, harm to America's economy, and very real threats to consumers’ safety. The answer cannot simply be to do nothing. The Internet is a vibrant and free marketplace; it cannot be lawless."

He added that "Few issues before Congress today are as well supported on both sides of the political aisle as the PROTECT IP Act, and boast the broad support that this legislation has received."

Sen. Leahy and others also introduced a predecessor bill late in the 111th Congress, S 3804 [LOC | WW], the "Combating Online Infringement and Counterfeits Act", or "COICA". See, stories titled "Senators Introduce Bill to Enable DOJ to Shut Down Web Sites Dedicated to Infringement", "Bill Summary: Combating Online Infringement and Counterfeits Act", and "Commentary: Combating Online Infringement and Counterfeits Act" in TLJ Daily E-Mail Alert No. 2,132, September 21, 2010.