TLJ News from September 1-5, 2011

People and Appointments

9/2. David Robbins was named Managing Director of the Federal Communications Commission (FCC), effective September 12, 2011. He replaces Steve VanRoekel. See, FCC release.

FCC Announces Agenda for September 22 Meeting

9/1. The Federal Communications Commission (FCC) announced the agenda for its September 22, 2011, event titled "Open Meeting". The Commission is scheduled to adopt only one item -- an NG911 NPRM.

The FCC is scheduled to adopt a notice of proposed rulemaking (NPRM) regarding "Next Generation 911" or "NG911". The FCC adopted a Notice of Inquiry (NOI) [36 pages in PDF] on this topic on December 21, 2010. It is FCC 10-200 in PS Docket No. 10-255. See, story titled "Genachowski Addresses NG911" in TLJ Daily E-Mail Alert No. 2,286, August 11, 2011.

There will also be a presentation with recommendations by staff of the FCC's Public Safety and Homeland Security Bureau (PSHSB) on "the use of deployable aerial communications architecture to facilitate the ability of first responders to communicate with each other and consumers to reach first responders in the wake of natural and manmade disasters, even in situations where there is severe damage to terrestrial communications infrastructure."

This event is scheduled for 10:45 AM on September 22, 2011, in the FCC's Commission Meeting Room, Room TW-C305, 445 12th Street, SW.

Senate Judiciary Committee to Take Up Data Privacy, Security and Breach Bills

9/1. The Senate Judiciary Committee (SJC) released an updated and expanded agenda for its executive business meeting of September 8, 2011. The SJC added two bills: S 1151 [LOC | WW], the "Personal Data Privacy and Security Act of 2011", and S 1408 [LOC | WW], the "Data Breach Notification".

Sen. Patrick Leahy (D-VT) introduced S 1151 on June 7, 2011. It would create a federal data broker regulation regime, and a data security regime. It would create a federal data breach notification regime, and criminalize certain acts of failure to disclose data breaches. It would also amend the Computer Fraud and Abuse Act (CFAA), which is codified at 18 U.S.C. § 1030, to include conspiracy.

Sen. Dianne Feinstein (D-CA) introduced S 1408 on July 22, 2011. See, story titled "Sen. Feinstein Introduces Data Breach Notification Act" in TLJ Daily E-Mail Alert No. 2,269, July 25, 2011.

On July 20, 2011, the House Commerce Committee's (HCC) Subcommittee on Subcommittee on Commerce, Manufacturing, and Trade amended and approved HR 2577 [LOC | WW], the "Secure and Fortify Electronic (SAFE) Data Act of 2011". That bill would create both a federal data security regime, and a federal data breach notification regime. See, story titled "House Commerce Subcommittee Approves SAFE Data Act" in TLJ Daily E-Mail Alert No. 2,267, July 23, 2011.

The SJC also added consideration of several more judicial nominees to the agenda for its September 8 meeting, including several for District Courts that are frequently fora for technology related litigation: the Southern District of New York, Eastern District of Texas and the District of Delaware.

The SJC usually holds executive business meetings once per week, usually on Thursday morning, when the Senate is in session. The SJC rules allow members to delay consideration of bills for one week. It is common for bills on the SJC agenda to be held over for many weeks before the SJC considers them.

Congressional Reaction to DOJ Action to Block AT&T Acquisition of T-Mobile USA

9/1. Congressional reaction to the Department of Justice's (DOJ) lawsuit to block AT&T's acquisition of T-Mobile USA broke down along party lines. It also mirrored statements made prior to the filing of the lawsuit. Many Democrats oppose the merger and support the DOJ action.

Several Democrats on the Senate Judiciary Committee (SJC) and House Judiciary Committee (HJC), which oversee the DOJ and its Antitrust Division, praised the DOJ. Judiciary Committee Republicans criticized the DOJ action.

Sen. Al Franken (D-MN) stated in a release that "I've heard from families across Minnesota that cell phone expenses are an ever-rising percentage of their bills each month, and this merger could make wireless bills increase by as much as 25 percent -- a burden families certainly don't need in this tough economy. This merger would also hurt competition and concentrate enormous power in the hands of just two companies -- AT&T and Verizon -- who would control more than 80 percent of the wireless market. I'm glad the Justice Department recognizes that this merger would hurt consumers and I hope that the court will agree and block it from moving forward."

Sen. Al FrankenSen. Franken (at left) has submitted letters to the DOJ and FCC expressing and explaining his opposition to regulatory approval of this merger. See for example, story titled "Sen. Franken Urges DOJ and FCC to Reject AT&T T-Mobile Merger" in TLJ Daily E-Mail Alert No 2,271, July 27, 2011.

Sen. Herb Kohl (D-WI), Chairman of the SJC's Subcommittee on Antitrust, Competition Policy and Consumer Rights, stated in a release that "We applaud the Justice Department for their action to protect consumers in a powerful and growing industry that reaches virtually every American. Preserving choices means ensuring competition, and competition ultimately benefits consumers."

In contrast, Sen. Mike Lee (R-UT), the ranking Republican on the Subcommittee, stated in a release that "I am disappointed in the Justice Department's decision to seek to block the proposed merger between AT&T and T-Mobile."

Rep. Mike LeeSen. Lee (at right) said that "The Senate Antitrust Subcommittee received significant evidence that the transaction could benefit consumers through enhanced service quality, expanded network capacity, increased data speeds, and continued innovation of data-rich handset devices and applications. I look forward to reviewing the Department's analysis and trust that the merger review process will be directed towards maximization of consumer welfare."

Sen. Richard Blumenthal (D-CT), another member of the SJC, stated in a release that "Serious questions have been raised about the effect of the proposed AT&T and T-Mobile merger on competition, innovation, and consumer costs. Regardless of the potential benefits of this deal, the Justice Department’s action today reflects that agency's considered judgment that this merger would ultimately harm consumers and violate U.S. antitrust law. I support the agency's efforts to protect consumers and urge the Federal Communications Commission, whose Chairman has said that the proposal raises serious concerns about competition, to conclude its review of this transaction quickly."

Rep. John Conyers (D-MI), the ranking Democrat on the House Judiciary Committee (HJC), stated in a release that the filing of a lawsuit by the DOJ "marks a win for consumers". He continued that the DOJ "has stood up for competition and fairness. As Americans struggle in today’s economy, the Department took an important step to ensure that consumers have continued access to affordable mobile services and new technologies. The action will protect American consumers and American jobs, the very purpose of our antitrust laws."

Fewer members of the Senate Commerce Committee (SCC) and House Commerce Committee (HCC) publicly addressed the DOJ action. These Committees oversee the Federal Communications Commission (FCC), which has not yet completed its antitrust merger review of the transaction.

Rep. Anna Eshoo (D-CA), the ranking Democrat on the HCC's Subcommittee on Communications and Technology, stated in a release that "Vigorous competition is a hallmark of the American economy benefitting innovation, benefitting businesses and benefitting consumers. The Department of Justice's decision today to block the merger of AT&T and T-Mobile based on antitrust concerns reflects my own views of the need for true competition and value to consumers."

Similarly, Rep. Ed Markey (D-MA), a senior member of the HCC, stated in a release that the DOJ action "is a victory for competition, consumers and choice. We should be protecting American consumers holding their cell phones, not just telecommunications titans holding stock in the companies. The merger would reduce the number of national wireless companies from four down to three, sending the mobile marketplace into a telecommunications time machine back to 1993. That would be an historic mistake."

More Reaction to DOJ Action to Block AT&T Acquisition of T-Mobile USA

9/1. The Department of Justice's (DOJ) Antitrust Division filed a complaint [25 pages in PDF] on August 31, 2011, 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 also, DOJ release and 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.

Reaction of Wireless Companies. Wayne Watts, General Counsel of AT&T, stated in a release that "we intend to vigorously contest this matter in court".

AT&T stated in another release that "after closing its proposed merger with T-Mobile USA, it will bring back 5,000 wireless call center jobs to the United States that today are outsourced to other countries". AT&T added that "the merger will not result in any job losses for U.S.-based wireless call center employees of T-Mobile USA or AT&T, who are on the payroll when the merger closes".

On August 31, Vonya McCann, Sprint's SVP of Government Affairs, stated in a release that "The DOJ today delivered a decisive victory for consumers, competition and our country. By filing suit to block AT&T’s proposed takeover of T-Mobile, the DOJ has put consumers' interests first."

McCann continud that "Sprint applauds the DOJ for conducting a careful and thorough review and for reaching a just decision -- one which will ensure that consumers continue to reap the benefits of a competitive U.S. wireless industry. Contrary to AT&T's assertions, today’s action will preserve American jobs, strengthen the American economy, and encourage innovation."

Groups that Support the DOJ Action. Ed Black, head of the Computer and Communications Industry Association (CCIA), stated in a release that "We are pleased, but not surprised. From the outset, it was clear that this merger was anticompetitive. This was a slam-dunk decision for the DOJ, as this was a textbook case of a blatantly anticompetitive horizontal merger. We are grateful that the Justice Department ignored AT&T's unprecedented political pressure and made its decision based on the clear facts gleaned from its thorough investigation. This is exactly what a well functioning antitrust authority is meant to do -- prevent dangerous concentration of power and protect consumers".

He added that "This merger would be disastrous for consumers, innovation, jobs, the Internet ecosystem and our economy in general."

Benjamin Lennett of the New America Foundation (NAF) commended the DOJ in a release. He wrote that the merger would "inevitably lead to higher prices and less choice for consumers while costing thousands of jobs at a time when the nation's economy can least afford it. No amount of funny math and last minute, hollow jobs promises from AT&T can obscure the basic fact that this deal would create an unprecedented level of market consolidation and harm consumers and innovation. We encourage the FCC to follow DOJ's lead and reject the merger."

Bert Foer, head of the American Antitrust Institute (AAI), stated in a release that "We are delighted that the Administration is committed to the vigorous use of antitrust even at a time of economic difficulties. Mergers of giant corporations generally do not increase employment or growth". He added that  "consumers of mobile wireless telecommunications services, as well as businesses that buy wireless services for their employees’ use, would be harmed by this mega-merger in the wireless industry."

The Consumers Union (CU), Public Knowledge (PK), Free Press (FP), Media Access Project (MAP), and other interest groups that oppose regulatory approval of this merger, held a teleconferenced news conference on August 31 to praise the DOJ's action. See also, CU release, FP release, and MAP release.

One of the DOJ attorneys whose name appears on the complaint if Gene Kimmelman. Prior to his appointment to the DOJ's Antitrust Division early in the Obama administration, he was a long time leader of the Consumers Union. He is now the Antitrust Division's Chief Counsel for Competition Policy and Intergovernmental Relations.

Some at this news conference also urged the FCC to act to block the merger. And, Harold Feld (PK) wrote in a release issued on the morning of the news conference that "FCC should ... reject the merger". However, at the afternoon news conference, he suggested, and predicted, the setting of the matter on for administrative hearing. He called this a "kiss of death", and a process that would delay FCC disposition until after the matter is moot. Then, on September 1, he sent a letter to the FCC urging it to "immediately deny the companies' application to transfer control of licenses and authorizations".

Groups that Oppose the DOJ Action. Berin Szoka of the TechFreedom (TF) stated in a release that "The DOJ has missed the forest for the trees. Neither company has the spectrum to offer a viable 4G LTE service. Only by combining their spectrum can the two companies compete effectively with Verizon's LTE service. Such services could also compete with traditional ISPs who provide home broadband access."

He added that "The real problem here is outdated central planning of spectrum. This merger was in part an attempt to overcome government mismanagement of the most vital resource of the digital economy. By blocking the deal, the DOJ is compounding harmful government meddling in the digital economy."

Larry Downes of the TechFreedom stated in this release that "The Justice Department's decision is surprising and disappointing. The Department's sensible merger guidelines, had they been applied, would have found the deal a great benefit to consumers at the local level, where mobile services are bought and used. The Department has instead untethered itself from rational analysis, inviting more delay and the potential to interrupt the mobile revolution, one of the few bright spots in the economy. Those hoping for real competition in the critical 4G LTE market will have to wait.

Ryan Radia of the Competitive Enterprise Institute (CEI) stated in a release that this "lawsuit amounts to a subversion of the evolution of free enterprise and economic progress. Federal regulators and their arbitrary “merger guidelines” are woefully ill-equipped to judge the merits of proposed business deals, particularly in dynamic modern markets such as the wireless sector."

He added that this "suit is also further evidence of this administration’s antipathy toward the job-creating sector. AT&T’s acquisition of T-Mobile has the potential to create hundreds of thousands of new jobs by accelerating the rollout of advanced wireless networks nationwide".

More News

9/1. The Department of Commerce's (DOC) Bureau of Industry and Security published a notice in the Federal Register that requests comments regarding the effect of its foreign policy based export controls., including certain encryption products, microprocessors, and cameras, and communication intercepting devices, software and technology. The deadline to submit comments is October 3, 2011. See, Federal Register, Vol. 76, No. 170, Thursday, September 1, 2011, at Pages 54426-54428.

Go to News from August 26-31, 2011.