Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age (61 page)

14.
“Q1 ‘11 Cable, DBS, Telco Video Subscribers by DMA,”
OSP Mag
, July 4, 2011,
http://www.ospmag.com/ospcentral/ospcentralresearchreport/q111-cable-dbs-telco-video-subscribers-dma
.

15.
Comcast Corporation, “Q4 2010 Earnings Call.”

16.
“Comcast Is King of Its Empire,”
Courier-Post
(Cherry Hill, N.J.), May 14, 2011, available via Westlaw (
www.westlaw.com
) at 2011 WLNR 9636907.

17.
Jessica E. Vascellaro and Lauren A.E. Schuker, “Comcast Plays Up ‘Symphony,’”
Wall Street Journal
, April 30, 2011.

18.
Ken Auletta, “A Conversation with John Malone,” New York, October 16, 2002, available at
http://www.kenauletta.com/2002_10_16_johnmalone.html
.

19.
Betty Liu, interview with John Malone,
Bloomberg News
, July 14, 2010, Voxant Business Transcripts, available via Westlaw (
www.westlaw.com
), 2010 WLNR 14208095.

20.
Jonathan Baker, “Continuing a Conversation About the FCC's Merger Review Process,”
Reboot FCC
blog, March 17, 2011,
http://reboot.fcc.gov/blog?entryId=1340463
.

21.
In the Matter of Media Bureau Seeks Comment on the Regional Sports Network Marketplace
, Federal Communications Commission, MB Docket No. 11-128, September 9, 2011, 2 (Comments of Comcast Corporation).

22.
The Commission established these terms as preconditions to approval of the NBCU-Comcast merger in the hope that they would protect nascent Online Video Distributors like Netflix. See Thomson StreetEvents, “Comcast Corporation Conference Call to Discuss It's [
sic
] Joint Venture with General Electric Related to Regulatory Clearance of NBCU Transaction,” January 18, 2011, available at
http://www.comcast.com/nbcutransaction/pdfs/CMCSATranscript-1.18.2011.pdf
.
In the Matter of Media Bureau Seeks Comment
, 3.

23.
“We call [this] the full freight door. … Under this door, an OVD that does not have a deal with anyone else can come to NBC Universal and ask for the full linear NBC Universal lineup that is typically made available to other multichannel video distributors. So this is not—you can't ask for one network. You can't cherry pick networks. You can't cherry pick programs. You have to go and ask for the whole linear lineup from NBC Universal. And the OVD in that case has to agree to pay the economic equivalent of what NBC Universal would receive for giving the same set of content to an MVPD. So that would include MVPD affiliate fees,
retransmission consent fees. But it would also include revenue that we might lose because this content was being delivered in an online video format instead of in the multichannel video distributor format. For example, advertising revenues” (“Comcast Corporation Conference Call”).

24.
David Faber, “Interview with John Malone,”
CNBC
, April 4, 2011, transcript at
http://msnbcmedia.msn.com/i/CNBC/Sections/News_And_Analysis/_News/__EDIT%20Englewood%20Cliffs/john_malone_interview.pdf
.

25.
Karl Bode, “Earthlink Wants Wholesale Access as NBC/U Condition,”
DSLReports.com
, October 7, 2010,
http://www.dslreports.com/shownews/Earthlink-Wants-Wholesale-Access-As-NBCU-Condition-110777
. EarthLink supported its contention with studies by Professor Simon J. Wilkie that were filed with the FCC. See Simon J. Wilkie, “Consumer Sovereignty, Disintermediation, and the Economic Impact of the Proposed Comcast/NBCU Transaction” (June 21, 2010) (“Wilkie Report”), available at
http://www.competitioneconomics.com/wp-content/uploads/2010/08/Report-of-Professor-Simon-J-Wilkie-on-Behalf-of-EarthLink-06-21-2010-MB-Docket-No-10-56-2.pdf
; Simon J. Wilkie, “Economic Analysis of the Proposed Comcast-NBCU-GE Transaction” (August 19, 2010) (“Wilkie Reply Report”), available at
http://www.competitioneconomics.com/wp-content/uploads/2010/08/Reply-Report-of-Professor-Simon-J.-Wilkie-on-Behalf-of-EarthLink-08-19-2010-MB-Docket-No.-10-56.pdf
. “Next Generation Connectivity: A Review of Broadband Internet Transitions and Policy from Around the World, Final Report,” Yochai Benkler, Principal Investigator (Cambridge, Mass.: Berkman Center for Internet and Society at Harvard University, February 2010), 15, available at
http://cyber.law.harvard.edu/sites/cyber.law.harvard.edu/files/Berkman_Center_Broadband_Final_Report_15Feb2010.pdf
.

26.
“The Communicators: David Cohen, Comcast Corp.,” YouTube video, 14:59–15:15, posted by “C-SPAN,” August 2, 2009,
http://www.youtube.com/watch?v=sIozcgvdehs
; Ron Chernow,
Titan: The Life of John D. Rockefeller, Sr.
(New York: Random House, 1998), 547.

27.
The FCC report covers EarthLink's request for wholesale access in note 224 (“While we agree with EarthLink that stimulating development, innovation and investment in the OVD market, and in the broadband market as a whole, are critical public policy goals, we find that the open Internet and standalone broadband conditions that we are imposing on this transaction are sufficient to protect the broadband industry and the interests of consumers”):
Memorandum Opinion and Order, “In the Matter of Applications of Comcast Corporation, General Electric Company and NBC Universal, Inc. For Consent to Assign Licenses and Transfer Control of Licensees,”
FCC, January 18, 2011, 41.

28.
TR Daily, “FCC Official: Managed Network Issues Likely to Be Decided Case-by-Case,” September 26, 2011,
Telecommunications Reports
, available via Westlaw (
www.westlaw.com
) at 2011 WLNR 19546357. (FCC officials participated in a Federal Communications Bar Association event on the condition that their remarks not be attributed to any individual.)

29.
David Hyman, “Why Bandwidth Pricing Is AntiCompetitive,”
Wall Street Journal
, July 7, 2011.

30.
“The Communicators: David Cohen, Comcast Corp.,” YouTube video, 5:37–6:15.

31.
Sen. Al Franken, interview with the author, September 30, 2010.

32.
“Per capita, fewer of us have broadband than in South Korea, Japan, or just about anywhere in Europe,” according to Nick Judd, “Gig.U Asks Universities and Telcos to Work Together for the Internet of the Future, Starting Today,”
Tech President
, September 15, 2011,
http://techpresident.com/blog-entry/gigu-asks-universites-and-telcos-work-together-internet-future
. “Other countries, such as Korea, Japan, and France, offer speeds 20 to 100 times faster in both directions, and for the price of the inferior copper-based DSL offered in the U.S. The American public is the big loser,” noted David Rosen, “The ComcastNBC Merger & the Future of Internet Video,”
Z Magazine
, March 2010. And the
Economist
pointed out: “Having led the world in internet access, America has slipped over the past decade to 22nd (behind Latvia and the Czech Republic) with an average download speed of a mere 3.8 megabits per second (Mbps) compared with South Korea's average of 14.6Mbps. Worse, Americans pay through the nose for their high-speed access. According to the New America Foundation, a 100Mbps internet connection costs $16 a month in Sweden and $24 a month in South Korea. In Hong Kong, 160Mbps can be had for $65 a month. Thanks to the lack of competition, Americans have to stump up $145 a month for 50Mbps—less than a third the Japanese internet speed for over twice the price. By any measure, that is a terrible deal” (“The Difference Engine: Politics and the Web,” December 24, 2010). “Approximately 100 million Americans do not have broadband at home,” according to the National Broadband Plan Executive Summary, accessed March 1, 2012,
http://www.broadband.gov/plan/executive-summary/
.

Chapter 13. The AT&T–TMobile Deal

Epigraph. Ian Shapira, “James Cicconi, Head of AT&T Lobbying Effort, Confident in Approval of TMobile Deal,”
Washington Post
, March 23, 2011.

1.
Tom Schoenberg, Sara Forden, and Jeff Bliss, “TMobile Antitrust Challenge Leaves AT&T with Little Recourse On Takeover,”
Bloomberg
, September 1, 2011,
http://www.bloomberg.com/news/2011-08-31/u-s-files-antitrust-complaint-to-block-proposed-at-t-t-mobile-merger.html
.

2.
Craig Moffett,
The Rationing Impulse … [For Straws] in the Wind
(Washington, D.C.: Bernstein Research, June 10, 2011).

3.
Eli Noam, “Let Them Eat Cellphones: Why Mobile Wireless Is No Solution for Broadband,”
Journal of Information Policy
1 (2011): 470–85.

4.
The cost of installing a wireless network is consistently less than that for a wired network. In some parts of the country, the wireless cost advantage exceeds $7,500 per customer. See Coleman Bazelon, “The Benefits of Wireless Broadband for Rural Deployments” (Cambridge, Mass: The Brattle Group, March 16, 2010), available at
http://www.brattle.com/_documents/uploadlibrary/upload837.pdf
.

5.
Greg Besinger, “For Sprint, Free Pays Off,”
Wall Street Journal
, November 10, 2011; Craig Moffett,
U.S. & European Telecommunications: Stuck in the Middle … Will TMobile USA Be the Next Sprint?
(Washington, D.C.: Bernstein Research, February 5, 2009).

6.
“During a recent Citibank investor's [
sic
] conference, John Stankey, AT&T's President, said that the service provider is confident it can pass 55–60 percent of the homes in their service region,” reported Sean Buckley, “AT&T Nears End of Its U-Verse Service Buildout,”
Fierce Telecom
, May 20, 2011,
http://www.fiercetelecom.com/story/att-nears-end-its-u-verse-service-buildout/2011-05-20
.

7.
Karl Bode, “AT&T: The U-Verse Build Is Over,”
DSLReports.com
, February 9, 2012,
http://www.dslreports.com/shownews/ATT-The-UVerse-Build-is-Over-118297
.

8.
Noam, “Let Them Eat Cellphones,” 481.

9.
John Horrigan, “Wireless Internet Use” (Washington, D.C.: Pew Internet, July 2009);
In the Matter of Lifeline and Link Up Reform and Modernization
, Federal Communications Commission, WC Docket No. 11-42, April 21, 2011 (Comments of Media Action Grassroots Network).

10.
Kai Jakobs,
Information Technology Standards and Standardization: A Global Perspective
(Hershey, Pa.: Idea Group, 2000), 206-08

11.
Ibid., 214.

12.
Enhanced Data Collection Could Help FCC Better Monitor Competition in the Wireless Industry
(Washington, D.C.: Government Accountability Office, July 2010), 8.

13.
Charles Edquist,
The Internet and Mobile Telecommunications System of Innovation
(Northampton, Mass.: Edward Elgar Publishing, 2003), 83–85.

14.
Ibid., 73.

15.
As part of the Omnibus Budget Reconciliation Act of 1993, Pub. L. No. 103-66, § 6002, 107 Stat. 312, 387-392 (the “1993 Budget Act”), Congress added Section 309(j) to the Communications Act of 1934, as amended (the “Communications Act”), authorizing the Federal Communications Commission to award licenses for rights to use the radio spectrum through competitive bidding.

16.
“Broadband Personal Communications Service (PCS),” Federal Communications Commission Encyclopedia, accessed March 3, 2012,
http://www.fcc.gov/encyclopedia/broadband-personal-communications-service-pcs
;
Where Do We Go from Here? The FCC Auctions and the Future of Radio Spectrum Management
(Washington, D.C.: Congressional Budget Office, April 1997), 12–17.

17.
Guy Klemens,
The Cellphone: The History and Technology of the Gadget That Changed the World
(Jefferson, Ill.: McFarland, 2010), 134.

18.
Ibid., 134–35.

19.
Ibid., 135–36.

20.
“Cingular Nabs AT&T Wireless for $41B,”
CNN Money
, February 17, 2004,
http://money.cnn.com/2004/02/17/technology/cingular_att/?cnn=yes
.

21.
Saul Hansell, “Verizon and AT&T Win Big in Auction of Spectrum,”
New York Times
, March 21, 2008; “AT&T Talks Up LTE,”
Daily Wireless
, accessed March 3, 2012,
http://www.dailywireless.org/2011/05/25/att-talks-up-lte/
.

22.
Sinead Carew and Diane Bartz, “Sprint Files to Block AT&T purchase of TMobile USA,”
Reuters
, May 31, 2011, available at
http://www.reuters.com/article/2011/05/31/us-att-tomobile-sprint-idUSTRE74U5Y320110531
.

23.
Gigi Wang,
AT&T/TMobile Merger: More Market Concentration, Less Choice, Higher Prices
(Boston: Yankee Group, August 2011).

24.
U.S. Department of Commerce, National Telecommunications and Information Administration, “Digital Nation: Expanding Internet Usage,” NTIA Research Preview, February 2011, available at
http://www.ntia.doc.gov/files/ntia/publications/ntia_internet_use_report_february_2011.pdf
.