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Verizon-Cable Hearing Exposes Weakness of Opposition

 

The Senate Judiciary Subcommittee hearing on the proposed Verizon-Cable spectrum sale flushed out the opposition's best arguments and evidence and they proved surprisingly weak and sparse.

Behind the façade of FreePress' trademark bumper-sticker bluster of "a competition crisis," "a creeping duopoly," and "spectrum warehousing," there was very little substance to back up their pejorative assertions.

FreePress' bogus duopoly deception is the core weakness of the opposition to this commercial agreement. To believe there is a Verizon-AT&T wireless duopoly, one has to:

  • Ignore the inconvenient fact that there are over 100 million American subscribers that do not subscribe to either Verizon or AT&T, (in other words roughly 1 of every three U.S. wireless consumers have chosen to not subscribe to Verizon or AT&T for one reason or another);
  • Not watch TV, listen to the radio, read news of surf the net, because if an American consumer does, they can't miss the fact that at least four wireless competitors are constantly barraging them with advertisements seeking their business; and
  • Believe that one can't switch to Sprint, T-Mobile or another wireless competitor, when they know they can.

FreePress' claim that there is not enough wireless competition is preposterous, because the U.S. is the only major country in the world with four national facilities-based wireless broadband providers.

  • In attacking the most competitive wireless market in the world as effectively a duopoly or market failure -- when price per megabit use is plummeting, handset prices are plummeting, private investment leads the world, and innovation is flourishing -- as somehow not competitive, belies FreePress' real views; FreePress does not believe in competition or free markets, only government control of communications.

FreePress' opposition to the Verizon-Cable commercial agreements also goes against what they have claimed to stand for for years.

  • FreePress' constantly has pushed Congress and the FCC to mandate that Verizon and AT&T be forced to resell their networks to promote competition.
  • Now that Verizon and cable companies have privately negotiated a reselling arrangement on their own based on market forces, FreePress screams it is anticompetitive.
  • This exposes FreePress' nonsensical hypocrisy that they don't really care about competition, they just will say and do anything to promote government regulation or ownership of communications because they fundamentally believe communications should be a public utility and not part of the private sector.

In the industry's opposition to the Verizon-Cable agreement, RCA did not seek to block the spectrum transfer, but to condition it. This exposes two industry realities.

  • First, unlike FreePress, industry and competitors know full well there is no legal basis or sound justification to block this transaction at the DOJ or FCC.
  • Second, they see it as an opportunity to hijack the process and extort through the regulatory process competitive gains they could never achieve in the marketplace.

The RCA's members seek special regulatory favors contrary to law, or the FCC's statutory authority, like:

  • Divestitures (i.e. spectrum subsidies and a spectrum bailout for those unwilling or unable to pay a market price for scarce spectrum despite Congress' recent affirmation that market auctions (public or private) are the best way to allocate spectrum);
  • More data roaming price breaks (subsidies via broadband price regulation that the FCC does not have the statutory authority to grant);
  • Handset regulation (regulating the unregulated, again without statutory authority); and
  • Special access price regulation (that they can't get the FCC to do in a rulemaking, because nothing is stopping Sprint, T-Mobile and other RCA members from building and operating their own backhaul services).

In sum, the Verizon-Cable hearing was a useful public exercise because it presented the very powerful justification and evidence in support of the transaction, while exposing the opposition as very weak on substance, and very self-serving in seeking regulatory subsidies and special favors through supposed "voluntary" public interest conditions that they never could hope to achieve in a normal FCC rulemaking subject to due process and the rule of law.

 

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