Competition

Given that Apple and Google are the #1 and #2 most valuable brands in the world and that Google has invaded all of Apple’s markets in the last few years as a new competitor, it is illuminating and instructive to compare and contrast the radically different visions, values, and standards, of Apple’s former leader Steve Jobs and Google’s current CEO Larry Page.

• See my Forbes Tech Capitalist post: "Jobs' Apple Standard vs. Page's Google Standard" here.

See my Forbes Tech Capitalist post "The Next Leg of Wireless Growth? here.

See my Forbes Tech Capitalist blog on Google's disingenuous free market charm offensive at the Heritage Foundation today -- here.

See my Forbes post: "Netflix Crushes Its Own Momentum" here.

• "...Netflix has crushed its own growth stock momentum -- and it won’t be coming back – that pixie dust is gone forever. Netflix will never be the same...."

Please see my Forbes Tech Capitalist blog "Opposing "The Verge" of Socialism" here, which rebuts Joshua Topolsky's Washington Post column: "Want better wireless service in America? Socialize it."

Netflix' continues to exhibit serious difficulties grasping basic economics, competition and value.

First, Netflix is lowering its value to customers.

• Netflix now charges its subscribers' 60% more in September in return for lots less premium content available for subscribers in February, as Netflix just lost Starz,its top premium content provider, which supplies 22 of Netflix' top 100 movies.

Second, Netflix is shifting its costs to its customers.

• Netflix used its abrupt and controversial 60% price hike to force many of its core users away from the DVD model that many prefer and have the viewing technology for (but costs Netflix more), to the streaming model, (which Netflix prefers because it costs them less) even if it costs many of their DVD customers to spend lots more to upgrade their viewing technology to view the streamed content in the way they can currently view DVDs.

Third, Netflix is chasing away the premium content its subscribers demand.

The DOJ lawsuit against the AT&T/TMobile merger has many serious flaws that will make it difficult for the DOJ to meet its burden of proof in court that this merger is anti-competitive.

• Court cases are precedent, fact, and merit driven, and DOJ's case is much weaker in those critical dimensions than most appreciate or reports indicate.
• (See DOJ's release here and the DOJ's complaint here.)

Importantly, if the DOJ ultimately cannot prove this merger is anti-competitive in a court of law, that official legal decision would make it legally difficult for the FCC to block the merger on competition grounds under the FCC's public interest standard, especially given that the merger would bring more broadband speed more quickly to more Americans, and create jobs, which the FCC's claims are their top public interest priorities.

• Simply, the precedents, facts, and merits are friends of the proposed AT&T-T-Mobile deal.

I.   Summary of Top Ten Flaws in DOJ's Case

An easy way for the FCC to show respect for the President's Executive Order to eliminate "outmoded" and "excessively burdensome" regulations would be to grant the NCTA's petition for a declaratory ruling, that Section 652 of the 1996 Telecom Act, (intended to encourage incumbent local telcos and cable companies to compete in telephony and video) was not meant to prohibit pro-competitive mergers between cable companies and new entrant CLECs that didn't exist in 1996 and thus have no market power.

The FCC Sect. 652 status quo is counterproductive in perversely thwarting a central competition policy goal of the 1996 Telecom Act: i.e. promotion of cable-telco competition.

• By creating unnecessary regulatory uncertainty around actual and potential cable-CLEC mergers, at both the FCC and with local franchising authorities, the FCC effectively has created a regulatory barrier to more cable-telco competition.
• We cannot "win the future" with a broadband Internet "excessively burdened" with anachronistic analog anchors like the FCC's current interpretation of Sect. 652.

Specifically, the NCTA's petition exposes a dysfunctional local franchising authority review process that has no standards or time limits, which makes the overall regulatory review process for cable-CLEC mergers uncertain, arbitrary, and "excessively burdensome."

In the end, the U.S. Government is highly-likely to approve the AT&T/T-Mobile merger, despite the significant opposition, because of three over-riding realities: 1) market/financial realities, 2)DOJ legal/precedent realities, and 3) FCC public-interest realities.

I.    Market Reality:

T-Mobile's leadership and owners have decided that they are unable and unwilling to invest what is necessary in order to compete going forward in the American 4G wireless market, and given that fundamental premise, the AT&T/T-Mobile merger is the optimal market outcome for T-Mobile's customers and for competition.

• T-Mobile shopped itself for a good while in order to fully test its market options and ultimately chose to merge with AT&T as the best outcome for all concerned from its perspective.

So the key baseline fact grounding the DOJ/FCC's decision processes here, is that T-Mobile's leaders/funders are effectively exiting this business one way or another long term via merger, sale or benign neglect.

Those interested in the ultimate legal fate of the FCC's beleaguered Open Internet order, should not miss Randy May's outstanding analysis of the D.C. Appeals Court's latest thinking on the FreeStateBlog.

Simply, Randy keenly spotlights a very relevant recent D.C. Court of Appeals decision overturning an SEC rule as a precursor/analogous decision of how that court will likely view the FCC's controversial Open Internet Order.

• Randy shows the Court currently has little patience for sloppy unsupported legal decisions (like the FCC's Open Internet order) where the agency "failed to make a rational connection between 'the facts found and the choices made.'"

Randy is dead on that this Court is very likely to show very little tolerance for the FCC's scant and lame justification for net neutrality regulation -- a justification that can be encapsulated in the well-known phrase of those who can't defend their position on the merits: "because we say so."

• This is more evidence that the FCC's net neutrality regulations are "dead regs walking."