Carterfone & AT&T Breakup Enabled Opening of Equipment Business

In 1984 AT&T in exchange for government permission to enter the computer equipment business agreed to a breakup of its subsidiaries into several Regional Baby Bells. The breakup was very beneficial for consumers and resulted in greater competition. Unfortunately, in the 2000s AT&T Corp., as it came to be known was allowed to re-merge with two of the original Baby Bells from the Ma Bell System: SBC Communications and later Bell South. Another Baby Bell MCI eventually become part of Verizon Communications which is a co-owner of Verizon Wireless.

What some people don’t know is in 1968 the FCC ruled that wire-line telephones had to be made compatible with any telephone company. The Carterfone decision as it was called paved the way for the innovation of the fax machine and allowed innovation in the phone equipment business that the AT&T monopoly otherwise sought to curtail. Today the wireless market for cellular phones and tablets looks a lot unfortunately like the phone equipment market pre Carterfone with wireless carriers allowed to dictate which handsets work with which carriers. It is imperative that this be resolved eventually for the benefit of the consumer.

Right now the Federal Communications Commission is accepting comments on a proceeding regarding interoperability rules for carriers with 700 MHz of wireless spectrum (12-69). They also have an open proceeding on Advanced Wireless Services (AWS) rules for holders of AWS spectrum (12-70). I would encourage anyone who has not had a chance to comment on these proposals to file comments as soon as possible in support of interoperability requirements for carriers using both 700 MHz and AWS spectrum. Furthermore, anyone wanting to contribute their opinion(s) on such rules are certainly welcome in doing so and public input is certainly a good thing. Otherwise the corporations against interoperability and any rules benefiting the public’s interest would be the only ones to speak out. We need to show their is support for pro consumer policies like these that also benefit smaller wireless companies and are thus pro competitive. AT&T Mobility and Verizon Wireless might not like these rules but the proposed rules benefit smaller companies and consumers a like.

I have already commented myself in these proceedings and mentioned having an open equipment market for cellular phones and tablets that can work with the carrier of the individual’s choice and would encourage others to do so as well. Please note that the FCC’s next Open Commission meeting is on Friday April 27th at which time they will vote on some proposed rules in proceedings related to standardized and enhanced disclosure pertaining to broadcaster’s public interest obligations (00-168) that while still open the commenting period for rules has passed, and on a few other proceedings related to USF contributions etc.

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Stop Verizon & Big Cable’s Shenanigans

As if the “inevitable” AT&T T-Mobile merger rightly killed by federal regulators wasn’t bad enough now Verizon Wireless and a handful of big cable companies want to enter into anti-competitive marketing agreements to divide up the Internet amongst themselves. The agency resale and joint operating entity agreements are part of an anti competitive spectrum licensing transfer filed by SpectrumCo (a consortium of cable companies including Comcast NBC, Time Warner Cable and Bright House Networks) and Cox Communications. If this  sweetheart deal between Verizon Wireless and Big Cable  is approved what little broadband competition still exists in the fixed wire-line market would disappear with Verizon Communications expected to discontinue expansion of their  land-line FIOS Phone, Internet and TV services into new markets if it does not abandon FIOS service altogether. There’s no way to sugarcoat it these deals would be a disaster for consumers, competition and violate the intent of Congress when they passed the Telecommunications Act of 1996.

The good news is public interest groups have convinced the FCC in examining whether to approve the license transfer or not to request the companies involved provide them more information on their marketing agreements. As such the FCC must review the commercial agreements and the spectrum transfer in combination even if its review of the marketing agreements are part of a separate proceeding.

After all Comcast’s Executive Vice President David Cohen has admitted that the deals are part of an integrated transaction. There was never any discussion about having the spectrum sale without the commercial agreements. Both the Justice Department and the FCC are examining the deals in combination which public interest groups say should be denied anyways because of the massive spectrum concentration that would occur should the deals be approved. After all both Verizon Wireless and AT&T Mobility have plenty of existing spectrum compared to smaller rivals  in both the national post-paid and pre-paid market(s) and the regional post-paid/pre-paid market(s) like Sprint Nextel, T-Mobile USA, MetroPCS, Leap Wireless (Cricket) and C-Spire Wireless.

If you haven’t had the opportunity to comment yet on the proposed transaction(s) please e-mail the U.S. Justice Department’s Antitrust Division at antitrust.complaints@usdoj.gov or file comments with the FCC at their website using docket 12-4. Also contact your member of Congress including your Representative and your U.S. Senators urging their opposition to the transactions. The U.S. Senate recently held an antitrust subcommittee hearing on the proposed deals where Verizon Wireless and Big Cable faced strong criticism. Let’s keep up the pressure and stop Verizon & Big Cable from carving up the Internet amongst themselves.