Tuesday, November 30, 2021

Charter to Commission: Pole Disputes Threaten Timely Deployment of Broadband Infrastructure

In two recent FCC filings, Charter Communications, Inc. (Charter) offered further evidence that efforts to connect rural Americans to broadband hinge upon agency action ensuring access to utility poles "on reasonable timelines, terms and conditions." Specifically, the grant, whether through declaratory ruling or notice-and comment rulemaking, of the forms of relief requested by NCTA – The Internet & Television Association (NCTA) in a Petition for Expedited Declaratory Ruling submitted in July 2020 and denied by the Wireline Competition Bureau in January of this year.

As I highlighted in "Charter Announces Ambitious Project to Deploy Broadband to Over One Million Unserved Locations," a February 2021 post to the FSF Blog, Charter is investing $5 billion, including $1.2 billion in subsidies secured via winning bids in the Rural Digital Opportunity Fund (RDOF) reverse auction, to expand its network in 24 states. This will enable it to offer high-speed Internet access – specifically, service that meets or exceeds the FCC's current 25 megabits per second (Mbps) downstream and 3 Mbps upstream definition of "broadband" – to more than one million locations at present unserved.

When it unveiled its plans, Charter cautioned that "pole applications, pole replacement rules and their affiliated issue resolution processes are all factors that can have a significant impact on the length of time it takes to build into these rural areas."

And in conversations last week with representatives of the Wireline Competition Bureau and legal advisors to Chairwoman Jessica Rosenworcel and Commissioner Geoffrey Starks, Charter presented specific evidence of issues relating to the processing of pole applications that threaten its ability not just to connect rural Americans, but to meet deadlines associated with RDOF subsidies.

Maureen O'Connell, Charter Vice President, Regulatory Affairs, detailed one impasse, involving the Warren Rural Electric Cooperative Corporation (WRECC) in rural Kentucky, that jeopardizes its plans to provide broadband to over six thousand unserved locations:

At the permit processing rate currently proposed by WRECC, it would take 14 years to complete the permitting process for attachments to poles to reach these locations – about seven times longer than planned and double the maximum allowed to deploy these federal taxpayer dollars under RDOF. That means a child in kindergarten now will have graduated from high school before the permitting phase is complete.

Charter also identified pole-related disputes in California, Hawaii, and South Carolina and "expressed concern that some pole owners have competitive incentives to delay broadband deployment by attaching entities because they are themselves affiliated with broadband providers who are putative competitors to the attaching entities, including (in the case of WRECC) affiliates or business partners receiving RDOF support."

In July 2020, NCTA filed with the FCC a Petition for Expedited Declaratory Ruling (NCTA Petition) seeking relief in rural areas including: (1) various clarifications regarding the appropriate allocation of pole replacement costs between attachers and owners, and (2) timely resolution of pole-related disputes via the Commission's Accelerated Docket.

Free State Foundation President Randolph May and Director of Policies Studies and Senior Fellow Seth Cooper filed Comments in support of the NCTA Petition.

In a January 2021 Declaratory Ruling, the Wireline Competition Bureau did clarify that "utilities may not require requesting attachers to pay the entire cost of pole replacements that are not necessitated solely by the new attacher and, thus, may not avoid responsibility for pole replacement costs by postponing replacements until new attachment requests are submitted."

As a general matter, however, the Wireline Competition Bureau denied the NCTA Petition, concluding that "it is more appropriate to address questions concerning the allocation of pole replacement costs within the context of a rulemaking, which provides the Commission with greater flexibility to tailor regulatory solutions."

The picture painted by Charter underscores how important it is for the FCC to provide additional clarity and guidance with respect to the respective rights and responsibilities of pole owners and attachers.

In that regard, I point out that, in a statement to Telecompetitor, a self-described "puzzled" WRECC disputed Charter's allegations and expressed "hope than we can come to an agreement soon." Thus, it would seem that the parties involved are not on the same page. Prompt intervention by the FCC holds the potential to accelerate the deployment of network infrastructure.

In other words, the policy goal of rapid rural broadband expansion compels precisely the relief requested in the NCTA Petition: "expedited consideration under the Accelerated Docket."

As noted above, the Wireline Competition Bureau denied NCTA's request for declaratory relief because it believed that a rulemaking of general applicability would be the more appropriate vehicle. It is time to begin that process.

Monday, November 29, 2021

Thanksgiving Day 2021

As regular readers of this space know, each Memorial Day and Independence Day I pen a special holiday message. And I've done so periodically on Thanksgiving too. So, here’s hoping you find this one thought-provoking.

To me, Independence Day, Memorial Day, and Thanksgiving are uniquely American holidays, bound together in uniquely American ways. By this I don't mean to say that other nations don't celebrate holidays that perhaps have the same names. And I don't mean to say that those nation's holidays don't commemorate aspects of their own histories and traditions that, in some respects, may be like our own.

What I do mean to say is that we celebrate Independence Day, Memorial Day, and Thanksgiving – and understand, or should understand, what they signify as national holidays – in our uniquely American context.

It is not necessary to accept, literally, the grade-school version of the first Thanksgiving in 1621 – which took place within a year of the Mayflower's landing at Plymouth Rock – to draw inspiration from the story of the Pilgrims' pause to give thanks. Regardless of the exact circumstances – and it now appears that the term "Thanksgiving" was not used at that meal – their prospects in their new American home remained highly uncertain.

Last year I wrote about the 400th anniversary of the Mayflower Compact, and I won't repeat all of that here. The key point is that the Compact, a declaration of self-government entered into by mutual consent, is an often-overlooked foundational American document. Those Pilgrims signing agreed to join together to form a "civil body politic" subject to "just and equal" laws. Not merely any laws.

In much the same way you don't have to accept, literally, the grade-school origin story of Thanksgiving to draw inspiration from the holiday today, you don't need to ignore the ugly history of slavery and Jim Crow in America to draw inspiration from the true meaning of the words of the Declaration of Independence. The Declaration's proclamation that "all Men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the Pursuit of Happiness," might not mean as much absent the Mayflower Compact's covenant, a century and half earlier, to establish a civil society subject to "just and equal laws." In other words, a line can be drawn from a proper understanding of the Mayflower Compact to a proper understanding of the Declaration of Independence, a thread in the establishment of the rule of law in America that ought to bind us together.

In the same way that the men who drafted the Mayflower Compact and the Declaration of Independence were not without their flaws, our leaders who have sent men and women to fight America's wars are not without theirs. Thus, some of America's wars may be viewed as more justified, or just, than others. But we celebrate Memorial Day not to honor our wars but to honor Americans who paid the ultimate price in answering their country's call.

Here then is the sense that I consider Thanksgiving, Independence Day, and Memorial Day together. The Founders possessed sufficient wisdom to bequeath a Constitution that framed a government that enables us to engage in the continuing project of forming "a more perfect Union.” Without the sacrifices of those we honor on Memorial Day, or the wisdom of those who drafted the Declaration in 1776 or the Mayflower Compact in 1620, the American experiment in self-government, under the rule of law, would not exist as we know it.

To my mind, it doesn't bode well for our country's future when so many today relish invoking the stains in our history as a reason to ignore, or even obliterate, all the good from which we can and should rightly draw inspiration. It bodes ill when so many relish silencing – "cancelling" in today's lingo – fellow Americans for uttering thoughts which with they disagree or consider out of fashion. This is not principally a matter of whether the First Amendment protects the right of individuals or private entities to engage in such silencing – it mostly does – but rather a matter of whether doing so comports with the constitutional culture that the free speech clause of the First Amendment is intended to nurture.

On this Thanksgiving, aside from enjoying a traditional Thanksgiving dinner with all the fixings, I'm going to draw inspiration from what I consider to be the uniquely American links between Thanksgiving, Independence Day, and Memorial Day. I remain unabashed in my belief that America is a unique nation, blessed with a unique form of government, one preserved by those who have paid the ultimate sacrifice in blood in defending our freedoms.

Any inspiration that may be drawn from these three uniquely American national holidays ought to be in the service of a renewed commitment to engage, as informed citizens, in the preservation of the rule of law.

With that in mind, as always, I wish you a Happy Thanksgiving, and one that is inspiring too!

With best wishes,


Tuesday, November 23, 2021

FCC Made a Good Call in Approving Verizon/TracFone Merger

Hours after my November 22 blog post, the FCC released its order approving the Verizon/TracFone merger. The Commission reached a strongly supportable conclusion, which is contained in paragraph 150 of its order:

After carefully reviewing the record in this proceeding and performing a thorough and extensive analysis, we find that the transaction will lower TracFone’s costs to provide service and improve its ability to offer prepaid and Lifeline services. These benefits, combined with Verizon’s robust commitments, which we accept as conditions of our approval, ensure that the proposed transaction will serve the public interest, convenience, and necessity. Accordingly, we approve the transaction. 

Notably, Commissioner Brendan Carr concurred in the result; but his statement accompanying the Verizon/TracFone Order also pointed to the agency's 2008 "mobile telephony/broadband services" market definition that it applied in evaluating the merger. Commissioner Carr cited to his thoughtful statement accompanying the 2019 T-Mobile/Sprint Order on the need for the FCC to update its framework for assessing competition and the likely effects of mergers in today's broadband services market. Insights from that prior statement, part of which are quoted below, are even more relevant as we approach 2022 than they were in 2019:

Instead of formally updating our view of competition to reflect 5G, we conduct our initial screen using the market definition of "mobile telephony/broadband services." The Commission created that market definition in November 2008—more than two years before any of the nationwide wireless providers had deployed 4G LTE. Even at that time, we saw how faster wireless service would combine the markets for talk, text, and low-data uses on phones with the market for high-data uses on computers and non-voice devices. The new market definition recognized how "mobile broadband services" (enabled by upgraded 3G and 4G networks) would break down previously siloed industries. And so when we reviewed a transaction between wireless companies in 2008, we took the opportunity to update our market definition, "conclud[ing] that there are risks associated with defining product markets too narrowly, since doing so may thwart this and future pro-competitive deals that take place in the context of rapidly evolving markets and services."


The Commission shows no such prescience in defining the relevant market here. Rather, it applies the same definition that both the FCC and antitrust authorities have been using for a decade. By sticking with a pre-4G market definition, we miss an essential feature of 5G: the blurring of wired and wireless networks and the enhanced competition that results. While our legacy market definition may track FCCs and antitrust authorities past, it prevents the expert agency Congress created to regulate telecommunications from helping our sister agencies modernize their approach to this technology. 

Monday, November 22, 2021

FCC Should Finally Make a Decision on Verizon/TracFone Merger

Verizon has stepped up its commitments regarding its proposed acquisition of TracFone, and the FCC should finally make a decision on the merger. In an ex parte filing dated November 18, Verizon strengthened its pledge to participate in the Lifeline program for several years as a condition for the Commission's approval of the transaction. If approved, the Verizon/TracFone merger likely would make the wireless market more competitive. And there appears to be no drawbacks because the deal would not result in the loss of a facilities-based provider.  

Verizon first applied to the FCC for consent to acquire TracFone on September 30, 2020. But the parties have been left hanging during the Commission's slow-motion review process. The proposed merger is not a hard call, and there is no good reason for the Commission to further delay its decision.

My blog post from August 17 of this year called attention to Verizon's pledge to continue providing low-income consumers with service through the Lifeline program after its acquisition of TracFone is approved. Verizon's ex parte from November 18 actually expanded on that pledge by offering to participate in the Lifeline program for at least seven years instead of three years. Among other proposed commitments, Verizon will continue existing TracFone rate plans for at least three years after the close of the deal. And for TracFone subscribers who are required to transition to Verizon's Network, Verizon will offer them devices with comparable functionality or SIM card replacements at no cost. 


Verizon is a facilities-based wireless service provider, and TracFone is a popular pre-paid mobile virtual network operator (MVNO) that relies on other providers' facilities. Thus, the merger would not cause any U.S. wireless consumer to lose a choice among facilities-based providers. Instead, by carrying wireless traffic for TracFone's pre-paid service on Verizon's network, the merger likely would save costs and make Verizon a stronger competitor with AT&T, T-Mobile, and other wireless providers that cater to the pre-paid market segment. 


In all, the public benefits of Verizon/TracFone clearly appear to outweigh any potential downsides. It is past time for the FCC to conclude its review and vote on the merger.  

Friday, November 19, 2021

Accenture Reports on the Potential for 5G Fixed Wireless Access in Rural America

A report released on November 18 by Accenture titled "5G Fixed Wireless Broadband: Helping Close the Digital Divide in Rural America." The report identifies the potential of next-generation fixed wireless services to provide capacious and high-speed broadband Internet services in hard-to-reach geographical areas. According to the report: "By leveraging advances in wireless network technologies like 5G, an FWA connection can potentially deliver sustained download speeds, through the air, of 1 Gbps up to four miles." Also, “[a]s advanced 5G technology rolls out with high-band spectrum, FWA will have 10 to 100 times more capacity than 4G" and "future 5G-enabled FWA services will provide ultra-reliable service with under 10 millisecond latencies that are critical to many emerging 5G use cases." Accenture estimates that 8.4 million households – that is, 43% of rural households – could be served by at least one 5G fixed wireless access provider in the near-term future. 

To obtain the benefits of fast 5G deployment, Accenture's report recommends more mid-band spectrum in the lower 3 GHz band be repurposed for commercial use. And it recommends additional streamlining of regulatory processes such as zoning for infrastructure permit approvals. Those are sound recommendations that Congress and the FCC ought to take seriously if they are truly serious about reaching underserved Americans. 

For further insights on policy actions needed to expand broadband access to all Americans, see my Perspectives from FSF Scholars from February of this year titled "Fast Action on the Lower 3 GHz Band Will Secure Americas 5G Future." And also check out "Real Infrastructure Opportunity for Congress: Speed Deployment of 5G Network," a Perspectives that I co-authored by Free State Foundation President Randolph May.

Thursday, November 18, 2021

Third Circuit Declines to Rehear Pro-IP Rights Decision Regarding Section 230

On November 17, the U.S. Court of Appeals for the Third Circuit denied a petition for rehearing en banc of the Circuit panel decision in Hepp v. Facebook. In its decision from September 23 of this year, the Third Circuit concluded that the legal immunity conferred on "interactive computer services" by Section 230(c) of the Communications Decency Act does not apply to claims based on state intellectual property laws. Section 230(e)(2) is title "No Effect on Intellectual Property Law" and it states that "[n]othing in this section shall be construed to limit or expand any law pertaining to intellectual property."

The Third Circuit's decision in Hepp v. Facebook was the subject of my Perspectives from FSF Scholars titled "Court Rejects Section 230 Immunity from State Intellectual Property Law." As pointed out in that Perspectives, the Third Circuit's decision creates a clear circuit split with the Ninth Circuit on the issue of whether Section 230(e)(2) provides an exclusion from immunity for state intellectual property claims. The Third Circuit's decision is solidly grounded in the natural reading of the statutory text, it respects the role of IP rights in flourishing markets, and it deserves to stand. The denial of a rehearing en banc is good thing. It remains to be seen if Facebook, Reddit, or Imgur will appeal the decision to the U.S. Supreme Court.  

Tuesday, November 16, 2021

Wireless Tax Hikes Mute Price Cuts - Tax Foundation Report

This week the Tax Foundation released its annual report for 2021 regarding the imposition of various taxes, fees, and surcharges on top of the charges for basic wireless services. The report highlights how regressive, record-high rates prevent low-income Americans from fully benefitting from price cuts by mobile carriers. These regressive fees almost certainly widen the digital divide, despite the consensus from policymakers that closing it is a top priority.

The overall tax rate customers paid on wireless in 2021 increased to a record high 24.96%, another year-over-year hike. Higher Universal Service Fund (USF) rates fueled the spike, though some states and localities hiked various sales taxes, 911 fees, or wireless surcharges. In total, governments collected $11.3 billion, about half for USF and half for state/local consumption taxes. Thanks to record high fees, a family of four paying $100 per month for four wireless voice lines paid $300 in fees this year. The same family paid $270 in 2020, amounting to an 11% year-over-year increase.

Taxes are increasing despite cuts in wireless service prices absent the added taxes, fees, and surcharges. The average line price dropped to $35.31 in 2021, a 15% decline from $41.50 in 2017. But consumers aren’t fully benefitting from the price cuts because the hikes in the various taxes, fees, and surcharges partly offset them.

And the burden of fee hikes falls heaviest on low-income Americans. Wireless taxes are regressive, since they are almost all flat rates or per-line fees. Plus, 74% of low-income adults subscribe to wireless voice only, compared to 65% of all adults. So every hike in wireless fees shifts more burden to low-income Americans.

Offsetting price cuts for wireless services with hikes in taxes, fees, and surcharges is no way to close the digital divide. Instead, governments should look to broader revenue sources that let consumers benefit from lower-prices. Lower prices would encourage more wireless adoption for Americans most in need. Then, closing the digital divide would be closer to a priority than lip service.

Friday, November 12, 2021

Section 253 Petition Rendered Moot by Responsive State Law

Once again, the possibility that the FCC might exercise its authority to preempt "excessive, unreasonable, and discriminatory" right-of-way requirements under Section 253 of the Communications Act has prompted positive change at the local level.

On May 10, 2021, Bluebird Network (Bluebird) submitted to the Commission a Petition for Declaratory Ruling seeking relief under Section 253(d). Bluebird argued that the $1.91 per linear foot right-of-way fee charged by the City of Columbia, Missouri, "violates Section 253 by materially inhibiting Bluebird's ability to bring competitive broadband services to customers in the City, which will constrain broadband deployment and perpetuate the digital divide."

Pursuant to Section 253(a), "[n]o State or local statute or regulation, or other State or local legal requirement, may prohibit or have the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service."

After Bluebird filed its petition, the Missouri legislature passed H.B. 271, which bars the City of Columbia from collecting the fees at issue. In response, Bluebird filed a Motion to Withdraw on November 9, 2021.

This outcome evokes the dispute I described in a recent post to the Free State Foundation's blog, "City's Preferential Treatment of Fiber-Based Broadband Raises Competition Concerns."

In that case, Mediacom Communications Corporation (Mediacom) objected to actions by the City of West Des Moines, Iowa, that it argued would provide Google Fiber, as a practical matter, with exclusive use of a $50 million city-financed fiber-specific conduit network.

Shortly After Mediacom filed its Petition for Expedited Declaratory Ruling, the City of West Des Moines and Google Fiber amended their agreement to reduce the period of the latter's exclusive use of the conduit network from 18 to 6 months.

And on October 15, 2021, Mediacom and West Des Moines notified the FCC that they had negotiated an agreement in principle to settle their dispute.  In response, the Wireline Competition Bureau on October 25, 2021, adopted an Order pausing the pleading cycle to provide the parties with additional time to work out the specific details of their settlement.

Thus, it appears that the mere specter of Commission preemption pursuant to Section 253 performs a potent role in assuring that providers have reasonable access to local rights-of-way.

Thursday, November 11, 2021

Sunny Forecast for 5G Fixed Wireless Broadband Access in the U.S.

According to a November 10 report by ABI Research, "in 2026, the FWA [Fixed Wireless Access] market will exceed 180 million subscriptions and generate US$70 billion in revenue." It forecasts quick 5G FWA rollouts in North America because it can be deployed faster to subscribers and for less capital expenditures compared to fiber-to-the-home. Thus: "In 2026, North American and Europe combined will represent nearly 60% of global 5G FWA subscriptions." While these figures aren't specific to the United States, one ought to expect this country to be the leader in 5G FWA deployment. And the press release for ABI's report acknowledges that Verizon is an early adopter of 5G FWA using mmWave band spectrum, with U.S. Cellular also planning to deploy in the mmWave band. 

The future of 5G FWA looks bright in the U.S. with T-Mobile and AT&T both making offerings available. And an October 26 blog post by Free State Foundation Legal Fellow Andrew Magloughlin highlighted the Verizon-Amazon deal for rural backhaul that will deliver Verizon's fixed wireless service. In the months ahead, expect FSF scholars to have more to say on 5G FWA and its implications for competition policy. 

Friday, November 05, 2021

The PATRIA Y VIDA Act Would Help Defeat Despotic Restrictions on Internet Access

Today, Sen. Marco Rubio introduced the Protecting Against Tyrants by Restoring Internet Access and Yielding Vital Interconnectivity in Designated Areas Act – or PATRIA Y VIDA Act. In the words of Sen. Rubio's press release, the bill would "build a strategy to protect internet freedom worldwide and strengthen support for technologies that allow users to evade foreign government-backed censorship and restrictions." The legislation would require the federal government to support and deploy Internet censorship circumvention technologies so that people located in foreign nations Cuba and China that are subject to authoritarian rule can access information. The bill's title commemorates the Cuban peoples' protests from July of this year against their despotic leaders who censored Internet access in that country. 

Sen. Rubio surely is right that the PATRIA Y VIDA Act is important legislation. The Senate should promptly take up consideration of the bill, which would direct the U.S. to do more to push back against despotic foreign regimes.

Wednesday, November 03, 2021

In Eyebrow-Raising Fashion, FTC Adopts New Policy Statement on Prior Approval Provisions

Last week, the FTC finally filled the vacuum it created this summer when, in a vote along party lines, it rescinded the 1995 Policy Statement Concerning Prior Approval and Prior Notice Provisions in Merger Cases (1995 Policy Statement). The new Policy Statement, perhaps unsurprisingly, heralds a worrisome return to, and expansion upon, pre-1995 practices shown to discourage pro-competitive transactions. Equally newsworthy, however, are the departures from traditional process associated with this agency action.

Prior to 1995, the Commission routinely required that consent decrees include an obligation that the combined entity provide advance notice of, and obtain prior approval for, subsequent transactions in the relevant product and geographic markets. The 1995 Policy Statement put an end to that practice.

However, and as I detailed in a July 23, 2021, post to the FSF Blogat the FTC's July Open Commission Meeting, the agency's Democratic majority opted to rescind the 1995 Policy Statement. The two Republican Commissioners articulated their concerns about that decision.

Commissioner Noah Phillips characterized prior approval provisions as "a decade-long M&A tax on anyone who enters a merger consent" and decried the inconsistency of the majority's action with the intent of the Hart-Scott-Rodino Act of 1976 (HSR Act). He also argued that the resumed use of such provisions will create competitive disparities between those subject to consent decrees and those not so constrained – and, as a consequence, "lead to suboptimal transactions, create inefficiencies, and reduce overall consumer welfare."

Commissioner Christine Wilson explained how prior approval conditions create opportunities for "questionable exercises of enforcement discretion"; emphasized that, even with the 1995 Policy Statement in place, the FTC retained the ability to require prior notice and/or approval in consent decrees under warranting circumstances; and highlighted that "by rescinding the 1995 Policy Statement without providing further guidance, the Commission substitutes uncertainty for a policy that has worked for more than 25 years."

That void now has been addressed, but decidedly not in a manner to the liking of either Republican Commissioner.

On October 25, 2021, the FTC announced the adoption of a new Prior Approval Policy Statement (2021 Policy Statement). Per the Press Release, "merger enforcement orders will once again require acquisitive firms to obtain prior approval from the agency before closing any future transaction affecting each relevant market for which a violation was alleged, for a minimum of ten years." Prior to 1995, prior approval provisions remained in effect for a maximum of ten years.

In addition, per this expanded policy, the agency may require prior approval for:

  • Transactions outside of the affected product and/or geographic markets when, based upon the application of a "non-exhaustive" list of subjective factors, it concludes that "stronger relief is needed";
  • In instances where the parties abandon the proposed deal; and
  • For the sale of divested assets by entities not involved in the challenged transaction.

Thus, the 2021 Policy Statement in significant ways is much more expansive than those practices in place prior to 1995.

Although there currently is a 2-2 split between Democratic and Republican Commissioners on the Commission, Chair Lina Khan and Commissioner Rebecca Kelly Slaughter were able to push through the 2021 Policy Statement with the assistance of a tie-breaking "zombie vote" cast weeks prior by former Commissioner Rohit Chopra.

However, that is not the only procedural anomaly that transpired.

While a Dissenting Statement from Commissioners Phillips and Wilson eventually was released, on October 29, 2021, it notably was not included in the initial announcement.

As a result, Commissioner Phillips took to Twitter to voice his displeasure:

Commissioner Wilson weighed in, as well:

For more on Commissioner Wilson's general process-related concerns, please read "Congressional Testimony of FTC Commissioner Wilson Addresses Agency Processes, Section 13(b), and Federal Privacy Legislation," a July 2021 post to the Free State Foundation's blog.

Eventually, the official FTC Twitter account issued a mea culpa:

Nevertheless, in a footnote to their joint Dissenting Statement, Commissioners Phillips and Wilson reiterated that "[t]he policy at issue was announced without our participation, which is contrary to longstanding practice and the opposite of what was promised."

Moving to the substance of their objections, Commissioners Phillips and Wilson dismissed the 2021 Policy Statement as "yet another daft attempt by a partisan majority of commissioners to use bureaucratic red tape to weigh down all transactions – not just potentially anticompetitive ones – and to chill M&A activity in the United States."

In addition, they:

  • Pointed out the various ways, noted above, in which the 2021 Policy Statement goes even further than pre-1995 practices;
  • Detailed how the 2021 Policy Statement stands in conflict with procedures set forth by Congress in the HSR Act;
  • Explained how "the majority oversells the benefits of its actions and significantly undersells the harms";
  • Highlighted how this action further exacerbates the growing disparity between how the FTC and the Department of Justice review transactions; and
  • Criticized the majority's failure to seek public input before finalizing the 2021 Policy Statement.

I urge you to read the Dissenting Statement of Commissioners Phillips and Wilson in its entirety. It can be accessed here.

Tuesday, November 02, 2021

FCC Should Dismiss Alarm Industry's Petition to Stall 3G-to-5G Transition

The alarm industry is asking the FCC to halt 5G deployment and force AT&T to operate outdated 3G networks through the end of 2022. The Commission should at once dismiss the alarm industry's self-serving petition, which seeks government intervention to push off its own business costs onto an adjacent market provider. The agency should take a forward-looking approach and promote the 3G-to-5G transition, not needlessly stall it.

The FCC lacks legal authority to mandate 3G network delivery of private mobile IoT services. Those service offerings are individually negotiated with alarm companies, and they are not subject to common carriage rules. Also, any attempt to mandate 3G enterprise services beyond February 2022 effectively would rewrite existing contracts between AT&T and alarm companies. And it would be a grave mistake for the Commission to choke the much-needed supply of spectrum for capacious and fast-speed 5G. Prompt repurposing of spectrum from 3G to 5G is mission critical to achieving the full technological and economic benefits of next-generation wireless networks.

The retirement of single digit megabytes-per-second speed 3G networks has been widely anticipated for a decade. And AT&T provided three years advance notice of plans to retire its 3G Universal Mobile Telecommunications Service (UMTS) network in February 2022. It currently dedicates 10 MHz of its licensed spectrum in the 850 MHz band to a small and dwindling number of 3G device users whose activities use only about 4% of its 3G network capacity. AT&T plans to repurpose that valuable spectrum by using it to provide uplink communications in connection with $23 billion worth of C-Band spectrum and thereby cover 200 million Americans with 5G by year-end 2023. 

But the alarm industry is seeking to avoid or delay its costs in upgrading to next-generation mobile technologies by having government push back 3G UMTS network retirement to the end of 2022. I wrote about this matter in my September 2021 Perspectives from FSF Scholars: "AT&T's 3G Sunset Will Make Way for Speedy 5G Services: Technology Transitions Shouldn't Be Delayed by Special Pleading."

As explained in my Perspectives, the Commission has no legal authority under Title II of the Communications Act to mandate 3G network continuation. The private mobile IoT services that AT&T offers to alarm companies do not meet the definition of common carriage services. AT&T's dealings with those sophisticated business enterprises are on customized terms arrived at through arms-length negotiations. These private carriage mobile services are not mass market retail services and they are not public offerings of communications to all endpoints through the public switched telephone network. 

According to an October 28 ex parte filing with the FCC, AT&T's contracts with major alarm companies apparently require operation of 3G network operations only "until December 31, 2021" and thereafter expressly reserve AT&T's right to "terminate 3G … at any time in its sole discretion." The Commission has no legal authority to override those contractual terms. In fact, Supreme Court and D.C. Circuit precedents appear to bar the Commission from using its Article III power over spectrum licenses to prolong 3G network operations. For instance, the D.C. Circuit's 2012 decision in Cellco Partnership v. FCC recognized that "the Commission lacks authority to invalidate licensees' contracts with third parties," and also that "Title III gives the Commission no authority to make 'fundamental changes' to the terms of existing licenses." Any Commission mandate for forced operation of AT&T's 3G network would invalidate key contract terms and it also would amount to a fundamental change in terms for AT&T's 850 MHz spectrum licenses. 

Two decades ago, the alarm industry tried unsuccessfully to delay the retirement of analog wireless networks. The Commission rightly rejected any forced delay in the analog-to-digital transition. Now the agency ought to reject any forced delay in 3G-to-5G transition.