President Trump Revokes President Biden's Mislabeled "Promoting Competition" EO

On August 13 President Trump issued an Executive Order revoking President Biden's Executive Order 14036 issued in 2021. EO 14036 was styled "Promoting Competition in the American Economy." 

Naming EO 14036 "Promoting Competition in the American Economy" was real misnomer in the same way that President Biden's "Inflation Reduction Act of 2022" was misleadingly labeled. That law did a whole bunch of things, but reducing inflation was not one of them. Instead, it increased inflation. Likewise, the "Promoting Competition" executive order encouraged adoption of a lot of unsound policies by various agencies. The overall effect was not to increase competition and make markets freer but to increase government intervention in key segments of the U. S. economy.

 

With respect to communications law and policy, the Biden EO "encouraged" the FCC to adopt "net neutrality" rules to convert broadband Internet service providers into public utilities. Additionally, it "encouraged" the agency to prohibit early termination fees; to require broadband providers to regularly report broadband price and subscription rates to the agency; and to prevent landlords and cable and Internet service providers from inhibiting tenants' choices among providers.

 

                                                  

Not surprisingly, the FCC under Jessica Rosenworcel's leadership proceeded to implement, or try to implement, all of the actions it was "encouraged" to implement. Most of these sugar-coated government interventions did not contribute to enhancing competition or benefitting consumers.

 

So, I'm pleased President Trump has revoked the Biden's Executive Order 14036 which provided a lot of the impetus for many of his administration's regulatory crusades.

 

That said, I have no hesitancy in admitting that I wish President Trump would resist his not-so-occasional urges to "encourage" government intervention in the free marketplace when it strikes his fancy. Could he issue an executive order that would restrain himself?

FCC Deletes, Modernizes, Streamlines Cable Rate Regulation

At today's Commission open meeting, Chairman Brendan Carr's IN RE: DELETE, DELETE, DELETE initiative bore fruit when the agency adopted a Report and Order providing the cable industry with long-overdue relief on the rate regulation front. As long as Section 623 of the Communications Act remains on the books (see below for more on that), the rate a cable operator not facing "effective competition" – essentially a null set, legally speaking, since 2017 –charges for the Basic Service Tier (BST) remains subject to regulation. This item, (circulated version available here), however, "will remove from … regulations approximately 27 pages, 11,475 words, 77 rules or requirements, and 8 forms."

The Report and Order deregulates most cable equipment, exempts smaller systems, and declines to extend its rules to commercial establishments. It also modernizes and streamlines those rules that remain in place, primarily to reflect the sunset, over 25 years ago, of tier regulation beyond that of the BST – that is, the tier (1) upon which local broadcast television stations and public, educational, and government access (PEG) channels must be carried, and (2) to which rate regulation in theory still applies.

In practice, of course, given the ubiquitous presence nationwide of "effective competition" from direct broadcast satellite (DBS) operators, telco TV providers, and virtual multichannel video programming distributors (vMVPDs), rate regulation of the BST no longer occurs. As the item notes, the Commission itself is "unaware of any local communities that are actively regulating cable rates at this time."

In a June 5, 2025, post to the FSF Blog, Free State Foundation President Randolph May described this undertaking broadly as "a meaningful regulatory reform accomplishment" and referenced the following language from our comments: "what primarily stands in the way of unbridled, consumer-benefitting competition are ill-fitting rules that hamstring the subset of participants to which they uniquely apply." The Report and Order, the goal of which is to "unleash prosperity through deregulation," is significant step in the right direction.

Speaking of deregulation, according to Law360 (subscription required), earlier this week House Energy and Commerce Committee Chairman Brett Guthrie (R-KY) stated that "'it's time to have a real conversation and update the 1992 Cable Act.'" Consistent with the position for which I (as well as others associated with the Free State Foundation) long have advocated, most recently in "Deregulation Is the Cure for the Video Regulatory Disparity," a June 9 post to the FSF Blog, Chairman Guthrie indicated that he opposes calls to extend legacy MVPD regulation to virtual alternatives: "'I fear that imposing additional regulation on this industry rather than relieving burdens on others would slow down innovation rather than encourage it.'"

The California COLR Rebuttable Presumption Should Be Flipped

 In “CPUC Denies COLR Relief to AT&T but Will Weigh Updating Rules,” published on June 21, Communications Daily’s Adam Bender has a good account of the California Public Utilities Commission’s denial of AT&T’s request, as an incumbent carrier, to be relieved of what’s called “Carrier of Last Resort” (COLR) obligations. As the designation implies, AT&T and other COLRs, cannot simply stop providing service without prior government permission. By the way, as you might anticipate, the COLR designation comes with strict regulation of rates and other terms of service.

In an era before consumers in almost all areas of the country, including California, had more than a single option from which to choose for the provision of basic voice telephone service, it may have made sense for the government to have the power to require that a service provider be designated as the Carrier of Last Resort. Needless to say, nowadays, consumers in most all areas have several options for acquiring voice telephone service from various providers that employ different technologies – copper wires, coaxial cable, fiber, cellular, satellite, and hybrid networks combining these facilities.

Without belaboring the point here in this short post, the carrier that happens to be saddled with COLR obligations, some of which are costly and involve offering free or reduced-price services and maintaining in place legacy equipment, likely is put at a competitive disadvantage vis-à-vis other competitors. But here I don’t want to argue the particulars of AT&T’s case, which it can do itself.

I only want to comment on one aspect of the CPUC’s action that was highlighted in the Communications Daily report. In initiating a new proceeding to consider whether the Commission should revise its COLR rules, the agency declares it “adopts a rebuttable presumption that the COLR construct remains necessary, at least for certain individuals or communities in California.”

Given the undeniable change in the competitive landscape, driven by ongoing technological advancements, since the “Carrier of Last Resort” concept was developed, the CPUC has the presumption backwards. In other words, there should be a rebuttable presumption that the COLR construct remains unnecessary.

As far back as 2011, I was suggesting in papers that, in light of the rapidly changing competitive landscape even then, the FCC should employ rebuttable presumptions in favor of regulatory relief in its mandated periodic regulatory reviews and consideration of forbearance petitions.

It’s 2024. In its consideration of whether to retain COLR, the California Public Utilities Commission should flip its proposal and its regulatory mindset. Retaining outdated legacy regulations that impose unnecessary costs harm overall consumer welfare. There should be a rebuttable presumption that the COLR construct remains unnecessary.

 

FSF Files Comments on FTC and DOJ Merger Enforcement

On April 21, the Free State Foundation submitted comments to Federal Trade Commission and the Department of Justice in response to their Request for Information on Merger Enforcement. The comments were written by FSF President Randolph May, Senior Fellow Andrew Long, and Legal Fellow Andrew Magloughlin. FSF's comments recommend that the FTC retain a case-by-case merger review process that weighs the totality of the circumstances, including merger-specific efficiencies and other contextual factors such as market structure and dynamic innovation. 

FSF's comments focus on the lessons to be learned from the T-Mobile/Spring merger, since it "exemplifies the probative value of an efficiency-centered, case-by-case approach." The introductory section of FSF's comments explain:

As predicted, that merger already has led to substantial pro-consumer efficiencies, including expedited deployment of next generation 5G service, network quality improvements, and continued downward pressure on prices. It also has confirmed the folly of relying on narrow market definitions in complex, dynamic markets. Indeed, that no consumer harm resulted is likely because, viewed through the appropriate lens – that is, the broader "broadband market" rather than the outdated mobile-only market – the T- Mobile/Sprint merger did not constitute a "4-to-3" merger as some alleged. 

Additionally, FSF's comments stated that "any revised guidelines should not adopt presumptions of harm." As the comments explain: 

There is no clear empirical evidence that vertical mergers are harmful on net. But there are numerous examples where predictions of harm have not materialized, including the AT&T/Time Warner, Comcast/NBC Universal, and AOL/Time Warner mergers, combinations with which Free State Foundation scholars are very familiar. The inaccuracy of those often overheated pre-merger prognostications of harm confirms that a case-by-case approach remains preferable to presumptions of harm for vertical mergers. 

FSF's comments to the FTC and DOJ on merger enforcement is available here.

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. 

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 Blog, at 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:

The Commission issued this ill-advised policy without giving minority commissioners a promised opportunity to issue a simultaneous dissent, as has always been the practice. ⁦@CSWilsonFTC⁩ and I will issue a statement later, as planned. https://t.co/KkQLbFzdTy

— Noah J. Phillips (@FTCPhillips) October 25, 2021

Commissioner Wilson weighed in, as well:

Simply stunning.

Strong dissent forthcoming. https://t.co/bHFpxOJmOC

— Christine S. Wilson (@CSWilsonFTC) October 25, 2021

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:

The Office of Public Affairs unfortunately issued the prior approval policy release prematurely and plans to update immediately upon receipt of the dissenting statement from minority Commissioners. We regret the error.

— FTC (@FTC) October 25, 2021

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.

Commissioners Phillips, Wilson Object to FTC's Rescission of Policy Statement on Prior Approval and Prior Notice Merger Provisions

At its July 21, 2021, Open Commission Meeting, the FTC voted along party lines to rescind its 1995 Policy Statement Concerning Prior Approval and Prior Notice Provisions in Merger Cases (1995 Policy Statement).

When it adopted the 1995 Policy Statement, the FTC abandoned what had become routine practice: requiring that transacting parties agree to obtain prior approval, and/or provide advance notice, of future acquisitions within the relevant product and geographic markets.

As a result of this substantial departure from longstanding policy, there is widespread concern that the FTC will expand significantly its exercise of authority over the merger and acquisition activities of companies that enter consent orders with the agency.

The two Republican Commissioners have made their objections to this action known. Commissioner Noah Joshua Phillips issued a Dissenting Statement and Commissioner Christine Wilson posted the text of her oral remarks to the FTC's website "[t]o facilitate transparency."

*    *    *

After objecting to the majority's decision to rescind the 1995 Policy Statement "with the minimum notice required by law, virtually no public input, and no analysis or guidance," Commissioner Phillips set forth two substantive criticisms in his Dissenting Statement.

First, he argued that, by once again broadly subjecting merging companies to prior approval and/or notice provisions, "the majority chooses to impose a decade-long M&A tax on anyone who enters a merger consent." This, he maintained, will discourage companies from entering consent decrees and, in turn, "abrogate" the Hart-Scott-Rodino Act of 1976, which "Congress enacted … to protect the public from anticompetitive mergers and acquisitions before they occur."

With the 1995 Policy Statement no longer in place, Commissioner Phillips concluded that "companies will be less likely to work with the Commission to resolve competitive concerns – contrary to the express purpose of the HSR Act, and leading to less efficient merger enforcement. As consent negotiations become more difficult, we will have to go to court more – wasting precious taxpayer dollars, and accomplishing less."

Second, he argued that "[a] blanket policy of routinely requiring prior approval" unreasonably will place at a competitive disadvantage those subject to consent decrees, as they "may have to bid higher … to compensate the seller for the uncertainty and the longer lead time required to obtain prior approval."This, in turn, will lead to suboptimal transactions, create inefficiencies, and reduce overall consumer welfare.

*    *    *

Commissioner Wilson offered three primary reasons for her opposition to the agency's decision to rescind the 1996 Policy Statement. First, she questioned why the majority chose to remove this important "guardrail to prevent … questionable exercises of enforcement discretion."

Commissioner Wilson pointed out that the 1995 Policy Statement was implemented "following nearly nine years of highly resource-intensive litigation undertaken by the FTC against an abandoned transaction" involving the Coca-Cola Co. (Coke) and the Dr Pepper Company that "some observers viewed … [as] a punishment for Coke's temerity to exercise its legal rights and litigate."

By contrast, a contemporaneous attempt by PepsiCo, Inc. to acquire Seven Up Co. was abandoned without a fight when the agency voted to challenge it – that is, without a legal challenge – and therefore did not lead to the imposition of a prior approval order.

Questioning the "purported rationale" put forth by the majority – that the justification for rescinding the 1995 Policy Statement "lies in saving agency resources that it would otherwise spend to review a transaction the Commission previously considered" – Commissioner Wilson expressed her concern "that the Commission intends to revert to the vindictive approach that led to the nine-year litigation against Coke" and "fear that rescinding the policy statement is being sold to the public under false pretenses."

Second, Commissioner Wilson highlighted the fact that, even with the 1995 Policy Statement in place, the FTC could, and often did, incorporate prior approval and/or notice provisions into consent decrees under certain scenarios, such as "where there [was] a credible risk that a company would attempt the same or approximately the same merger" or "would engage in an otherwise unreportable anticompetitive merger."

Raising doubts as to "whether rescission of this policy will facilitate further constructive use of" such provisions and echoing the sentiment of Commissioner Phillips, she expressed her fear that instead "it will facilitate a massive end-run around Hart-Scott-Rodino ('HSR') filing requirements and, for mergers subject to prior approval provisions, a shifting of the burden of proof that will chill procompetitive deals and hurt consumers." Such a drastic step, she argued, should only be taken by Congress.

Third, Commissioner Wilson agreed with Commissioner Phillips 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." In that regard, she noted that this action will create a conflict between the FTC and the Department of Justice's Antitrust Division, which takes a similar approach to prior approval provisions as the FTC did pursuant to the 1995 Policy Statement.

Commissioner Wilson also took issue with the majority's decision to rescind the 1995 Policy Statement without first seeking input from the public, a step the FTC did take prior to its adoption.

*    *    *

Finally, I would be remiss if I didn't mention that Commissioner Phillips and Commissioner Wilson both participated in a Fireside Chat with FSF President Randolph May in March as part of the Free State Foundation's Thirteenth Annual Telecom Policy Conference. Video of that wide-ranging discussion is available here.

Video of FSF Fireside Chat with FTC Commissioners Noah Phillips & Christine Wilson

To kick off the Free State Foundation's Thirteenth Annual Telecom Policy Conference, FSF President Randolph May moderated a Fireside Chat with FTC Commissioners Noah Phillips and Christine Wilson. Theodore Bolema, a member of the FSF Board of Academic Advisors, also participated. Policy topics included antitrust, data privacy, and Section 230 immunity for Big Tech platforms. Video of the March 19 event is now available online:

NTIA Internet Use Survey Highlights Primacy of the Smartphone

NTIA on June 10 released data from its latest Internet Use Survey, conducted in November of last year. This is the fifteenth edition of the survey over the past 25 years. That extended time horizon offers valuable insight into evolving trends. For those who are interested, NTIA's Digital Nation Data Explorer tool helpfully presents that information in visual form.

One trend of note: the ascendency of the smartphone as consumers' preferred means of accessing the Internet.

• In 2011, the first year for which device-specific data is available, most consumers – 45 percent – used a desktop computer, followed closely by a laptop at 43 percent. Only 27 percent used a smartphone.
• By 2015, the smartphone had become the most used device at 53 percent, the laptop remained relatively steady at 46 percent, while the desktop had dropped to 34 percent.
• In the most recent survey, the use of smartphones increased to 68 percent, 21 percentage points more than laptops (47 percent). Desktops, at 28 percent, trailed both smart TVs (41 percent) and tablets (30 percent).

The Free State Foundation argued in comments filed on April 27 in The State of Competition in the Communications Marketplace proceeding that:

[T]he Commission should move beyond its traditional siloed approach to competition policy by making substitution findings for broadband Internet services [and] adopt a broader product market definition for broadband Internet services that takes into account functional similarities and intermodal competition between wireless and wireline broadband services.

Smartphones, to an extent that differentiates them from other categories of devices, are able to access, and seamlessly transition between, mobile broadband data offerings and – via Wi-Fi – wireline high-speed Internet access. The increasing degree to which consumers rely upon smartphones to go online therefore further suggests that wireless and wireline broadband services indeed are functional substitutes. 

Petition to Supreme Court Could Clear the Way for Modernized Media Rules

On April 17, U.S. General Solicitor Noel Francisco filed a petition to seek Supreme Court review of a decision by the Third Circuit Court of Appeals in Prometheus Radio Project v. FCC. For 17 years, a divided panel of the Third Circuit has effectively blocked all attempts by the FCC to comply with Section 202(h) of the Telecommunications Act of 1996 and modernize media ownership rules. Hopefully, the Supreme Court will agree to hear the case and clear the way for rules that reflect current market conditions. As Free State Foundation President Randolph May and I discussed in our November 2017 Perspectives from FSF Scholars paper, "It's Time for the FCC to Relinquish Control of Media Ownership," existing rules reflect a largely 1970's outlook on the media market. As the Commission has rightly recognized, the rules need to be significantly revamped.

FTC Commissioner Wilson's FSF Conference Keynote on Free Markets, (De)Regulation, and Privacy Legislation

Commissioner Christine S. Wilson of the U.S. Federal Trade Commission gave an important keynote address at the Free State Foundation's Twelfth Annual Telecom Policy Conference. "Broadband Beyond 2020: Competition, Freedom, and Privacy" was held on Tuesday, March 10 at the National Press Club in Washington, DC. As in previous years, a stellar lineup of presenters offered valuable insight and food for thought on a wide range of topics. Commissioner Wilson's speech was no exception.

In an address entitled "Free Markets, Regulation, and Legislation: A Place for Everything, and Everything in Its Place," the Commissioner proclaimed her strong support for free markets, competition, and deregulation; explained how government intrusion leads to "toxic outcomes" for consumers; touted the benefits of the FCC's Restoring Internet Freedom Order; and laid out both high-level principles and specific objectives that federal privacy legislation should achieve.

Using the Interstate Commerce Commission and the Civil Aeronautics Board as historical examples, Commissioner Wilson described how consumers suffer when government prioritizes other "public interest" objectives over competition. A better approach, she argued, is limited intervention.

In that vein, she expressed her strong support for the President's deregulatory agenda. In particular, his Executive Order requiring that, for every new regulation created, two must be eliminated. She highlighted the FTC's efforts to date to eliminate unnecessary rules and expressed her belief that there is more work to be done.

The Commissioner also praised the FCC's Restoring Internet Freedom Order and, more broadly, touted the benefits of competition laws over proscriptive rules, asserting that "[t]he replacement of the FCC's extensive regulatory framework with the FTC's broad and flexible Section 5 principles will protect consumers while also facilitating investment and innovation."

On the topic of consumer privacy, Commissioner Wilson identified specific market failures (i.e., asymmetric information and "privacy resignation") that, in her opinion, justify federal privacy and data security legislation. Such a bill, she argued, should (1) incorporate a harm-focused, risk-based approach; (2) hold entities that handle data accountable; (3) empower informed consumer decision making through transparency; and (4) take competition into account.

In addition to these "high-level principles," she recommended that federal privacy legislation accomplish the following specific objectives: designate the FTC as the enforcing agency; provide for civil monetary penalties; apply to non-profits and common carriers; include "targeted and narrow" rulemaking authority; preempt state laws; and NOT create a private right of action.

Commissioner Wilson's prepared remarks are available on the FTC's website here.

Deputy AG Rosen's FSF Conference Keynote on Competition & Innovation

The Free State Foundation held its Twelfth Annual Telecom Policy Conference on Tuesday, March 10, 2020, at the National Press Club in Washington, DC. The opening keynote address was delivered by U.S. Deputy Attorney General Jeffrey Rosen. DAG Rosen's address addressed topics in antitrust, competition, and innovation. The prepared text of his address is available online at the Department of Justice's website. John Eggerton's write-up for Multichannel Newson DAG Rosen's address is also available online.  

Videos Released! DOJ's Andrew Finch and NTIA's David Redl at #FSFConf11

The theme of the Free State Foundation's Eleventh Annual Telecom Policy Conference (#FSFConf11) was "Internet Providers and Platforms: Getting Law and Policy Right." Two keynote addresses delivered at the Conference on March 26 are now available for viewing online. 

Video of the Conference's opening keynote address, delivered by Andrew Finch, Principal Deputy Assistant Attorney General of the Department of Justice's Antitrust Division is available here.

Additionally, video of the Conference keynote address by Assistant Secretary of Commerce and NTIA Administrator David Redl is available here.

FTC Acting Chairman: Current Antitrust Framework Is Sufficient for Technology Sector

In a September 12, 2017 speech at the Global Antitrust Enforcement Symposium at Georgetown University, Acting Chairman Maureen Ohlhausen of the Federal Trade Commission addressed the proper role of antitrust enforcement in an increasingly digital world.

Acting Chairman Ohlhausen noted the problems with increasing reliance on regulators to control the development of competition in digital markets:

If you want to put your faith in the hands of the regulators, think about some of the subsidiary questions you are actually asking the government to decide. Can these technology firms branch out into new markets, or must they narrowly focus on their original, core competency? When a technology company lowers prices, should that be permitted by regulators because it helps consumers or prohibited because it makes some other business less likely to succeed? How should a regulator weigh these effects against each other?

She concluded:

Although the analysis in the technology sector may be different from other industries, I believe the current framework is sufficiently flexible to address these important issues, but we should continue to refine our understanding on future competitive conditions.

Consolidated/FairPoint Merger Merits Proper and Prompt Review in States

The proposed merger between Consolidated Communications and FairPoint Communications, if approved by regulators, would likely enhance competition for broadband services. So far, the transaction has sailed through federal agency reviews. Yet the proposed Consolidated/FairPoint merger still faces parallel reviews by several state public utility commissions (PUCs). Surely, the transaction deserves state PUC reviews that are timely and focused on likely competitive effects.

In a transaction worth $1.5 billion, Consolidated Communications and FairPoint Communications would combine their fiber networks, thereby expanding their Ethernet footprint and serving multi-location enterprise broadband customers as well as wireless backhaul customers with faster speeds and better reliability. The proposed Consolidated/FairPoint merger poses no apparent downside for residential or business customers of voice or broadband services. The two providers do not compete head-to-head anywhere. And neither party to the merger ranked in the top 10 for Ethernet ports in the U.S. at mid-year 2016.

Not surprisingly, the transaction speedily received antitrust clearance by the Federal Trade Commission. A review by the Federal Communications Commission, which elicited only one public comment, will likely be concluded in short order. However, the proposed Consolidated/FairPoint must still undergo a multiplicity of regulatory reviews by state PUCs. It has been reported that the transaction must receive approval in 17 states.

Mergers that are pro-competitive on their face should not be slowed down by numerous and overlapping reviews by federal and state regulatory agencies. More particularly, parallel state PUC reviews of merging telecommunications providers ought to consider only merger-specific competitive effects and be conducted in a timely manner. State PUC merger reviews that fail to follow such a course are highly problematic. As I explained in a March 6 blog post regarding the proposed CenturyLink/Level 3 merger:

State PUC regulators can succumb in merger reviews to many of the temptations that have plagued FCC reviews. Regulators can become preoccupied with non-merger specific issues and use their leverage to impose regulatory conditions on their approval that are unrelated to the transaction or perhaps more fit for industry-wide rulemakings.

Going forward, state PUCs reviewing the proposed Consolidated/FairPoint merger should consider only the transaction’s competitive impact. State PUCs should not impose unnecessary conditions and they should conclude their reviews promptly.

Focus on CenturyLink/Level 3 Merger Benefits Should Lead to Prompt Review in States

The proposed merger between CenturyLink and Level 3 Communications, if approved by regulators, would likely enhance competition in the market for enterprise broadband services – with no effect on residential broadband services. The FCC is in the midst of conducting its review of the merger. At the same time, states in which CenturyLink and Level 3 provide service are conducting parallel reviews. While public utility commissions (PUCs) in states such as Ohio and Utah have already approved the proposed CenturyLink/Level 3 merger, other states, such as New York and perhaps Washington, apparently intend somewhat lengthier and more detailed reviews.

The parallel state reviews can be problematic unless conducted properly and without delay. So, state PUCs now considering the proposed CenturyLink/Level 3 merger ought to act with dispatch and focus on merger-specific competitive effects only. The FCC can provide PUCs encouragement in these respects by directing its review of the proposed CenturyLink/Level 3 merger to the likely public benefits and by completing its review proceeding with dispatch.

As explained in my Perspectives from FSF Scholars paper, the “CenturyLink/Level 3 Merger Should Bring Pro-Competitive Public Benefits” in the enterprise broadband market. Enterprise broadband services deliver high volumes of data with performance quality guarantees using dedicated network facilities. These services typically are negotiated at arms-length and used by sophisticated business customers, not residential consumers.

A combined CenturyLink/Level 3 would be better able to serve business customers in multiple geographic locations, relying more on its own fiber network and less on capacity leased from third-party providers. Increased on-network capabilities and end-user connections offer superior technical performance and responsiveness to business customers. Many business customers prefer use of a single provider relying on a single network to meet their enterprise broadband needs. Importantly, the proposed merger presents no genuine concerns for residential broadband or video consumers, since Level 3 serves neither of those residential markets.

By combining resources and thereby creating new efficiencies through economies of scope and scale, mergers enable providers of enterprise broadband or other services to better serve consumers through enhanced offerings, lower prices, or both. It is therefore important that proposed mergers subject to review – particularly transactions that are pro-competitive on their face – be considered promptly and properly. On its face, the proposed CenturyLink/Level 3 certainly appears to be pro-competitive. It ought not be bogged down by multiple regulatory reviews that move slowly or that become preoccupied with issues unrelated to the transaction. 

My 2010 FSF Perspectives from FSF Scholars paper, “Multiple Government Regulatory Reviews Burden Telecom Mergers with Too Many Conditions,” explained how state PUC reviews of mergers can result in costly, time-consuming, redundant reviews by multiple regulators. State PUC regulators can succumb in merger reviews to many of the temptations that have plagued FCC reviews. Regulators can become preoccupied with non-merger specific issues and use their leverage to impose regulatory conditions on their approval that are unrelated to the transaction or perhaps more fit for industry-wide rulemakings. 

As I’ve previously written, “[t]he individualized nature of mergers means that onerous conditions amount to company-specific regulation that may result in unequal and unfair treatment.” Lengthy merger reviews become particularly susceptible to interest group special pleading rather than sound analysis of potential competitive effects. And by imposing conditions on merging providers of IP-enabled broadband services, state PUCs can engage in de facto regulation outside their typically narrow scope of delegated authority. Given that one or more federal authorities – such as the U.S. Department of Justice, the Federal Trade Commission, and the FCC – routinely review major proposed mergers, there is indeed reason to question whether state regulators should be conducting such duplicative reviews.

State PUCs reviewing the proposed CenturyLink/Level 3 merger should exercise self-restraint. They should avoid issues unrelated to the transaction and not impose needless administrative expenses or lost market opportunity costs through drawn-out proceedings. For those state PUCs that examine the proposed CenturyLink/Level 3 merger, it should be evident that the transaction will likely improve competitiveness in enterprise broadband services and that residential broadband and video subscribers will not lose a provider – or be impacted at all.

Thus, the states should not allow their reviews to place unnecessary conditions or shackles on what looks to be a pro-competitive merger, or to unduly delay its consummation.