The Federal Communications Commission (FCC) is green lighting AT&T's $49 billion takeover of DirecTV, in exchange for promises to abide by stricter Net neutrality roles and expand broadband fiber to more customers. Is it just me, or does anyone else think that AT&T should hire Kevin Spacey as Francis Underwood to be the company's next spokesperson?
Only a few months ago, AT&T and its various paid and unpaid shills were crying that it and other traditional phone carriers would be crushed by the burden of having more regulation placed upon their Internet operations. It would stop them from investing in building more broadband capacity because of the "uncertainty" in the regulatory environment, human sacrifice, dogs and cats living together, mass hysteria!
Closer to today, the position evolved to one of "We're going to invest anywhere because the courts are going to overturn the FCC anyway and if that doesn't work, we'll hold out for a Republican president in 2016." AT&T announced it planned to move forward with $18 billion in broadband investments, despite those bad, bad regulations.
Fast forward to yesterday, with FCC Chairman Tom Wheeler saying AT&T has vowed to build 12.5 million customer locations—"about 10 times the size of AT&T's current fiber-to-the-premise" deployment—along with conditions to "build on" the Open Internet Order already in effect in exchange for being able to buy DirecTV. The additions include "AT&T will not be permitted to exclude affiliated video services and content from data caps on its fixed broadband connections. Second, in order to bring greater transparency to interconnection practices, the company will be required to submit all completed interconnection agreements to the Commission, along with regular reports on network performance."
Enter Francis Underwood to tell us what this means.
"Now we all know that AT&T thinks it can beat the new FCC regulation in court. I'm not so sure about a Republican president because, after all, I'm a fictional character and a Democrat to boot, but that's beside the point. Just who will hold AT&T's feet to the fire here if they don't meet these terms? Answer: No one."
If this sounds like the ranting of the paranoid, you may want to review the fight between Verizon and New York City. There's an ongoing battle between broadband advocates, city officials, and Verizon as to how the company failed to meet a 2008 promise to make FiOS available to everyone in the city by June 30, 2014 as a part of its franchise agreement. Politicians and the union are starting to turn the screws on Verizon, but it remains to be seen if the pressure will do any good.
"You expect this sort of thing out of the unions," comments Underwood. "It's contract time, of course, but they're only doing what's right for themselves. Can't really blame them, they'll get bought off in time. The politicians are more dangerous because they might think of something Verizon can't out-litigate, like City Hall's current slowdown of network contracts to NYC agencies. Start pinching in the pocketbook and Verizon will have to start paying more attention."
Comcast also made lots of promises when it bought NBC Universal, some of which might not have been kept. Nobody bothered to look at the Comcast terms for NBC Universal until the company wanted to acquire Time Warner Cable and started making more and bigger promises. Ultimately, regulators decided that Comcast would control too much of the market and threw up enough hits of lawsuits that finally forced the cable company to punch out of the detail.
The FCC's weakness here is two-fold. First, AT&T has already decided it is playing for time so it will agree to nearly anything while tighter FCC broadband regulation gets challenged in the courts. Secondly, it isn't clear what penalties the FCC could impose if those promises were not kept (see Verizon, New York City), other than to threaten to block the next merger proposal.
If the FCC is to be taken seriously, it will have to first demonstrate there are penalties for not meeting commitments at the local and national level. Comcast and Verizon would appear to be the test cases to determine what could be done if obligations aren't met. Otherwise, you'll have service providers willing to promise everything without fear of consequences down the road.
Now if you'll excuse me, I'm going to get some good old-fashioned barbeque. Because Francis would want it that way.
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