@jbtaylor on tech

The Wall Street Journal has reported this week that one of the reasons that Sprint is opposed to AT&T's takeover of T-Mobile is because AT&T (and Verizon) are already anticompetitive in the special access market.

And boy does this have AT&T hoppin' mad.

AT&T's Senior Vice President of Government Affairs Bob Quinn complains loudly in this story, saying "This merger has absolutely no impact on the issue of special access/wireless backhaul." Quinn goes on to say, "If the special access debate comes up during the merger review, it will come up because of Sprint."

Actually Bob, it will come up because of AT&T.

You see it was the old AT&T who filed the original complaint at the FCC asking the Commission to rein in the Landline guys. (Then AT&T was an independent long distance carrier.)

It will also come up because the special access rip off that AT&T and its Ma Bell cousins carry out is hurting our economy. A study released earlier this year shows that shutting off the Special Access ATM machine would create approximately 176,000 jobs and add $37.7 billion in economic output to the nation's economy.

From Sprint's point of view AT&T is already being anti-competitive in the special access market. Approving the takeover of T-Mobile would simply strengthen AT&T's chokehold on the wireless industry and the nation's broadband economy, essentially allowing an anti-competitive company to be even more anti-competitive.

That's why opposition is building to AT&T's takeover plans.

Today Rep. Ed Markey (D-Mass.) and Rep. John Conyers (D-Mich.) held a news conference to announce their opposition to the T-Mobile takeover.

Rep. Markey said, "I believe it would be a historic mistake for this merger to be approved" while Rep. Conyers went even further saying that the Department of Justice has allowed “AT&T to combine with other companies and basically reform Ma Bell, only with T-Mobile, it will be Ma Cell.”

Conyers later said, “This constitutes, in my mind, a mega-merger in an already concentrated industry,” Conyers said. If approved it would be “one of the largest duopolies of all time.”

Well there you have it.

p.s. The photo is one I took of the special access lines AT&T sells Sprint to support a cell site in Charlotte, N.C. Incidentally, the upload and download speeds of this connection is less that AT&T's UVerse, but costs Sprint 7 times what AT&T charges you for U-verse. What accounts for the difference? AT&T recognizes that you have a choice to get cable or satellite if you don't want U-verse, but with special access, there is no competition. That's how they get away with 100 percent rates of return on special access.

On Friday, four senior leaders of the House Energy and Commerce Committee (Reps. Henry Waxman, John Dingell, Ed Markey and Rick Boucher) sent a very cordial letter to Michael Copps, the Acting Chairman of the FCC. seeking information about a complicated regulatory process call forbearance petitions.

Did I lose you now? Are you scratching your head?

Bear with me.

Several years ago, Congress established a process where certain regulated phone companies could file a formal request at the FCC to ask that the Commission no longer enforce certain regulatory requirements. The prevailing notion at the time was, the less regulation, the better for all concerned.

The lawyers call these requests "forbearance petitions". The idea is to set a basketball shot clock of sorts on the FCC to act on these requests. Basically the phone companies ask for regulatory relief and the FCC has X amount of time to decide whether or not the petition is approved.

Here's where this gets tricky.

If the FCC misses that deadline and the shot clock runs out, the request is automatically approved.

In theory, that made sense, but in practice, the landline phone companies like AT&T, Verizon and Qwest have showered the FCC with these forbearance petitions. Because there are so many petitions, it's sometimes difficult for the FCC, which is a relatively small agency, to give these documents a thorough reading.

What makes a difficult process harder is what Verizon recently did. At the last minute, just before the FCC was prepared to act on its forbearance petition, Verizon pulled the petition from review.

In other words, the FCC spent a great deal of time and money reviewing Verizon's request only to have the company change its mind at the last minute. Verizon, for its part, didn't offer much of an explanation for its regulatory cold feet at the forbearance altar. They claimed that the petitions were no longer needed because a court was expected to rule in the matter in a few weeks.

But the Wall Street Journal (http://bit.ly/7pFur) wrote that Verizon pulled the petition because Verizon expected the FCC would reject their request.

In that story, Acting FCC Chairman Copps said, "It just doesn't seem to be the way policy should be made. If somebody sees maybe it's going in the wrong direction, they can just say, 'Well, thanks. I'm outta here.'"

At Sprint, we're closely following this policy debate because we've opposed many of these forbearance petitions filed by the landline phone companies. These regulations are put in place to promote competition and to protect consumers. Often, we believe that removing the regulations will have the opposite effect.

We'll see what the FCC has to say to the Congressmen.