Joelle Tessler

Government sues to block AT&T, T-Mobile merger

Department of Justice seeks to prevent $39 billion deal

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The Justice Department filed suit Wednesday to block AT&T’s $39 billion deal to buy T-Mobile USA on grounds that it would raise prices for consumers.

The government contends that the acquisition of the No. 4 wireless carrier in the country by No. 2 AT&T would reduce competition.

At a news conference, Deputy Attorney General James Cole said the combination would result in “tens of millions of consumers all across the United States facing higher prices, fewer choices and lower quality products for mobile wireless services.”

The lawsuit seeks to ensure that everyone can continue to receive the benefits of competition, said Cole.

AT&T said it would fight and ask for an expedited court hearing “so the enormous benefits of this merger can be fully reviewed.” The company said the government “has the burden of proving alleged anti-competitive effects, and we intend to vigorously contest this matter in court.”

Four nationwide providers — Verizon, AT&T, T-Mobile and Sprint — account for more than 90 percent of mobile wireless connections.

T-Mobile has been an important source of competition, including through innovation and quality enhancements such as the roll-out of the first nationwide high-speed data network, according to Sharis Pozen, acting chief of Justice’s antitrust division.

Mobile wireless telecom services play an increasing role in day-to-day communications, with more than 300 million smart phones, data cards, tablets and other mobile wireless devices in use.

Deutsche Telekom, the owner of T-Mobile, had no immediate comment.

AT&T and T-Mobile compete nationwide, in 97 of the largest 100 cellular marketing areas, according to the suit filed in U.S. District Court in Washington.

It says AT&T’s acquisition of T-Mobile would eliminate a company that has been a competitive factor through low pricing and innovation.

Federal Communications Commission member Michael Copps, a Democrat and a staunch opponent of industry consolidation, said that he shares “the concerns about competition and have numerous other concerns about the public interest effects of the proposed transaction, including consumer choice and innovation.”

Democratic Sen. Herb Kohl of Wisconsin, who heads the Senate Judiciary subcommittee on antitrust, competition policy and consumer rights, said the suit was an effort to protect consumers “in a powerful and growing industry that reaches virtually every American.”

The suit used some of T-Mobile’s own documents describing its role in the market to explain why the merger shouldn’t take place. In those documents, the company calls itself “the No. 1 challenger of the established big guys in the market and as well positioned in a consolidated 4-player national market.”

T-Mobile said its strategy is to attack other companies and find innovative ways to overcome the fact that it is a smaller company.

T-Mobile “will be faster, more agile and scrappy, with diligence on decisions and costs both big and small,” one company document said. “Our approach to market will not be conventional, and we will push to the boundaries where possible.”

The suit also says the anti-competitive problems a merger would cause cannot be overcome by regional companies.

Regional companies lack national networks, so are limited in their ability to compete with the four national carriers, the lawsuit states.

Government lets Google buy travel software company

The Justice Department has given the Internet giant the green light to buy ITA Software for $700 million

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Government lets Google buy travel software companyFILE - In this Nov. 10, 2010 file photo, the company logo is displayed is at Google headquarters in Mountain View, Calif. Search engine giant Google Inc. is making Kansas City, Kan., the first place to get its new ultra-fast broadband network, the company announced Wednesday, March 30, 2011. (AP Photo/Paul Sakuma, file)(Credit: AP)

Government officials are letting Google proceed with its $700 million purchase of airline fare tracker ITA Software. The deal will establish the Internet search giant as a key player in the online travel market.

The purchase gives Google Inc. control over the technology that powers the reservation systems of most major U.S. airlines and many popular online fare-comparison services, including Kayak, TripAdvisor and Hotwire.

But the antitrust clearance by the Justice Department comes with conditions.

Google will be required to license ITA’s software to other companies, and it will be prohibited from accessing any proprietary data or technology of ITA customers that resides on or runs through ITA servers.

House panel votes to repeal new FCC Internet rules

Voting along party lines, the subcommittee on communications and technology moved to overturn net neutrality rules

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House panel votes to repeal new FCC Internet rulesAT&T office in San Antonio

A Republican-controlled Congressional panel has voted to repeal new Federal Communications Commission rules that prohibit phone and cable companies from interfering with Internet traffic on their broadband networks.

The House Commerce Subcommittee on Communications and Technology voted 15-to-8 along party lines Wednesday to overturn the FCC’s new “network neutrality” regulations. The FCC’s three Democrats voted to adopt the regulations in December over the opposition of the agency’s two Republicans.

The rules are intended to prevent phone and cable companies from using their control over broadband connections to dictate where their subscribers go and what they do online. They prohibit broadband providers from favoring or discriminating against Internet content and services, including online calling services like Skype and Web video services like Netflix that could compete with their core phone and cable operations.

Wednesday’s vote marks the second attempt by House Republicans to reverse the FCC’s actions. Last month, they attached an amendment to a sweeping spending bill that would prohibit the agency from using government money to implement its new regulations.

Republicans argue that the rules will discourage phone and cable companies from investing in costly network upgrades by barring them from offering premium services over their lines or prioritizing traffic from business partners in order to earn a return on those investments. They also maintain that the FCC overstepped its authority in adopting the rules.

Verizon Communications Inc. and Metro PCS Communications Inc. are also challenging the rules in federal appeals court in the District of Columbia.

Last year, that same court ruled that the FCC had exceeded its legal authority in rebuking cable giant Comcast Corp. for blocking its subscribers from accessing an Internet file-sharing service used to trade online video and other big files. Comcast maintained that traffic from the service was clogging its network.

The agency said Comcast had violated broad net neutrality principles first established by the commission in 2005. Those principles served as a foundation for the formal rules adopted by the FCC late last year.

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Verizon challenges FCC’s net neutrality rules

How will the internet giant fare when faced with the controversial new set of regulations?

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Verizon challenges FCC's net neutrality rulesFILE - In this file photo taken Jan. 6, 2011,Consumer Electronics Association president and Chief Executive Officer Gary Shapiro, left, greets Verizon Communications Inc., chairman and Chief Executive Officer Ivan Seidenberg, right, and president and Chief Operating Officer Lowell McAdam during the Consumer Electronics Show, in Las Vegas. As the tech industry awaits a likely Verizon iPhone announcement on Tuesday, Jan. 11, 2011,shares of Apple Inc. hit a record high during Monday trading. (AP Photo/Julie Jacobson, file)(Credit: AP)

Verizon Communications Inc. on Thursday filed a legal challenge to new federal regulations that prohibit broadband providers from interfering with Internet traffic flowing over their networks.

In a filing in federal appeals court in the District of Columbia, Verizon argues that the Federal Communications Commission overstepped its authority in adopting the new “network neutrality” rules last month.

The rules prohibit phone and cable companies from favoring or discriminating against Internet content and services — including online calling services such as Skype and Internet video services such as Netflix, which in many cases compete with services sold by companies like Verizon.

The FCC’s three Democrats voted to adopt the rules over the opposition of the agency’s two Republicans just before Christmas. Republicans in Congress, who now control the House, have vowed to try to block the rules from taking effect. They argue that they amount to unnecessary regulation that will discourage phone and cable companies from investing in their networks.

Several key House Republicans, including House Commerce Committee Chairman Fred Upton of Michigan, welcomed Verizon’s actions Thursday as “a check on an FCC that is acting beyond the authority granted to it by Congress.” The court challenge had been widely expected.

In a statement, Verizon said that while it is “committed to preserving an open Internet,” it remains “deeply concerned by the FCC’s assertion of broad authority for sweeping new regulation of broadband networks and the Internet itself.”

The company is taking the case to the same federal court that ruled last year that the FCC had exceeded its legal authority in sanctioning cable giant Comcast Corp. The agency had cited Comcast for discriminating against online file-sharing traffic on its network — violating broad net neutrality principles first established by the agency in 2005. Those principles served as a foundation for the formal rules adopted by the commission last month.

Last year’s court ruling forced the FCC to look for a new framework for regulating broadband to ensure the commission would be on solid legal ground in adopting net neutrality and other rules. The agency currently treats broadband as a lightly regulated “information service,” as opposed to phone service, which is more heavily regulated as a so-called “common carrier.”

At one point, FCC Chairman Julius Genachowski proposed redefining broadband as a telecommunications service subject to common carrier obligations to treat all traffic equally. But he later backed down in the face of fierce opposition from the phone and cable companies, as well as many Congressional Republicans.

And he now argues that the agency has ample authority to mandate net neutrality under the existing regulatory framework for broadband — an assumption that will be tested in the Verizon challenge.

A senior FCC official said Thursday that the agency is confident that its new net neutrality rules are legally sound and is prepared to defend them.

The rules represented an attempt to craft a compromise on an issue that has divided the telecommunications and technology industries. On one side, Internet companies such as Skype, as well as public interest groups, argue that strong rules are needed to prevent broadband providers from becoming online gatekeepers that can dictate where people go and what they do online.

But the big phone and cable companies insist that they need flexibility to manage Internet traffic to keep their networks running smoothly and preventing bandwidth-hogging applications from slowing down their systems. They also maintain that they should be able to charge extra for special services over their broadband lines and earn a healthy return on the billions of dollars they have spent on network upgrades.

New York-based Verizon is the country’s fourth-largest fixed-line Internet service provider, with 8.3 million subscribers. It’s investing more in home broadband than any other company, since it’s upgrading about two-thirds of its local-phone network with optical fiber for ultra-fast Internet access.

The regulations adopted last month try to find a middle ground. The rules require broadband providers to let subscribers access all legal online content, applications and services over their wired networks. But they give providers flexibility to manage data on their systems to deal with network congestion and unwanted traffic, including spam, as long as they publicly disclose how they manage the network.

The new rules do prohibit unreasonable network discrimination — a category that would likely include “paid prioritization,” which favors the broadband providers’ own traffic or the traffic of business partners that can pay extra — but they do not explicitly bar the practice.

The regulations also prohibit wireless carriers from blocking access to any websites or competing services such as Internet calling applications on mobile devices, and they require carriers to disclose their network management practices, too. But they give wireless companies more flexibility to manage data traffic because wireless systems have less network bandwidth and can become overwhelmed with traffic more easily than wired lines.

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FCC approves Comcast-NBC merger

Final approval from Justice Department expected today. Media giant must make programs available to competitors

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FCC approves Comcast-NBC mergerFILE - In this Dec. 3, 2009 file photo, a sign outside the Comcast Center, left, is shown in Philadelphia. Comcast Corp. reported an 8 percent drop in third-quarter earnings Wednesday, Oct. 27, 2010, a decline caused by expenses related to its pending acquisition of NBC Universal and other one-time costs.(AP Photo/Matt Rourke, file)(Credit: AP)

The Federal Communications Commission is giving Comcast, the country’s largest cable company, the green light to take over NBC Universal, home of the NBC television network.

The deal is still awaiting Justice Department approval, which is expected later Tuesday.

With the deal certain to transform the entertainment industry landscape, regulators are attaching conditions to prevent Comcast Corp. from trampling competitors once it takes control of NBC’s vast media empire.

Among other things, the government is requiring Comcast to make NBC programming available to rival cable companies, satellite operators and new Internet video services that could pose a threat to Comcast’s core cable business.

The FCC voted 4-to-1 Tuesday to let Comcast buy a 51 percent stake in NBC Universal from General Electric Co. for $13.8 billion in cash and assets.

FCC poised to adopt network neutrality rules

New regulations aimed at curbing phone and cable companies may have enough votes to pass today

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New rules aimed at prohibiting broadband providers from becoming gatekeepers of Internet traffic now have just enough votes to pass the Federal Communications Commission on Tuesday.

The rules would prohibit phone and cable companies from abusing their control over broadband connections to discriminate against rival content or services, such as Internet phone calls or online video, or play favorites with Web traffic.

FCC Chairman Julius Genachowski now has the three votes needed for approval, despite firm opposition from the two Republicans on the five-member commission. Genachowski’s two fellow Democrats said Monday they will vote for the rules, even though they consider them too weak.

The outcome caps a nearly-16-month push by Genachowski to pass “network neutrality” rules and marks a key turning point in a policy dispute that began more than five years ago.

“The open Internet is a crucial American marketplace, and I believe that it is appropriate for the FCC to safeguard it by adopting an order that will establish clear rules to protect consumers’ access,” Commissioner Mignon Clyburn, a Democrat, said in a statement.

Yet many supporters of network neutrality are disappointed. Clyburn and the other Democrat, Michael Copps, both said the rules are not as strong as they would like, even after Genachowski made some changes to address their concerns.

That sentiment was echoed by some public interest groups on Tuesday.

“The actions by the Federal Communications Commission fall far short of what they could have been,” said Gigi Sohn, president of Public Knowledge. “Instead of strong, firm rules providing clear protections, the commission, created a vague and shifting landscape open to interpretation.”

A number of big Internet companies, including Netflix Inc., Skype and Amazon.com Inc., have previously expressed reservations about the proposal as well.

Meanwhile, even the weakened rules are likely to face intense scrutiny as soon as the Republicans take over the House next year.

The chairman’s proposal builds on an attempt at compromise crafted by outgoing House Commerce Committee Chairman Henry Waxman, D-Calif., as well as a set of broad net neutrality principles first established by the FCC under the previous administration in 2005.

The rules would require broadband providers to let subscribers access all legal online content, applications and services over their wired networks — including online calling services, Internet video and other Web applications that compete with their core businesses.

But the plan would give broadband providers flexibility to manage data on their systems to deal with problems such as network congestion and unwanted traffic like spam as long as they publicly disclose their network management practices.

Senior FCC officials stressed that unreasonable network discrimination would be prohibited.

They also noted that this category would most likely include services that favor traffic from the broadband providers themselves or traffic from business partners that can pay for priority. That language was added to help ease the concerns of Genachowski’s two fellow Deomcrats.

The proposal would, however, leave the door open for broadband providers to experiment with routing traffic from specialized services such as smart grids and home security systems over dedicated networks as long as these services are separate from the public Internet.

Public interest groups fear that exception could lead to a two-tiered Internet with a fast lane for companies that can pay for priority and a slow lane for everyone else.

They are also worried that the proposal lacks strong protections for wireless networks as more Americans go online using mobile devices.

The plan would prohibit wireless carriers from blocking access to any websites or competing applications such as Internet calling services on mobile devices. It would require them to disclose their network management practices too.

But wireless companies would get more flexibility to manage data traffic as wireless systems have more bandwidth constraints than wired networks.

“Individuals who depend on wireless connections to the Internet can take no comfort in this half-measure,” said Joel Kelsey, political advisor for the public interest group Free Press.

Republicans, meanwhile, warn that the new rules would impose unnecessary regulations on an industry that is one of the few bright spots in the current economy, with phone and cable companies spending billions to upgrade their networks for broadband.

Burdensome net neutrality rules, they warn, would discourage broadband providers from continuing those upgrades by making it difficult for them to earn a healthy return on their investments.

Still, Genachowski’s proposal is likely to win the support of the big phone and cable companies because it leaves in place the FCC’s current regulatory framework for broadband, which treats broadband as a lightly regulated “information service.”

The agency had tried to come up with a new framework after a federal appeals court in April ruled that the FCC had overstepped its existing authority in sanctioning Comcast Corp. for discriminating against online file-sharing traffic on its network — violating the very net neutrality principles that underpin the new rules. Comcast argued that the service, which was used to trade movies and other big files over the Internet, was clogging its network.

To ensure that the commission would be on solid legal ground in adopting net neutrality rules and other broadband regulations following that decision, Genachowski had proposed redefining broadband as a telecommunications service subject to “common carrier” obligations to treat all traffic equally. But Genachowski backed down after strong opposition from the phone and cable companies, as well as many Republicans in Congress.

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