From the Minority Report Blog – The Truth About “Consumer Advocates” in the AT&T-Mobile Merger

by Mike Wendy on June 13, 2011

From the Minority Report Blog, June 3, 2011 – The Truth About “Consumer Advocates” in the AT&T-Mobile Merger With Mike Wendy

The Minority Report was fortunate to get to speak with Mike Wendy, director of MediaFreedom.org, about these so-called “Public Interest Advocates” and “Consumer Groups” who oppose the proposed AT&T and T-Mobile merger, to the tune of tens of thousands of comments to the FCC, saying the merger would reduce competition.

As always, TMR strives to get expert opinions, when possible, so that our readers are armed with the truth I want to thank Mike for taking time to speak with us today.

The following is my short Q&A with Mike:

1) Could you please describe who these “Public Interest Advocates” and “Consumer Groups” are who are protesting AT&T’s proposed acquisition of T-Mobile for our readers… are they really just a bunch of concerned citizens?

In the tech space, there are a handful of activist, progressive (or further Left-leaning) groups that habitually “just show up” when companies need to address various matters before government legislators, agencies and the courts (we’re seeing one such instance now with the proposed AT&T acquisition of T-Mobile here in Washington).

These non-profit groups – including Public Knowledge, New America Foundation, Media Access Project, and Free Press, among others – derive a lot of their funding from organizations like George Soros’ Open Society Institute, the Ford Foundation, the MacArthur Foundation and the Rockefeller Philanthropic Foundation, to name but a few.  In all, these charitable foundations have poured tens-of-millions of dollars into the “consumer groups” in an effort to shape policy, legislation and business practices toward a more “progressive,” “fair” and less free-market direction.

Many of the “consumer groups” also take funding from corporations, though they are generally loath to admit it.  The corporate underwriters in this instance use the cover of the “consumer groups” to achieve things they could not otherwise do in the marketplace; hamstring / “knee cap” opponents; or work to leverage the given situation to extract benefits from the matter at hand.

They are hardly just “concerned citizens.”  The “consumer groups” are professional, well-organized special interest lobbying shops, doing the bidding of anti free-market patriarchs and corporate underwriters instead of your “Average Joe.”

For the non-profits groups, it is a profitable affair, too.  For instance, over the past five years, Free Press’ tax records show that it has received nearly $20 million in gifts, grants and contributions, which it has used to work to impose onerous, market-killing regulations at the FCC and the DoJ for its suitors.

2) Is the charge that this merger would limit competition accurate and shouldn’t we be worried about lack of or lessening of competitors in the market?

I believe that, though this merger poses unique questions for the marketplace and the economy, all of which deserve a considered look by the FCC, the DoJ and Congress (as any important merger does), competition will actually be heightened by the acquisition.

How?

The merger will help improve the rollout of new and better wireless broadband services in urban and rural areas for AT&T and its customers.  In doing so, it will also spur a vigorous competitive response not only from Verizon and Sprint, but the numerous other regional / local providers of wireless broadband services across America.  Consequently, infrastructure will get better, helping more Americans get online wirelessly.  And, services, applications, devices and content will respond positively, too.  This is not to mention the fact that with better wireless broadband services for Americans, U.S. workers will become more competitive, stronger and productive.

We have been here before.

Since Congress re-wrote the communications laws in 1996, Americans have seen a natural, steady, and I will add beneficial, consolidation of the communications industry.  While this may strike some as bad (especially the self-proclaimed “consumer groups”), it has actually enabled the industry to bring broadband Internet access to 95% of America in a very short time.  Prices are good and stable. Customers are satisfied.  Innovation abounds throughout the entire Internet ecosystem.

Yes, the number of wireless competitors falls by one.  But, in most U.S. markets, 5 or more competitive options will remain.  I believe, as with similar events in the past, the public should benefit from the acquisition.

3) Is all this opposition really just a smoke screen for forces that want to add new rules and regulations on the industry?

Yes. The “consumer groups,” as well as many government officials, see any given merger as a weak point for the companies involved.  They recognize that the companies have a lot at stake in getting the blessing of the FCC and DoJ, which they must do before the transaction can become final, legal.

When this has happened in the past, the “consumer groups” and agency policymakers have used the process to impose conditions – like Net Neutrality regulations – that they could not otherwise achieve through open rulemaking, legislative or court processes.  Many joke openly about the “legal extortion” by Uncle Sam, which occurs during merger reviews.  Quite frankly, it represents a feeding trough of opportunity for those “opposed” to the merger – one that is gamed to the disadvantage of the merging companies, and most importantly, American consumers.

(Mike Wendy directs Media Freedom.org (www.mediafreedom.org).  He has been in the tech policy space since 1994, focusing primarily on telecommunications and IT industry-related issues that have emerged over that time.)

 

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