Public Knowledge Makes a Roaming Kvetch, Proposes Absolute Bar…to Progress

by Mike Wendy on June 23, 2011

In their latest kvetch filed at the FCC, entrenched lobbying group, Public Knowledge, claims that the agency has no choice but to deny the merger of AT&T with T-Mobile because…drum roll please…“the transaction will reduce the number of GSM-based international roaming providers from two to one in numerous markets, and in other (sic) will reduce the number of possible roaming partners from three to two.”

Ummm, OK…

Using Section 314 of the Communications Act, which the FCC notes “was included in the original 1934 Communications Act to preserve competition in international communications,” Public Knowledge opines that “unlike the public interest standard usually employed by the Commission [during license transfers], Section 314 does not permit the Commission to balance the harm to competition versus the possible benefits and grant the merger where benefits outweigh harms.”  Rather, the group concludes, “Section 314 is an absolute statutory bar against the transfer.”

Period.  Talk to the hand ‘cuz the ears ain’t listening, FCC.

The author of Public Knowledge’s current argument has used it before, but erringly.  In a 2005 domestic license transfer matter before the FCC, he and his co-counsel pulled out the “314 argument” in an effort to thwart the deal. In that instance, the FCC informed the lawyers that they missed an important aspect of the law – its focus on International competition as opposed to domestic.  Consequently, the argument got deep-sixed by the agency.

Perhaps recognizing the infirmity of the argument then, the author slipped in a little caveat:

“The Commission thus faces the rare circumstance where it is compelled to to (sic) deny the Applications as filed…[However] in the alternative, the Commission must designate the matter for a hearing…” (Emphasis added)

“In the alternative.”  Hmmm…

The same author now cuts-and-pastes a similar sentiment into the present kvetch, noting:

“In the rare cases where, as here, a transaction triggers Section 314, the Commission has no choice but to deny the Application.”

No choice?

Well, maybe not No Choice.  As before, the author seeks an escape route to his dubious argument, footnoting some “in the alternative” wording:

“At a minimum, because AT&T and Deutsche Telecom are clearly entities subject to Section 314, the evidence in the record establishes an issue of material fact which may only be resolved by hearing.”

What?  No absolute bar?

Er, no.

It is highly doubtful the FCC would explode a merger of such importance because some international travelers have an issue with GSM roaming.  As usual, Public Knowledge seeks to make more of a market that, well, isn’t so relevant – a classic antitrust analysis trick, taking a small slice of some market, saying it’s FUBAR, and then claiming that the whole kit-and-kaboodle is FUBAR as a result.

I don’t know how to break this to the legal team at Public Knowledge, but the AT&T / T-Mobile merger is not about GSM international roaming.  It seems to me it’s far, far bigger than that.  Something like, oh, bringing broadband wireless service to 97% of Americans (not to the French, Germans and Chinese, but Americans), the overwhelming majority of whom use those services primarily in their own U.S. localities (not internationally).

Besides, isn’t Public Knowledge on record as saying the merger is about a “national market”?  Now, it’s the GSM international roaming market that’s the REAL concern.  Really.

Who knows (who cares)?  They can’t keep their goal posts in any one spot.

Anyway, upon discovery (again) of his 314 argument, the author couldn’t contain his pride, boasting in a number of tweets that the merger “Actually violates Section 314. Really…” That “Finding a merger that actually fits the Sec. 314 ban feels like finding a 4-leaf clover. ‘Rare’ doesn’t begin to cover it…”

“Rare circumstances.” “ Rare cases.”  Yeah, “Rare doesn’t begin to cover it.”  That’s because it’s not even half-baked.

Perhaps sensing this, the author posted a detailed explanation of his 314 filing – a brief for his brief – on Public Knowledge’s corporate-supported website yesterday.  It was more, and then some, of the same.  But it offered me the ability to add a coda to my thoughts on this issue (and, now, this piece, too):

In an interconnected world, your 314 surmise, though creative, amounts to an absolute bar on progress, amounting to a per se violation of the antitrust laws for any party wanting to merge in this space.  That would take us back to the mid-20th Century POTs world, or worse. Maybe that’s what y’all want, but I do not think that is what the ‘34 and ‘96 Comm Acts intended.

Public Knowledge’s idea of progress should be rejected by the FCC.

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