Broadband

The Senate Judiciary Antitrust Subcommittee announced Wednesday that it will hold a hearing to examine the impact on competition from the deal struck between Verizon and some of the nation's biggest cable firms to buy some of their spectrum and cross-promote their services.

Subcommittee Chairman Herb Kohl, D-Wis., said in a statement he planned to examine the potential competitive effects the deals will have in markets where both Verizon and the cable firms offer both video and Internet services.

Kohn has "not reached any conclusions on this deal yet - just beginning an inquiry which this hearing will be a part of," Kohl's spokeswoman said. The committee has not set a firm date but is aiming to hold the hearing sometime after the President's Day break.

Verizon announced late last year that it had struck deals with Bright House Networks, Comcast, Cox, and Time Warner to buy some spectrum from them and also to cross-promote their services.

Public interest groups welcomed Kohl's interest. They say the deals raise serious competitive issues given that in most markets there are only two major broadband, phone and television providers.

"If, as these companies claim, they cannot compete against one another, Congress and the FCC need to consider whether we will need to return to the world of regulated natural monopolies," Public Knowledge Legal Director Harold Feld said in a statement. "While Public Knowledge believes that competition is better, there are serious questions to be answered whether true broadband competition can ever emerge if one provider in a two-company broadband market starts selling the products of the other company."

It's been a month since its bid to buy T-Mobile USA went south, and AT&T made clear Thursday that it hasn't forgotten the Federal Communications Commission's role in the deal's demise.

The two sides clashed Thursday after AT&T Chairman and CEO Randall Stephenson complained that the FCC is taking too long and using inconsistent standards to decide spectrum transactions and other deals.

"This industry continues to see just explosive mobile broadband growth and it's providing one of the few bright spots in the U.S. economy. But I think we all understand this growth cannot continue without more spectrum being cleared and brought to market," Stephenson said on a conference call Thursday morning to discuss the company's earnings report. "Despite all the speeches from the FCC, we are all still waiting. The last significant spectrum auction was nearly five years ago now and this FCC has made it abundantly clear that they will not allow significant [merger and acquisition] to help bridge their delays in freeing up new spectrum."

AT&T reported a $6.7 billion loss in the last quarter of 2011 in large part because of the break-up fee it must pay after its bid to buy T-Mobile failed. The company dropped its bid for T-Mobile last month after both the Justice Department and the FCC objected to the deal.

Stephenson complained on Thursday that the FCC used differing sets of standards related to how much spectrum AT&T can hold in each market for evaluating its bid for T-Mobile and in its recently cleared purchase of a swath of spectrum from Qualcomm.

"We are literally sitting here in a situation where we don't know how much spectrum we are allowed to hold...who we are allowed to do business with, and so forth," he said.

The FCC fired back Thursday afternoon noting that the commission has approved more than 150 commercial mobile transactions in the last year, including AT&T's Qualcomm deal.

"Unfortunately, these facts were completely ignored in the conference call," FCC spokesman Neil Grace said in a statement. On the AT&T-T-Mobile deal, Grace added that, "The DOJ and FCC staffs concluded that this action would violate the antitrust laws and result in higher prices for consumers, and less innovation and investment in the marketplace. Those conclusions surely disappointed AT&T executives, but they followed directly from the facts and the law."

It wasn't always this way between the telecom operator and its regulator. Just over a year ago, AT&T was among the few broadband providers to endorse the FCC's controversial open Internet order. Then again both sides got something out of it. For AT&T, the order's most controversial provisions did not apply to the growing wireless broadband market. At the same time, the FCC gained the support of one of the biggest broadband providers in the country.

The chairman of the House Energy and Commerce Communications and Technology Subcommittee said Wednesday he is confident that House and Senate negotiators will include his version of spectrum legislation in a payroll tax package given that it would generate more cash to pay down the deficit than the Senate Commerce Committee's version.

Rep. Greg Walden, R-Ore., outlined an aggressive agenda for his panel for this year, including pushing for legislation to free up more spectrum for wireless broadband and to help build a national broadband public safety network.

Walden and Energy and Commerce Chairman Fred Upton, R-Mich., are among the House conferees picked to help negotiate the differences between the House and Senate versions of legislation that would extend a payroll tax holiday and other tax breaks. The House's payroll tax bill, passed last month, included the spectrum legislation authored by Walden that was approved by his subcommittee in November.

The Senate Commerce Committee approved its own version of spectrum legislation last summer. Both the Walden and Commerce bills would authorize auctions to entice broadcasters to voluntarily give up some of their spectrum for a share of the money generated. Among the notable differences between Walden's measure and the Senate Commerce bill is that his would generate about $10 billion more for deficit reduction, Walden said.

Another provision that has emerged as a point of contention in recent weeks is language in the House bill that would bar the FCC from limiting which companies could participate in incentive auctions. FCC Chairman Julius Genachowski earlier this month urged lawmakers not to limit the commission's flexibility to structure the auctions as it sees fit.

Following his speech, AT&T voiced concern that the FCC may try to keep it and other large wireless operators from bidding for the spectrum that broadcasters give up at auction. Walden said the language included in his bill would ensure the FCC can't pick winners and losers. He added that the commission would still have authority to address concerns over market concentration even after an auction is conducted.

"The only reason the chairman is upset about the provision is that he wants to exclude one of two market participants," Walden said, referring to the nation's two biggest wireless firms: AT&T and Verizon Wireless. "I don't think it's good public policy."

Walden said he believes it's likely that some version of the spectrum legislation will be included in the payroll tax package the House and Senate negotiators are trying to hammer out. The conference committee met for the first time Tuesday. "I would think given the need to pay for the various components of the [payroll] legislation...it would cause a problem if it dropped out," he said. The Congressional Budget Office has estimated that Walden's spectrum legislation would generate $16.7 billion for deficit reduction compared with just $6.5 billion for the Senate bill, authored by Commerce Chairman Jay Rockefeller, D-W.Va.

Walden also said the full Energy and Commerce committee plans to mark up FCC reform legislation on Feb. 7. While praising Genachowski for making some progress in overhauling how the FCC conducts its business, Walden said changes promoting transparency need to be codified into law.

Democrats, however, have been critical of a provision that would limit the FCC's ability to demand conditions from merging companies in the name of the public interest. "All we're saying is that you can't use leverage on mergers...to achieve effects in the marketplace that you don't statutorily have the right to do," Walden said.

AT&T says it hopes to quickly finalize a $1.9 billion spectrum deal with Qualcomm after the Federal Communications Commission approved it on Thursday.

"This spectrum will help AT&T continue to deliver a world-class mobile broadband experience to our customers," AT&T Senior Vice President Bob Quinn said in a statement. "We appreciate the FCC Chairman, the Commissioners and their staff for completing its review before the holidays."

For just over $1.9 billion AT&T will buy 700 MHz spectrum licenses covering more than 300 million people. AT&T said the two companies will close the deal "in the coming days."

AT&T, which called spectrum the "lifeblood" of the wireless industry, had been seeking more spectrum resources through the Qualcomm deal as well as a mega-merger with rival T-Mobile USA.

The merger with T-Mobile fell through on Monday after regulators at the FCC and Justice Department moved to block it.

The Qualcomm buy was panned by groups that also opposed the T-Mobile merger. Free Press argued that by giving AT&T access to more of the high-quality 700 mHz spectrum, the FCC is potentially harming competition.

Verizon Wireless submitted an application to the Federal Communications Commission on Monday to get permission to buy $3.6 billion in spectrum from billion from SpectrumCo, LLC, jointly owned by cable companies Time Warner Cable, Bright House Networks, and Comcast. Verizon said the purchases would benefit customers by making networks more robust.

Verizon said earlier this month that it was buying 122 Advanced Wireless Services licenses covering 259 million POPs from the cable providers. It also said the government does not need to review its marketing agreement with the cable companies - something that worries advocacy groups.

"No matter how forcefully Verizon claims that this is 'a spectrum-only transaction,' it is much more than that," Andrew Schwartzman of the Media Access Project said in a statement. "The FCC's mandate is to look at the totality of the circumstances to decide if a proposed transfer is in the public interest."

Verizon announced a smaller deal on Friday, saying it would buy 20 MHz of spectrum from cable provider Cox Communications for $315 million. The stretch of AWS spectrum includes 28 million POPs.

Cox and Verizon also agreed to market one another's residential and commercial products and services.

"Over time, Cox may have the option to sell Verizon Wireless' services on a wholesale basis. In addition, Cox expects to enter into arrangements with the innovation technology joint venture formed by Verizon Wireless, Comcast, Time Warner Cable and Bright House Networks to better integrate wireline and wireless products and services," Verizon said in a statement on Friday.

House and Senate talks meant to resolve sticking points over spectrum legislation appear to have stalled for now.

Staffers from the House and Senate Commerce committees had been in talks to try to resolve some of the differences between legislation approved by the Senate Commerce Committee in June and GOP draft legislation approved by the House Energy and Commerce Communications and Technology Subcommittee earlier this month.

The draft Energy and Commerce measure was added to the payroll tax package passed by the House Tuesday. Senate Democratic leaders have said the payroll tax package is unlikely to pass the Senate for reasons unrelated to the spectrum bill and President Obama has vowed to veto it if it passes Congress in its current form.

"I'm disappointed that the House has unilaterally stopped negotiating with us on spectrum, but I'm not giving up," Senate Commerce Chairman Jay Rockefeller, D-W.Va., said in a statement late Wednesday. "It's my hope that we can include a compromise in the final year-end package. Although I don't care to negotiate this publicly, we remain open to any good idea. "

Both the House and Senate bills aim to free up more spectrum for wireless broadband and help build a national broadband network for public safety.

Energy and Commerce Communications and Technology Subcommittee Chairman Greg Walden, R-Ore., told reporters earlier Wednesday that discussions with the Senate weren't making enough progress to continue.

"We had a bipartisan vote on the House floor. It's up to the Senate to try to do something here," Walden said. "Why would we negotiate against ourselves?"

Walden said the main problem in talks with his Senate counterparts was the governance structure for the public safety network. He said he and other Republicans on the committee have already given in on a key issue by lifting their opposition to giving a swath of spectrum known as the D-block to public safety for their network.

"We haven't seen much give, and I didn't feel there was any reason to continue those discussions," Walden said. "And you know if it's all going to break down over their governance model or the highway, then maybe public safety has to come out" of the spectrum measure.

But Rockefeller said public safety is his top priority in the spectrum legislation and he would not compromise on the need to build a national network to improve emergency communications. "Frankly, the rest of the spectrum debate is secondary to the needs of our firefighters, cops, and emergency workers," he said.

Rep. Anna Eshoo, D-Calif., the ranking member on Walden's subcommittee, told Tech Daily Dose Wednesday afternoon that she would support passing Rockefeller's bill in the House. Eshoo and other Energy and Commerce Democrats opposed Walden's bill during the subcommittee markup because of concerns with the public safety governance language and other provisions.

A top Democrat on the House Energy and Commerce Committee voiced frustration Wednesday with reports that House GOP leaders are considering including spectrum legislation in a broader bill that might include an extension of a payroll tax holiday and other measures.

Rep. Anna Eshoo, D-Calif., the ranking member on the Communications and Technology Subcommittee, told Tech Daily Dose that it's important for the committee to continue its work on the issue even if it ends up getting attached to another bill.

The subcommittee approved spectrum legislation crafted by the panel's chairman, Rep. Greg Walden, R-Ore., on a largely party-line vote last week. Eshoo and other Democrats opposed the bill because of concerns about provisions related to unlicensed spectrum and the governance structure for a national broadband network for public safety.

"It is my understanding that the Republican leadership is considering placing this in an omnibus," Eshoo said. "But this is without the benefit of a full committee markup. These are complex issues. Congress does not do spectrum legislation but for maybe once a decade, if that," she added."I'd like to see the fullness of the effort optimized."

A spokesman for House Speaker John Boehner, R-Ohio, confirmed that GOP leaders are considering including spectrum in the payroll tax measure, which the House may take up next week. Spectrum legislation has been floated several times this year as a possible offset to pay for various measures Congress has considered.

Walden said last week that his spectrum measure, which is focused on freeing up more spectrum for mobile broadband and helping to build a public safety broadband network, could raise as much as $15 billion for the U.S. Treasury through spectrum auctions.

Walden said last week that he expected the full committee would take up his measure this week but that appears to be on hold until a decision is made on whether his bill will be attached to the payroll tax measure. Eshoo said her staff and Walden's aides are continuing to talk about ways to resolve their differences on his spectrum bill.

Meanwhile, Senate Commerce Chairman Jay Rockefeller, D-W.Va. said Tuesday that his staff may begin discussions with the House on ways to resolve differences between his spectrum bill, approved in June, and Walden's proposal.

"Were moving to get together with the House folks," Rockefeller said, though he didn't say when such talks would take place.

The top Democrats on the House Energy and Commerce Committee have asked the panel's GOP leaders to postpone Thursday's markup of spectrum legislation offered by Communications and Technology Subcommittee Chairman Greg Walden, R-Ore.

The Democrats wrote full committee Chairman Fred Upton, R-Mich., and Walden to say a delay is necessary to give them more time to analyze Walden's spectrum bill and to give both parties a chance to resume negotiations on crafting bipartisan legislation.

"We believe the difference between us can be resolved and we have some new ideas for bridging our differences that we would like to discuss with you," Energy and Commerce ranking member Henry Waxman, D-Calif., and Communications and Technology Subcommittee ranking member Anna Eshoo, D-Calif., wrote. "We hope you will agree to postpone the markup so we can work with you to produce a bipartisan bill that all members can support."

Following the release of Walden's draft bill on Tuesday, Waxman chided the panel's GOP members for cutting off negotiations last month before a bipartisan deal could be reached. He also announced that Democrats on the panel planned to introduce their own competing spectrum measure.

Still, in their letter Wednesday, Waxman and Eshoo praised Walden for reversing his previous opposition to giving a stretch of spectrum known as the D-block to public safety officials to create a national broadband network.

The Democrats, however, voiced concern that Walden's bill doesn't provide enough funds for building the network and that provisions related to deploying and maintaining it are too burdensome. They also complained about a provision that would bar the Federal Communications Commission from allocating some spectrum freed up through incentive auctions authorized by the bill for unlicensed uses such as super-fast Wi-Fi.

"After almost a year of hearings and extensive meetings, the committee looks forward to convening the markup tomorrow at 10 a.m." a Walden spokeswoman said in response to the Democrats' letter.

Wireless companies and other supporters of freeing up more spectrum for wireless broadband technologies have been keen for the committee to act on the issue. "Spectrum is a vital resource that needs immediate attention. We are thankful for the chairman's leadership and the progress that's been made," AT&T Executive Vice President of Federal Relations Tim McKone said in a statement Tuesday.

The House Energy and Commerce Committee has launched an investigation into a $267 million loan provided to a wireless broadband company by the Agriculture Department's Rural Utilities Service.

In a letter to RUS Administrator Jonathan Adelstein, key Republicans and Democrats on the committee asked for information about the loan made under the 2002 farm bill to Open Range Communications, which filed for bankruptcy on Oct. 6. The committee noted that the Agriculture Department's inspector general has raised concerns about the agency's broadband program.

"Open Range's bankruptcy potentially puts $73.5 million of taxpayer money at risk," committee Chairman Fred Upton, R-Mich., ranking member Henry Waxman, D-Calif., and the Democratic and GOP leaders of the panel's Oversight and Communications subcommittees wrote.

The panel has asked the Rural Utilities Service to brief it on the process the agency used to provide the loan to Open Range and its oversight of the company, as well as information about other broadband loans made by the agency.

On its website, Open Range, which planned to provide wireless broadband service to under-served areas in 17 states within five years, said an unnamed company has plans to buy it and continue offering service.

The committee also is investigting federal government loans made to solar maker Solyndra, which also filed for bankruptcy earlier this year.

Federal Communications Commission Chairman Julius Genachowski announced a new agency push to get Americans connected to high-speed Internet in a speech Wednesday at the Pew Charitable Trusts.

He said the concern is that even when Americans have access to broadband service, many fail to adopt the technology. One-third of all Americans--100 million people--don't have broadband at home, according to Genachowski.

A lack of "digital literacy," he said, is a main reason many people don't adopt the technology. To fight that issue, the agency helped secure a commitments from nearly a dozen companies to train people in technology skills.

For instance, Microsoft will offer training for its software products in schools, libraries and community colleges. Best Buy promised to offer basic technology training in 20 cities over the next year.

Genachowski framed the effort as once piece of a much larger puzzle.

"No single program or actor alone - government, nonprofit, or private sector - can solve this national challenge. It will take all of the above, playing smart, mutually re-enforcing roles, acting boldly for both the near-term and long-term, and building on the increasing volume of best practices and data," he said.