Net Neutrality Murky, Says Top Antitrust Official

“From an antitrust enforcement perspective they were not required, which is why we closed the investigation without seeking any net neutrality commitments,” Barnett said. “The FCC has a different and broader mandate in terms of the public interest and so I defer to them.” Net neutrality “sounds good and it can be good,” he said, calling it “a vague concept” that has varying meanings.

Barnett termed the telecom industry hugely competitive. He cited industry data showing increased competition and investment. “We've made tremendous progress,” he said. “We're clearly doing some things right.” But DoJ must take care in investigating mergers, he said. “Every merger transaction, every investigation, is fact-specific.” DoJ’s record shows that “where the investigation indicates that no challenge is warranted… we get out of the way,” he said.

DoJ investigates differentiations between products even when a market has several competitors -- for example, in the recent wireless mergers, Barnett said. DoJ must scrutinize claims that future technologies will eliminate present-day competitive concerns, Barnett said. “Such predictions are often fraught with uncertainty,” he said. “Sometimes they are imminent enough and credible enough to be given significant weight in our analysis.” He cited slower-than- expected rollout of broadband over powerlines and persistent uncertainty about WiMAX.

Efficiencies flowing from a merger often are given “significant weight” by DoJ, Barnett said. “We do not, however, take them at face value,” he said. “We look for evidence that will support the projections in the particular case.” In a typical analysis DoJ discounts a “significant” amount of the efficiencies merger partners say will result. - - Howard Buskirk

PLI Notebook…

On Nov. 30 the FCC terminated its investigation of 39 rural telecom companies accused of traffic pumping (CD Aug 28 p7) as all of them took one of two agency-proffered “safe harbors,” escaping inclusion in the inquiry, FCC Wireline Bureau Chief Dana Schaffer said Wednesday at the Practising Law Institute conference. The agency let carriers exit the investigation either by committing to modifying their access rates if they experienced “a significant increase in demand” or rejoining the traffic-sensitive tariff pool operated by the National Exchange Carrier Association, she said.

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Nearly 12 years after the 1996 Telecommunications Act’s passage, policy debate in that arena has changed greatly, panelists said at the PLI conference. Still reeling from the Bell System’s 1984 breakup, policymakers in 1996 mainly feared “vertical” abuse in the wireline industry and worried about whether to impose controls to separate provision of local exchange and long distance services, James Cicconi, AT&T senior executive vice president, said. The FCC “finally dealt with that problem by allowing vertical mergers” such as the AT&T-SBC and MCI-Verizon mergers, he said. Comcast Vice President Joseph Waz said he “took issue” with the view that the 1996 battle “centered on long distance versus local.” The “biggest thing” then was cable deregulation, which “lit a fire” under investors and got the broadband revolution started, he said. “Now it’s the battle of the bundle,” with AT&T and Verizon wanting into the video business along with cable, he said. “The big issue now is what government policies promote [the bundle battle] or is this FCC taking steps backward,” Waz said.

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“I'm from Omaha and I keep wondering if the FCC would come to the same conclusion if it took another look at the order giving Qwest forbearance there,” Nebraska Public Service Commissioner Anne Boyle said at the PLI conference. McLeod Communications may quit the market owing to competitive woes and Cox Communications, the basis of an FCC conclusion that competition exists there, “is a huge competitor, but in residential service only,” she said. Cox has little of the business market where Qwest still dominates, Boyle said. There’s “concern on the Hill that forbearance is driving public policy and some have discomfort with that,” said Jessica Rosenworcel, majority counsel for the Senate Commerce Committee. “There’s a place for the forbearance process,” said James Cicconi, AT&T senior executive vice president. “Markets sometimes move faster than regulation can move,” he said. Rather than deterring new market growth, “it’s good to have a process where regulators can look at competition on a market-by-market basis,” he said.