[Sign Up Now] to Receive Our FREE Daily SCVTV-SCVNews Digest by E-Mail

Santa Clarita CA
Partly cloudy
Partly cloudy
Today in
S.C.V. History
March 17
1927 - Newhall telephone exchange, est. 1900, now serves 100 phones [story]



Before discussing the concerns I have about the license transfer applications filed by AT&T Inc. and Deutsche Telekom AG this past March, I will address the procedural posture the Commission finds itself in because, on November 23, after being notified of the Commission’s intent to circulate a Hearing Designation Order, the Applicants sent an electronic filing to request withdrawal of these applications. I understand why the decision was made not to proceed with the Hearing Designation Order and I wish to express my support for today’s release of the staff Analysis and Findings. The agency has the discretion to issue such a report in this proceeding and furthermore, this action promotes federal agency transparency. Several outside parties have spent considerable time and resources to respond to the data and information requests that the FCC staff has asked them to prepare, and they deserve to see the staff’s analysis of the record evidence. In addition, the Applicants have stated that they “are continuing to pursue the sale of Deutsche Telekom’s U.S. wireless assets to AT&T.” Consequently, as they decide how best to reframe any changes to their transfer of control applications, the Applicants also deserve to have the benefit of the staff’s Analysis and Findings.

When I began to consider this license transfer application between the number two and number four (in terms of subscribers) nationwide mobile wireless service providers, I initially had concerns about the impact such a proposed merger would have for competition, innovation and investment, and customer service. I decided to keep an open mind because the Applicants offered interesting arguments why these license transfers would serve the public interest. Most notably, AT&T’s customers have complained about the problems they have with AT&T’s mobile wireless data services and the acquisition of additional spectrum could help alleviate that problem. Second, AT&T asserted that the proposed merger would result in a net gain of job openings for Americans seeking to enter the mobile wireless service industry. As is evident in the Analysis and Findings, the FCC staff engaged in a careful and thorough review of each of these issues.

As I have said before, if we want markets to be unencumbered by the cost of regulation, we need to ensure that the markets are truly competitive. My concern that the proposed merger could substantially lessen competition in the mobile wireless service market begins with what I see in the current state of the market. Increased consolidation, over the past several years, has resulted in fewer regional and rural service providers that are able to discipline the largest carriers. Voice and data roaming and other network sharing agreements would stimulate the deployment of networks to more Americans, but the denial of these agreements and those opportunities would prevent the smaller carriers from providing competitive service offerings to their subscribers, resulting in pockets of this Nation not being robustly served. In fact, the most recent 15th Mobile Services Report finds that more than seven million Americans still live in rural census blocks with two or fewer mobile service providers. In addition, more than 37 million Americans live in rural census blocks that have two or fewer choices when it comes to mobile broadband services. It may be that this current state of affairs calls for the Commission to adopt more regulation to better implement the public interest aims of the Communications Act. But, in my view, ensuring that the competitive structure of the market furthers the goals of the Act is another reason why the Commission must review license transfer applications and make its determination as to whether or not such applications serve the public interest.

Consistent with FCC precedent, the staff reviewed those aspects of the structure of the mobile services market that are relevant to this proceeding. It then determined the relevant product market to be the mobile telephony/broadband services product market. It also appropriately reviewed the impact of the merger on a local market basis and a nationwide basis. The staff’s findings suggest the applications appear to substantially lessen competition in ways that no conditions would appear to remedy. The Commission uses the Herfindahl-Hirschman Index, or HHI, to trigger when it must take a closer look at the impact of a proposed merger on a relevant geographic market. It conducts that closer scrutiny when a proposed merger would lead to market concentrations that exceed 2800 on the HHI and the change in the HHI would be 100 or the change in the HHI would be 250 or greater in a market irrespective of the total market concentration. Based on the staff analysis, 419 local markets, formally known as Cellular Market Areas, hit the HHI trigger for closer agency scrutiny.

When it subjects a proposed merger to heightened competitive review, the Commission considers whether the proposed merger would create incentives for the merged entity and other competitors, such that they would likely engage in unilateral or coordinated action that would harm competition. Said another way, we ask whether by removing T-Mobile, AT&T and competitors would be more likely to raise prices. After a detailed analysis of these issues, the staff concluded that the removal of T-Mobile as a competitor would create these incentives for AT&T and other competitors because these two companies compete with each other for customers and respond to each other’s competitive strategies. The staff also considered the Applicants’ argument that the merger would not result in these competitive harms because smaller regional mobile wireless carriers are available to effectively compete. The staff was not persuaded by this argument because these smaller mobile wireless carriers do not have the resources to replace T-Mobile’s competitive strength in the market. These smaller carriers have considerably less spectrum, smaller service footprints, lower Average Revenue Per Unit and, as I implied earlier, have difficulties obtaining roaming agreements. Furthermore, it appears the proposed merger would make it even more difficult for these smaller carriers to compete because the merged entity would make it more difficult for them to acquire the more advanced and popular handsets and acquire the backhaul services. For these and additional reasons, the staff report finds that the proposed merger would substantially lessen competition in the market for mobile telephony/broadband services.

I am concerned about the impact that policies and market structure have on innovation and investment in the mobile wireless services market. Innovation is why we have seen mobile wireless handsets change from being about the size of a brick with limited coverage and offering only voice service, to including the advanced technologies in smart phones, tablets and other portable devices that operate at broadband speeds. As the National Broadband Plan stated, greater deployment and adoption of mobile broadband services will drive innovation throughout our Nation’s economy. With regard to the impact of the proposed merger on innovation in the industry, the staff Analysis and Findings also finds harm because by removing T-Mobile, the proposed merger would remove a disruptive force in the mobile wireless services market. T-Mobile exerts that disruptive force by engaging in both price and technical innovation. For example, the staff Analysis explains that, T-Mobile was the first nationwide provider to offer the following innovative pricing plans: month-to-month postpaid plans; plans that allow customers to pay for new phones over four monthly interest free installments; and soft data cap plans that allow customers to exceed their monthly maximum in data service without incurring expensive overage fees. T-Mobile also acted disruptively by being the first to invest in and deploy HSPA+ technology through its network. That strategy led AT&T to respond by accelerating its deployment of the same technology. T-Mobile was a founding member of the Open Handset Alliance which spurred the deployment of Android devices to the market. It was also the first provider to offer an Android smart phone. According to the staff reports, the Applicants have not shown how the innovation in pricing and technology, which T-Mobile had the resources and market power to introduce to the market, would continue after this proposed merger.

Also of concern is that the staff found that the proposed merger could adversely impact customer service. The staff found that AT&T’s documents show that the cost savings from the proposed merger would result from the elimination of most T-Mobile customer service representatives and the complementary infrastructure. In recent years, T-Mobile has received high ratings for its customer service. So, this causes me to question how current customers would be impacted.

As I implied earlier, I was intrigued by the Applicants’ assertions that the proposed transactions would result in the following merger specific benefits: (1) network efficiencies that would allow them to meet the challenges caused by the explosion of data traffic on their networks; and (2) the creation of more jobs for Americans than would occur without the merger. The Applicants submitted several documents to support the network efficiency claim including economic and engineering models. The staff report reviewed these models and, in some instances, agreed with some of the assertions the Applicants made. The staff’s overall assessment of these models and documents, however, is that they fall far short of being persuasive because “the models provided are abstract, [are] not robust to more reasonable assumptions, [are] not consistent with each other or, in many cases, [with] the Applicants’ internal documents and have no demonstrated predictive value.”

The staff also stated that they were not persuaded by the Applicants’ contention that the proposed merger would result in the creation of more jobs. That is due to the staff’s calculation that, in order to reach the dollar amount of synergies the Applicants assert would result from the merger, this would necessarily mean the elimination of jobs. The staff found that this is consistent with AT&T’s own statements in the record that “jobs serving redundant functions” would be eliminated to reduce costs. Furthermore, staff examined the history of AT&T’s management decisions following recent mergers. The staff found that “in 2002, there were 70,000 employees at AT&T Mobility and its predecessor companies. Since then, AT&T merged with Cingular, Dobson, and Centennial. Today, there are 67,000 employees at AT&T Mobility.” After reviewing this evidence, the staff found that, even if AT&T follows through with its commitment to not terminate any call center jobs in the United States, there is “no dispute that the proposed transaction will result in fewer total direct jobs across the business.”The staff Analysis and Findings concludes that the proposed merger would substantially lessen competition whether reviewed at the local market or national market level, and there are substantial questions whether the claimed public interest benefits would occur.

I would like to thank Renata Hesse, Austin Schlick, Rick Kaplan, Paul De Sa and the staff members from their respective Bureaus and Offices who worked tirelessly to finish the review of these applications before 180 days. I commend them for presenting us with a sound analysis of the relevant issues in the proceeding.

Comment On This Story
COMMENT POLICY: We welcome comments from individuals and businesses. All comments are moderated. Comments are subject to rejection if they are vulgar, combative, or in poor taste.
REAL NAMES ONLY: All posters must use their real individual or business name. This applies equally to Twitter account holders who use a nickname.

1 Comment

  1. Michael Van Tol says:

    Elimination of more jobs… great. I’m looking for a customer service job, but not in a call center. I need to work from home. Anyone know of a good source? I’ve tried craigslist, but no luck. Anyone heard of PajamaJobs.com ? They have a lot of jobs listed but I can’t tell if they’re legit…

Leave a Comment

Latest Additions to SCVNews.com
1927 - Newhall telephone exchange, est. 1900, now serves 100 phones [story]
The 2018 SXSW Film Festival, which runs from March 9 to 18, announced its Jury and Special Award winners on Tuesday with CalArts alumni taking home some of the top prizes.
CalArtians Earn Juried Prizes at 2018 SXSW Film Festival
Santa Clarita Valley Boys & Girls Club "Youth of the Year" Lluvia Partida was among the young people vying for regional "Youth of the Year" honors at the annual County Alliance award ceremony Tuesday night.
County Boys and Girls Club Alliance Names 2 ‘Youth of the Year’ Honorees
Newhall School District administrators will host an information/enrollment meeting for families that may be affected by the possible closure of the Einstein Academy at Stevenson Ranch Elementary School on Wednesday, March 21, starting at 6:30 p.m.
March 21: Newhall School District Info Session for Einstein Families
The SCV Chamber of Commerce-sponsored NextSCV group for young business professionals ages 21-40 will tour Scorpion's new Valencia headquarters on Wednesday, March 28 starting at 5:30 p.m.
March 28: Young SCV Professionals to Tour Scorpion HQ
The Bureau of Land Management has made available for public review a draft Supplemental Environmental Impact Statement and draft Land Use Plan Amendment that aim to manage dispersed recreation visitation over an extensive area in the Mojave Desert.
BLM Issues EIR for Mohave Desert Use, Seeks Public Comment
The TMU Mustangs men's basketball team lost to Peru State College 106-104 in overtime at the NAIA Division 1 National Championship tournament opener in Kansas City Wednesday night.
TMU Men’s Hoops Team Upset by Peru State in First Round
The Master's University doubled up the University of Antelope Valley 8-4 on a cloudy and cold Wednesday afternoon in Placerita Canyon.
Mustangs Stop UAV Pioneers in Their Tracks 8-4
After standing toe-to-toe with the perennial powerhouse Freed Hardeman Lions, the Mustangs didn't have enough left in the fourth quarter and fell 71-51 in the NAIA Women's National Tournament Wednesday.
Mustangs Fall to Freed Hardeman at Nationals
College of the Canyons starter Joy Veloz struck out nine batters and the Cougars pounded out 10 hits to defeat conference rival Antelope Valley College 7-2 at Whitten Field on Thursday.
COC Softball Team Claims 7-2 Victory Over Antelope Valley
The Los Angeles County Metropolitan Transportation Authority has implemented a one-year pilot program to assist Metro-certified Small Business Enterprise, Disadvantaged Business Enterprise and Disabled Veteran Business Enterprise firms secure sufficient bonding to work on Metro construction projects.
LA Metro Launches Program for Small, Disadvantaged, Veteran-Owned Firms
The Golden Oak Adult School will host its second annual Open House at the school on Tuesday, March 27 from 4 p.m. to 7 p.m.
March 27: Golden Oak Adult School 2nd Annual Open House
The Los Angeles County Board of Supervisors on Tuesday approved a $2.7 million payment to the family of a man fatally shot by a sheriff's deputy in Santa Clarita on January 14, 2016.
Supes Settle Suit for Wrongful Death in Santa Clarita for $2.7 Million
The next meeting of the Los Angeles County Board of Supervisors is set for Tuesday, March 20, starting at 9:30 a.m.
March 20: LA County Board of Supervisors Meeting
Local developer Pardee Homes will host a grand opening paw-ty for the new Dogwood Park dog park in the Aliento neighborhood of Canyon Country on Saturday, March 17 from 9 a.m. to 11 a.m.
March 17: Dogwood Park Grand Opening Paw-ty in Canyon Country
The nonprofit Los Angeles County Animal Care Foundation will host a "Wild for Animals" benefit at Centre Pointe Plaza in Santa Clarita to raise funds for the Castaic Animal Care Center on Saturday, May 19 starting at 6 p.m.
May 19: ‘Wild for Animals’ Benefit for Castaic Shelter in Centre Pointe
2003 - Life-size sculpture honoring heroes of St. Francis Dam disaster unveiled in Santa Paula [video]
Campus Compact — a Boston based non-profit organization working to advance the public purposes of higher education — has announced the 268 students who will make up the 2018 cohort of Newman Civic Fellows. Among them is California State University, Northridge graduate student Lilia Gonzalez.
CSUN Grad Student Among 268 Awarded with Newman Civic Fellows
Academy Award-nominee, Angela Bassett will join Kathleen Battle as a guest narrator in Battle’s program Underground Railroad: A Spiritual Journey accompanied by pianist Joel Martin and the LA-based choir, The Albert McNeil Jubilee Singers at the Younes and Soraya Nazarian Center for the Performing Arts (The Soraya) on Thursday, March 29 at 8:00pm.
March 29: Angela Bassett Joins Kathleen Battle at The Soraya
The next Canyon Country Advisory Committee meeting will be held Wednesday, March 21, from 7:00 p.m. - 9:00 p.m., at the Mint Canyon Moose Lodge Family Center Banquet Room, located at 18000 Sierra Highway, Canyon Country, 91351.
March 21: Canyon Country Advisory Committee Meeting
There are a few seats left in ARTree's Junior Arts Sampler (ages 5 - 7) and our Arts Sampler (ages 8 - 12) classes which start next week.
Seats Still Available for ARTree’s Arts Sampler
Confronted with a wide range of complex challenges to enrolling residents in need of food assistance in the CalFresh Program, the Department of Public Social Services (DPSS) has launched a comprehensive community outreach and education campaign to address the increasing threat of food insecurity in the most populated and culturally-diverse county in the nation.
CalFresh Launches Community Outreach to Reduce Food Insecurity
After clawing its way back to within a pair a runs, College of the Canyons couldn't get any closer, instead dropping a 17-9 decision to conference rival Citrus College at Cougar Field on Wednesday.
Canyons’ 9 Runs Not Enough to Hold Off Citrus College
Thanks to Senate Bill 85 the California State University (CSU) announced the distribution of more than $2 million across its 23 universities to support student success and the CSU Basic Needs Initiative.
CSU to Distribute $2.5 Million in Effort to Fight Student Hunger
The Santa Clarita City Council recognized the Salvation Army’s Santa Clarita Valley Corps at the Council’s meeting Tuesday night.
Salvation Army’s SCV Corps Lauded by City Council
The Santa Clarita City Council invites the public to attend a demolition event at the site of the future Canyon Country Community Center, located on the corner of Soledad Canyon Road and Sierra Highway, on Tuesday, March 20 at 10:30 a.m.
March 20: Demolition Event at New Canyon Country Community Center Site
Washington, DC - On Thursday, Rep. Steve Knight (R-CA) introduced H.R. 5307, The School Training, Equipment, and Protection (STEP) Act.
Knight Legislation to Implement Specific School Safety Measures
Recognizing California State University, Northridge’s strong commitment to regional economic development, CSUN has been named an Innovation and Economic Prosperity (IEP) University by the Association of Public and Land-grant Universities (APLU).
CSUN Recognized as Innovation, Economic Prosperity University
Max Maitland hit a tie-breaking, two-run homer and the bullpen combined for over five innings of one-run ball as The Master's University doubled up the University of Antelope Valley 8-4 on a cloudy and cold Wednesday afternoon in Placerita Canyon.
Mustangs Improve to 17-10 with Win Against Antelope Valley
MORENO VALLEY, Calif. - Effective immediately, all Bureau of Land Management-managed public lands within the California Desert District shall be under Stage I restrictions and year-round fire restrictions. Recreational shooting restrictions applicable to the California Desert District, issued on May 26, 2017, have been terminated as of March 13, 2018.
Bureau of Land Management Now Under Year-Round Fire Restrictions
KANSAS CITY, Mo. – Before Wednesday night's NAIA Division 1 National Championship tournament opener, Master's assistant coach Thomas Lowery and senior Lawrence Russell came to an understanding.
No. 1 Mustangs Knocked Out in First Round of NAIA Tourney
AlphaKidz International S.M.A.R.T. Academy is conducting a shoe drive fundraiser on March 19 to raise funds for their new school building.
March 19: AlphaKidz International Shoe Drive Fundraiser
The Santa Clarita community will once again show their support for a great non-profit, WiSH Education Foundation while sampling 44 chilis on Tuesday, March 20.
Tickets Still Available for 6th Annual Charity Chili Cook-Off
Princess Cruises announced a new culinary shore excursion program in collaboration with the number one food lifestyle brand, Bon Appétit, offering guests the opportunity to indulge in culinary experiences inspired by their surroundings while cruising to destinations around the globe.
Princess Cruises Partners With Bon Appétit
Valencia High School’s Jazz Choir Two N’ Four is ranked the best in the country.
Valencia High Choir Takes 1st Place in Monterey; Bests Schools Nationwide