Federal Government Stirs, May Begin Enforcing Antitrust… Maybe

Date: 10 Jul 2009 | posted in: information, MuniNetworks | 0 Facebooktwitterredditmail

The Wall Street Journal recently reported that the Department of Justice is examining AT&T and Verizon for antitrust violations.

The Department of Justice has begun an initial review to determine whether large U.S. telecom companies such as AT&T Inc. and Verizon Communications Inc. have abused the market power they’ve amassed in recent years, according to people familiar with the matter.

Among the areas the Justice Department could explore is whether wireless carriers are hurting smaller competitors by locking up popular phones through exclusive agreements with handset makers, according to the people. In recent weeks lawmakers and regulators have raised questions about deals such as AT&T’s exclusive right to provide service for Apple Inc.’s popular iPhone in the U.S.

AT&T and Verizon are among a few companies that dominate telecommunications in the U.S. – from broadband to cell phones. These companies lobby heavily for federal and state legislation to pre-empt local authority when it comes to building broadband networks and even managing their rights-of-way. However, some have claimed that neither AT&T or Verizon has sufficient “market power” to warrant antitrust proceedings.

Harold Feld, legal director of Public Knowledge, has recently expounded on the changing views of antitrust.

Most antitrust lawyers I’ve talked to in the last few years are either extremely bitter about what has happened to antitrust law or happily content, depending on whether they represent plaintiffs or defendants. Increasingly, the idea of antitrust law as being a means of preserving a competitive market has gone out the window in favor or a doctrine that requires not only explicit conspiracy, but a showing that the conspiracy couldn’t somehow end up being good for consumers in some imaginary universe dreamed up by a bunch of Federalist Society judges on a three-day bender.

But times may be changing…

After all, in the last 8 years, we saw the wireline telecom market devolve into three major incumbent local exchange carriers (ILECS), two of whom gobbled up their largest competitors back in 2005 when Verizon swallowed MCI and SBC devoured the old AT&T and assumed her mantle as “Ma Bell.” Simultaneously, we’ve seen the wireless world drop to four national competitors with AT&T and VZ wireless controlling about 60% of the wireless customers, and, as a byproduct of absorbing MCI and AT&T, Verizon and AT&T also control 90% of the special access connections. So why is it that traditional antitrust lawyers are genuinely astounded at the notion that there might be some competition issues here for an antitrust agency to investigate?

However, Harold notes in closing that none of this means the government will actually act to enforce antitrust. Below, check out two interesting short videos – one in which Harold is forced to speak in sound-bites on CNBC and one in which he takes a few minutes to explain why exclusive handset (cell phone) deals hurt everyone.