A Consequential Week for Telecom in Washington

On Monday, The U.S. Department of Justice filed suit in the United States District Court for the District of Columbia to stop AT&T’s acquisition of Time Warner. The move is beyond the usual mega-deal implications. Paired with the news that the Federal Communications Commission (FCC) is doing as promised and attempting to kill net neutrality, it’s been a week of significant telecommunications regulatory and legal news.

The high-profile context of the suit is that Time Warner executives refused the government’s demand that it spin off CNN, which is part of the Turner Broadcasting unit. The government’s goal is to find CNN a home with owners who will be friendlier to the administration. The fact that the president has a rooting interest is clear:

Charles King, principal analyst with Pund-IT, said the DoJ move appears to be a “remarkable reversal” from the business-friendly approach taken by the Trump administration so far in 2017. This reversal supports “conclusions that other motivating factors may be in play,” said King. “Given the President’s antagonistic relationship with CNN (one of Time Warner’s properties), it’s difficult not to believe that political issues are coloring Delrahim’s judgement.”

Makan Delrahim is an Assistant Attorney General with the DOJ’s Anti-trust division.

At a higher level, the net neutrality and AT&T/Time Warner imbroglios deal in different ways with the question of how companies that control content and access should be made to behave. Perhaps the key net neutrality issue is whether or not content/programming entities owned or controlled by the Comcasts and AT&Ts of the world will have unfair advantages without tight legal and regulatory oversight.

The desire to block Time Warner/AT&T because it annoys Trump begs the question: The president, through the DOJ, is threatening to prevent AT&T from benefiting from the marriage of content (CNN) and wired and wireless distribution networks. In other words, the move by the administration, if successful, will prevent AT&T from doing precisely what net neutrality proponents fear would happen widely if the rules are abandoned.

Writing today at Wired, Susan Crawford said that the DoJ was right in bringing suit and clearly suggests that it is based on far more than Trump’s annoyance. In the bigger picture, however, her point is that it is a strange one:

The DOJ uses quotes from AT&T’s and DirecTV’s own internal documents to show that the merged company intended to use Turner’s top-rated, widely distributed content as a sledgehammer both (a) to raise prices for any other competing video distributor, so as (ultimately) to drive those distributors’ customers into AT&T’s arms, and (b) to slow competition from online video.

It’s odd because that is precisely what could happen in many other cases if another part of the Trump administration – the FCC – succeeds in dismantling net neutrality. An unnamed antitrust attorney makes the same point in extended comments included in a post by Josh Marshall at Talking Points Memo.

The Department of Justice presumably makes decisions on what lawsuits to bring based on its analysis of current laws. Whether or not net neutrality is on the verge of being radically changed or thrown out probably has no effect on its deliberations. It’s ironic, however, that a key element of its decision to bring suit to stop the AT&T/Time Warner deal is based, at least in part, on a petulant president and regulations that almost simultaneously took a body shot from another part of the same administration.

Carl Weinschenk covers telecom for IT Business Edge. He writes about wireless technology, disaster recovery/business continuity, cellular services, the Internet of Things, machine-to-machine communications and other emerging technologies and platforms. He also covers net neutrality and related regulatory issues. Weinschenk has written about the phone companies, cable operators and related companies for decades and is senior editor of Broadband Technology Report. He can be reached at cweinsch@optonline.net and via twitter at @DailyMusicBrk.