A bad bargain

Republicans and Democrats have agreed to sell spectrum and use the proceeds to pay for payroll tax cuts and unemployment benefits. Sounds like a good deal all the way around, right?

No.

To begin with, spectrum is a limited resource. Once it is sold, it is gone. Payroll tax cuts and unemployment benefits are long-term recurring needs which should not be supported even in the short run by one-off sales.

It's a little like chopping up the piano for firewood — in the Spring.

Secondly, far more jobs would be created over the long term if we (we as in us, as in U.S.) held our spectrum back, or made it available for free, to anyone.

How can that be, with the auction expected to raise $25 billion?

Because innovation would follow such a major lowering of "barriers to entry" into wireless markets. Not selling spectrum to fat and entrenched oligopolies, but allowing general access to hungry and smart entrepreneurs would encourage new companies to spring up and new industries to flourish. Tremendous growth and more tax revenues in the long run would actually pay for programs that proceeds from this one time auction may offset temporarily.

But no, the fix is in. AT&T and Verizon will buy up most of the spectrum and Americans will be stuck with extortionist policies as powerful corporate "persons" profit by limiting our choice of phones, dictating usage through lawyered-up sleight-of-hand, and bundling unwanted services.

How badly does this reek? First clue is support by Oregon's Rep. Greg Walden, AT&T's main man in Washington. That right there smells like a used fish barrel.

In "The National Journal:"

The provision in the House spectrum bill is aimed at ensuring the FCC can't keep the nation's two biggest wireless providers ,Verizon Wireless and AT&T, from participating in future spectrum auctions. Energy and Commerce Communications and Technology Subcommittee Chairman Greg Walden, R-Ore., who drafted the House spectrum legislation, said last month that he doesn't think it's good public policy to exclude any market players from participating in spectrum auctions.

AT&T has echoed Walden's view on the issue. "Auctions should be open, not closed. Any qualified carrier, including those on today's letter, should have a chance to bid on any spectrum available in an auction," AT&T Senior Executive Vice President Jim Cicconi said in a statement. "This group, however, wants the FCC to stack the deck in its favor. Congress is right to resist this notion." –

By the way, Cicconi has made several vitriolic statements as AT&T blundered around trying to duopolize the mobile phone industry. Look him up. If AT&T likes a proposal, get ready to hurt.

The second clue that this is not a good deal is the standard-issue fiscal recklessness of those on the left who continue the magical thinking of getting something for nothing. "Win-win," chortles the threadbare Democrat while AT&T and its shill Verizon buy from him an apple with money they just picked from his pocket. How sad.

It's a bad bargain between the worst inclinations of both major parties.

Life blood of freedom

Have you been on the internet in the last day or two?

A trick question, right, given that you are reading this on the internet right now? But that's my point, really: "the internet." I think it needs to be capitalized. "The Internet."

Not "AT&T's Internet." Not the "Official Internet," or "NYT Internet," or "Internet by Fox." This is critically important, and under severe threat. The true power of The Internet lies in the fact that it is universal and not subject to the goals of any corporation or government.

This is about access to information. Access to the good and bad, truth and lies, accurate and false, valuable and worthless. Access that does not belong to anyone, and needs to stay that way or we lose something more valuable than can be calculated.

Threats come from Verizon, and AT&T. How? Because they own your mobile access point to the internet and want control. You can't just buy a phone and use it as you want. You must buy their phone, and they have disabled certain functions and added others you know nothing about. You can't change those functions, either, you don't have the freedom to do so.

Cable companies, too. They have limited who sees what at what speed.
The day is coming when these companies will only display search results from companies that pay a fee. Better yet, from companies they own or control. They will display news only from their favored political party.

Thomas Jefferson advocated for freedom of the press even as he was being savaged by the merciless press of his time. That is why we have the First Amendment. In our electronic age, that freedom is threatened both by governments and corporations, by those who would limit our access to information as if in an earlier age they wished to control which newspapers could be published, which books would be read, who spoke to whom.

Access needs champions, in Congress and in the streets, Republican and Democrat, willing to advocate for freedom, freedom of information, internet freedom and freedom of access.


If "The Internet" is fragmented into Verizon's Internet, Comcast's Internet, Democrats Internet, or access is controlled, there is less hope for emergence of "truth." This is the weapon of dictators and oligarchs around the world and has been long before the days of Nazi and Communist propaganda machines.

Who controls "truth?" Almost by definition, no one, truth must fight falsehood everywhere. That is how it should be. But if the battlefield is fragmented, it takes truth much longer to win.

That is why there must be "The Internet," and equal access must be guaranteed. Then information will fulfill the powerful role Jefferson envisioned, his "market place of ideas" will eventually reveal truth, bad ideas will fade (to be replaced by others), good ideas will endure. It is crucial for democracy as well as a free market economy.

This is not about providing a certain service, it is about inalienable rights. This is not about buying ice cream, it is about finding water. There is a role for government in protecting rights, and this is one of the most fundamental of rights. It is the well-spring of our freedoms.

Threats to the internet are threats to our internet, broadcast over our spectrum, by companies under supervision by our government.

Don't tread on me.

Protect the free market! Block AT&T!

The government is soon going to authorize the sale of some more of our mobile phone spectrum.

Should the goal of the auction be:

(1) Get as much as possible from that auction, regardless of who buys the spectrum?
(2) Manage the sale for the long term good of consumers?
(3) Get government off the back of god-fearing, job-creating businessmen?

Okay, okay, you're right. It was a trick question.

Next month, bills will be introduced in Congress that may include language that allows the FCC to structure who can bid on the spectrum. The "Government is bad! Always bad!" crowd will of course scream "Freedom! Let capitalism work!"

Except we know that market capitalism can harm market capitalism. Where limited resources are concerned, like oil or railroads or tobacco in the 19th century when the Sherman Anti-trust act was enforced, sometimes the government has to protect market capitalism from itself.

In the 1890s, the Rockefellers crushed many companies and put many people out of work with their money. The same threat exists today. We need competition in the mobile phone industry and there is national interest in seeing that competition can flourish.

Fighting monopoly is fighting for free market. Fighting concentration of power is fighting for small businesses and is pro-business.

This is even more true of the mobile industry than it was with oil. This is our spectrum. And if We, The People decide to foster competition and protect free markets by selling that spectrum to competitors of AT&T and Verizon, that is advocating for the free market, it is not "socialism," despite what the fear mongers on the right, the pro-monopolists and their lackeys like Rep. Greg Walden, would have you believe.

Promoting free enterprise in this case means potentially limiting who can bid on the spectrum and potentially taking a loss in the short run so that competition can, in the long run, keep prices competitive.

(By the way, I almost included the Boston Tea Party as an example. I'll submit, just for the joy of it, that the East India Company was in collusion with the British Crown. It was their tea! That's the history of influence of business on government. If the "Tea Party" wanted to be true to its namesake, it would join the Occupy Wall Street folks and demand that corporate scofflaws go to jail.

Big pharma, Goldman Sachs, the insurers, those are the East India Company of today. Don't tread on me!

At some point, some smart grad student at Berkeley or Stanford or the University of Chicago or Wharton will do a study on the minimum number of competitors required for a market to remain healthy, and how barriers to entry into that market affect that number.

My theory is that markets with higher barriers to entry require more existing competitors to be healthy, because companies outside a market that see the attractive profits will find it more difficult get in.

I will join the right wing in saying the Supreme Court has failed America. The overturning of campaign finance laws was to allow the East India Company to marry into the royal family. Talk about protecting an institution from incest! )

Verizon, on the other hand...

... just bought about $4 billion worth of spectrum from Comcast.

Why do I like this deal, after showering AT&T's takeover over of T-Mobile with so much bile?

Because Verizon's deal brings new, unused spectrum to the market, actually doing what AT&T falsely claimed their deal with T-Mobile would accomplish. Because the Verizon deal still leaves the competitors on the field, especially the scrappy one (T-Mob) known for good prices and good deals. Because, in the final look, Verizon isn't AT&T.

Did you note last week that Verizon was the one major cell phone provider that did not use the sneaky software from Carrier IQ that knows more (a lot more) about you than your mother?

There is an obvious difference between Verizon and AT&T. One is good, the other is ... well, not so good. The corporate cultures seem vastly different. It's like going into a restaurant where staff is smiling and professional and eager, versus going into one where the first words you hear are "We close in fifteen minutes." Don't you just wonder what they're doing to your burger back there in the kitchen?

AT&T just seems to be in it for themselves, ya know?

We post this to let our conservative friends understand that we are not anti-business. We like business, and we like functioning markets, where they exist. Which does not include the U.S. pharmaceutical industry or anything that travels in the same wheel rut as AT&T.

That is not to say Verizon only wears a white hat. They were astoundingly silent about the AT&T and T-Mobile deal. Verizon's execs knew even if AT&T succeeded in swallowing T-Mobile and moving past Verizon to become the largest cell provider, even being second largest would increase Verizon's bottom line in a less competitive market. That's how oligopolies work.

But being silent is not the same as openly trying to undermine market competition. Verizon bought $4 billion of spectrum and will bring it online, while AT&T was taking a $4 billion charge for likely blowing a deal with T-Mobile that was a blatant attempt to subvert market dynamics so beloved of the right wing if in name only.

AT&T is anti-business, except their own. Rep. Greg Walden is anti-business,too, except for AT&T's business which Walden conducts quite well as a mole for AT&T at the government level. He is not working for small Oregon companies that need a functioning market in which to buy phone service. But then, we don't give Rep. Walden nearly as much money as he gets from AT&T.

Verizon is the nation's leader in customer service, the leader in basic service, the leader in high speed service, and it appears that lead will continue with this recent purchase of spectrum and marketing deals with cable companies.

Verizon is complicit

In a story (read it here) on May 24, 2011 in the Wall Street Journal, under the headline "These Companies Hate the AT&T/T-Mobile Merger," it was noted by reporter Shira Ovide that Verizon, which would drop from largest to second largest wireless company after AT&T swallows T-Mobile, has not come out against the proposed merger.

Duh.

Ovide notes the Verizon CEO is saying only “We’re not going to get distracted by this.”

Ovide refers to analysts who opine that the reason for Verizon's calm reaction is that "Verizon Wireless ... could get a lift if AT&T strips low-cost rival T-Mobile from the market. At the same time, AT&T could be distracted for a year or more securing all the necessary government clearances for the deal, and then integrating T-Mobile into the fold. The lull might help Verizon poach subscribers from its biggest competitor."

Sometimes it is hard to believe what passes for journalism. Distracted? Please.

One would think that a reporter from the Wall Street Journal would understand the value of a duopoly (like a monopoly, but with two) to one of the duopolists. In other words, if AT&T becomes the only GSM wireless company, and is able to hammer suppliers and gouge consumers, then Verizon, as by far the largest of the CDMA wireless group, would also benefit. Even without direct collusion.

Markets require competition to work effectively. AT&T and Verizon are doing everything they can in the media, in Texas, and before the U.S. Senate to cloud the issues.

"We don't know if the market is best served by three or four carriers," burbles one wireless exec. "If we don't have more spectrum, ambulances will be unreachable," growls another from AT&T.

Nonsense. This merger is about AT&T sucking up spectrum now, dollars and dollars later, from a distortion of a market that rides on licenses to use airways owned … by… us.

We need more choices of which carrier to use, not fewer choices. We need three or four GSM carriers, and three or four CDMA carriers, for there to be a truly competitive "free" market. There is less competition if there are only three, if Sprint hobbles along as a distant 3rd, or two if Verizon sucks up Sprint.

Verizon is sanguine about the AT&T and T-Mobile merger because Verizon executives know that even as number two, they will still get a larger slice of porker pie than they do now, even if it is not the largest one on the table.

The U.S. government should protect consumers and small business and refuse to go along with this merger. Communication is the economy's lifeblood now more than ever. Republicans should live up to their ideals of doing what is good for business, and that does not mean just doing good for one of their largest political donors. Where the hell is the U.S. Chamber of Commerce?

AT&T was broken up once before. We should look at this power grab as a reason to consider doing it again.