United States: Telecoms

With respect to the regulation of telecommunications competition policy, 2017 is proving that elections have consequences. Confirmation of Ajit Pai as Chairman of the Federal Communications Commission (FCC) has caused a heel turn on a number of initiatives of his predecessor, Chairman Tom Wheeler. To that end, the FCC issued a Notice of Proposed Rulemaking proposing to eliminate the current internet conduct standard and seeking comment regarding whether the FCC should repeal the bright-line issues adopted in the Open Internet Order. The FCC has also taken steps to repeal restrictions on media ownership, while suggesting that further liberalisation is forthcoming. A less restrictive approach to regulation foretells a more prominent role for antitrust in competition law in this vital sector of the economy.

For decades, a fundamental goal of US telecommunications policy has been to transition from a regulated monopoly to a competitive market. Since the enforcement action of the United States Department of Justice's Antitrust Division (DOJ) against the AT&T monopoly opened long-distance markets to competition,1 antitrust enforcement has starred in this effort. In subsequent years, Congress wrote the policy of relying on market principles to promote the growth and development of the modern telecommunications services such as the internet directly into the Communications Act of 1934, 47 USC section 151, et seq (the Communications Act).2 Technology has indeed flourished, but the telecommunications market also has seen significant consolidation. US policymakers have struggled with how to ensure that network providers maintain an environment that gives consumers access to all legal content and enables innovation from application developers and content providers while encouraging network provider investment in broadband deployment. This debate has assumed the monikers of ‘net neutrality' or ‘open Internet.' While some policymakers have advocated for applying an antitrust framework exclusively to net neutrality issues,3 others have argued for the FCC to impose regulations.4 In 2015, the FCC's Open Internet Order5 chose a regulatory path and adopted rules governing the provision of both fixed and mobile broadband internet access service. The Open Internet Order adopted an internet conduct standard intended to prohibit ‘current or future practices that cause the type of harms [the Commission's] rules are intended to address.'6 In addition to this general standard, the FCC adopted ‘Clear, Bright-Line Rules' for the provision of broadband internet access services, including:

  • no blocking - to ensure consumer access to all lawful internet destinations, the FCC prohibited the blocking of lawful content, applications, services or non-harmful devices;
  • no throttling - to prevent the degradation of lawful content, the FCC prohibited the impairment of degradation of lawful content, applications, services or non-harmful devices; and
  • no paid prioritisation - to prevent preferential treatment for the content of certain providers over others, the FCC prohibited preferential traffic management practices (i) in exchange for consideration or (ii) favouring an affiliated entity.7

In the Open Internet Order, the FCC expanded its authority over the internet by making an important legal distinction. In part to improve the chances of passing judicial review, the Open Internet Order reclassified the service of broadband providers from an ‘information service' to a ‘telecommunications service'. This reclassification subjected broadband internet access services to common carrier regulation under Title II of the Communications Act and its gauntlet of statutory provisions and regulations. While the FCC exercised its authority to forbear from many of these obligations,8 the legal distinction has implications for future regulation of broadband providers. In United States Telecom Association v FCC, the DC Circuit affirmed the FCC's decision to reclassify broadband services as a ‘telecommunications service.'9

In seeking comment on the proposal to rescind key components of the Open Internet Order, the FCC issued a Notice of Proposed Rulemaking (NPRM) that assailed the Open Internet Order.10 The NPRM asserted that the Commission's reclassification of broadband internet access services from an information service to a telecommunications services contradicted a 20-year bipartisan consensus ‘to preserve the vibrant and competitive free market that presently exists for the Internet […] unfettered by Federal or State regulation.'11 After criticising the Open Internet Order's interpretation of the Communications Act, the NPRM addressed policy issues related to the Open Internet Order.12 The NPRM asserted that the increased regulatory burden and uncertainty stemming from the rules adopted under Title II has disincentivised broadband investment and ‘resulted in negative consequences for American consumers.'13 The NPRM claimed that Title II reclassification and the resulting regulatory burden has been particularly harmful to small internet providers, which has stymied efforts to deploy broadband to underserved areas.14 For these and other reasons, the NPRM proposed to restore the reclassification of the broadband internet access service and mobile broadband internet service as an information service, which would undermine the legal basis for the DC Circuit's upholding the Open Internet Order.15

The NPRM proposed to eliminate the internet conduct standard.16 Characterising the standard as vague and subject to case-by-case interpretation, the NPRM criticised its application in the now-retracted Zero Rating Report. This report had examined whether wireless carriers' practice of allowing customers to access certain conduct free of data-cap restrictions. The NPRM cited the report's inability to conclude that zero rating had caused consumer harm as an admonition that enforcement would be undertaken on a case-by-case basis to assert the standard's chilling effect on ‘innovative offerings.'17

The NPRM also sought comment regarding whether the bright-line rules governing the internet should be retained - and if the FCC had the authority to retain them. First, while stating the FCC's opposition to blocking lawful material on the internet, the NPRM sought comment on how to achieve this end given the goals of incentivising investment and proposal to reclassify internet broadband services as an ‘information service.'18 Second, the NPRM requested comment on whether the no-throttling rule was necessary. Noting that the Open Internet Order had adopted the rule to prevent anticompetitive conduct favouring affiliated content, the NPRM asked whether such a prophylactic rule was necessary in light of the antitrust laws' prohibition of anticompetitive conduct.19 Third, with respect to the no-paid-prioritisation rule, the NPRM sought comment on whether the rule prohibited potentially procompetitive business practices, stymied innovation or frustrated consumer-friendly services such as real-time remote monitoring of health information.20

The NPRM's scepticism of the Open Internet Order is apparent, but the proposed changes require a full notice-and-comment rulemaking process, which is likely to be followed by a court challenge. In the meantime, the FCC appears unlikely to undertake aggressive enforcement of the current rules of which the Chairman is sceptical. This regulatory posture increases the importance of antitrust laws and the antitrust enforcement agencies in the telecommunications sector.

While reclassification would restore jurisdiction of the FTC over certain conduct by broadband service providers, the courts may take it away

The classification of broadband internet access services as telecommunications services regulated under Title II restricted the authority of the Federal Trade Commission (FTC) to regulate certain conduct of providers of broadband internet access services. The reclassification of broadband internet service as a telecommunications service subjected such services to common carrier regulation.21 Because the common carrier exemption in section 5 of the Federal Trade Commission Act of 1914 (the FTC Act) excludes from the FTC's jurisdiction all ‘common carriers subject to the Acts that regulate commerce,' including the Communications Act,22 the Open Internet Order limited the FTC's authority with respect to those services, including with respect to its consumer protection and privacy authority.

Owing to a recent court decision, even reclassification of broadband internet service as an information service may not restore the jurisdiction of the FTC. In prior enforcement actions against telecommunications companies, the FTC has sought to cabin the common carrier exemption by arguing it is activity-based and applies only to the services provided and not status-based, which would mean that it precludes application of section 5 to any company that provides any common carrier services. In 2014, the FTC had sued AT&T alleging that the company had throttled the data service it had advertised and sold as ‘unlimited' in violation of section 5 of the FTC Act's prohibition against unfair or deceptive acts or practices.23 AT&T filed a motion to dismiss, arguing that the federal district court lacked subject matter jurisdiction. Because AT&T is a common carrier, the company argued the exemption denies the FTC regulatory authority over all of AT&T's conduct - not just conduct related to common carrier activities. The district court denied the motion to dismiss but certified the issue for immediate appeal to the Ninth Circuit.24 Before the Ninth Circuit, AT&T has maintained its position that application of the FTC Act's statutory text exempts it as a common carrier.25 The Ninth Circuit agreed with AT&T, concluding that ‘based on the language and structure of the FTC Act, […] the common carrier exception is a status-based exemption and that AT&T, as a common carrier, is not covered by section 5.'26

While the decision struck a blow to the FTC's claim of jurisdiction over the activities of common carriers, the Ninth Circuit has decided to hear the case en banc to consider the scope of the application of the common carrier exemption.27 Not only have public interest advocates supported the FTC's interpretation,28 but the FCC filed an amicus brief arguing for the activity-based interpretation.29 The FCC stated that ‘the FTC and FCC engaged in complementary regulation of' broadband internet service30 with the FTC exercising consumer protection authority and the FCC administering communications policy. The FCC's brief warned that the Ninth Circuit's position threatened to disturb the balance: ‘the fact that AT&T provides traditional common-carrier voice telephone service could potentially immunize the company from any FTC oversight of its non-common-carrier offerings, even when the FCC lacks authority over those offerings - creating a potentially substantial regulatory gap where neither the FTC nor the FCC has regulatory authority.'31 This regulatory gap could become significant, as it would apply to any company that provides common carrier services - even if the common carrier services are a minor portion of the company's services and unrelated to the conduct at issue. Foreseeing potential problems, other major common carriers have supported the FTC's activity-based approach, citing concerns that the regulatory gap identified by the FCC would create an inconsistent regime of federal, state and local regulation.32 Until this issue is resolved, the FTC's consumer protection authority over telecommunications carriers will remain in doubt. The court has scheduled oral arguments scheduled for mid-September 2017.

Antitrust enforcement in broadband internet access services

While the Open Internet Order prohibited conduct some considered anticompetitive, it also reserved a role for antitrust. The Open Internet Order stated that its regulations were ‘complementary to vigorous antitrust enforcement' and that the DOJ should continue to ‘carefully monitor, review, and where appropriate, take action against any anticompetitive mergers, acquisitions, agreements or conduct'.33 The NPRM proposes to amplify reliance on competition law principles by asking whether the existence of antitrust laws make the bright-line open internet rules unnecessary.34

Proponents of applying an antitrust framework to net neutrality have characterised the concerns of the proponents of regulation as vertical leveraging and vertical foreclosure.35 In the net neutrality context, this might manifest itself with a broadband service provider with market power imposing a vertical restraint against a rival content or application provider to gain an advantage in the content market.36 Under modern antitrust standards, a claim premised on such a theory would be difficult to prove. In the past decade, Supreme Court decisions have limited the scope of potential cases against the unilateral conduct of network providers.37 To satisfy the elements of a Sherman Act section 2 monopolisation claim,38 the plaintiff would have to show not only that the broadband service provider possessed monopoly power but that the discriminatory conduct was exclusionary and resulted in an anticompetitive effect such as driving applications from the market, preventing new entry or denying competitors minimum efficient scale.39

The broadband internet access service market does not seem conducive to such a showing. While the sales of the service are made locally to subscribers, the upstream market for applications and content is likely national, quite competitive and typified by low entry barriers and low marginal costs. Accordingly, demonstrating that any one internet service provider's vertical restraint could harm competition would require proof that denial of access to one ISP's customers was sufficient to prevent a rival from achieving minimum efficient scale or dissuade the provider from entering. With at least five major broadband internet service providers nationwide that often compete head-to-head in local markets, this would be a very difficult showing.40

To date, the incoming administration has not signalled a departure from traditional antitrust standards. In answers to questions posed by the Senate Judiciary Committee, President Donald Trump's nominee to serve as Assistant Attorney General for Antitrust, Makan Delrahim, pledged to ‘apply traditional analysis' to the media, entertainment, information and telecommunications markets that are rapidly evolving due to internet technology ‘to determine whether antitrust violations exist.'41 He further pledged to ‘investigate and vigorously enforce the antitrust laws with respect to online platforms as I would in any industry.'42 A significant vertical merger in this industry will provide an early test of the new administration's approach.

AT&T-DirecTV/Time Warner will test approach to vertical mergers

On 22 October 2016, AT&T, Inc and Time Warner, Inc announced a definitive agreement pursuant to which AT&T agreed to acquire Time Warner in a stock-and-cash transaction valued at approximately US$85 billion.43 The merger is a vertical combination between a premium network and a content provider. AT&T's assets include 134.2 million wireless subscribers, 13.1 million wireline broadband subscribers and 25 million multichannel video programming distribution (MVPD) subscribers when including subscribers to its DirecTV service.44 Time Warner provides television networks, film and TV entertainment through its most prominent outlets of HBO, CNN, TBS, TNT, Cartoon Network as well as the Warner Brothers movie studio. Both companies have initiated efforts to distribute content over-the-top (OTT) outside the traditional MVPD bundle. AT&T has introduced DirecTV Now's packages of OTT content while Time Warner has distributed some of its most valuable content through the HBO Now and HBO Go OTT services. In highlighting the benefits of the deal, the companies touted the combination of Time Warner's content and AT&T's networks to deliver access to content ‘on any device, anywhere.'45

At the federal level, the DOJ will conduct the sole review of the competition issues presented by the AT&T-DirecTV/Time Warner transaction.46 Because the transaction did not result in the transfer of an FCC licence, Chairman Pai determined that the FCC lacked jurisdiction over the transaction. While vertical mergers typically present fewer competitive concerns because they tend to generate efficiencies, the DOJ previously has taken enforcement action against vertical mergers in the video programming industry. In its review of the proposed transaction between Comcast and NBCUniversal (NBCU) unit, the DOJ concluded that the ‘transaction would allow Comcast to disadvantage its traditional competitors (direct broadcast satellite (DBS) and telephone companies […] that provide video services), as well as competing emerging online video distributors (OVDs),' resulting in the ‘loss of current and future competition' and therefore ‘lower-quality services, fewer choices, and higher prices for consumers […].'47 The DOJ's analysis focused on whether the combined firm had the ability and incentive to either withhold the valuable NBCU programming content or raise rivals' costs for such content so that competition between Comcast and its established and nascent competitors would be diminished to the detriment of consumers. The DOJ approved the transaction only after entering into a consent decree imposing behavioural remedies that, among other things, prohibited discrimination requiring that content be licensed on ‘economically equivalent' terms; required Comcast to relinquish management rights in the OTT provider, Hulu; and requiring arbitration for certain programming disputes.48

The AT&T-DirecTV/Time Warner transaction presents a similar concern about input foreclosure. Time Warner provides valuable programming and content that arguably is as ‘important for video programming distributors to compete effectively' as was the content in Comcast/NBCU.49 The Time Warner properties are premier content. TBS and TNT provide popular general entertainment and live sports programming, including NBA basketball and the NCAA men's basketball tournament. HBO is the leading premium content provider that generated US$5.9 billion in revenue for Time Warner during 2016.50 Meanwhile, CNN provides news content that is part of our national conversation. For a foreclosure strategy to be profitable, however, depriving a competitor of important content must cause more subscribers to switch to the affiliated MVPD service (here, primarily DirecTV) to compensate for the revenue lost. For programmers, the downside is potentially significant. Programmers stand to lose the licensing fees paid by MVPDs on a monthly, per-subscriber basis as well as the advertising revenue lost from each network's diminished reach. Such a strategy may prove profitable in markets where two MVPDs are particularly close competitors, and consumers are likely to switch from one to the other. Indeed, the DOJ has previously alleged that DirecTV is the DISH network's ‘closest competitor,'51 and a similar finding in the current investigation may lead the DOJ to conclude that a foreclosure strategy is profitable. The transaction might also lead to an anticompetitive effect if it gives AT&T/Time Warner the ability and incentive to charge higher per-subscriber licensing fees to competitors that become part of their rivals' marginal cost and lead to higher prices for consumers.

The AT&T-DirecTV/Time Warner transaction does present issues distinct from the Comcast/NBCU transaction. AT&T owns a major wireless network that streams OTT services for its wireless subscribers. As consumers expect to be able to access all content across all their devices, AT&T/Time Warner may have the ability and incentive to foreclose competitive offerings in a number of ways, including:

  • throttling competitor-provided content over the AT&T network, diminishing the quality of such services;
  • requiring competitors to pay for prioritisation so that their subscribers that access content using the AT&T network and raising rivals' costs; or
  • favouring Time Warner content by not counting the programming against subscriber data caps (zero rating).

To the extent the merger increases the incentive to engage in these strategies and the DOJ concludes they may lead to higher prices and diminished service quality, this may lead the DOJ to seek conditions on the merger.

There are at least two barriers for such relief. First, the absence of FCC review means that the DOJ would be required to prove its case in an antitrust action in which it would bear the burden of proof. While this procedural posture is always the case, the existence of a parallel FCC regulatory review has caused most major telecommunications transactions facing DOJ and FCC scrutiny to be abandoned prior to any trial on the merits.52 Second, the incoming Assistant Attorney General for antitrust has affirmed a strong preference for structural relief and scepticism about the enforceability of behavioural remedies.53

Sinclair/Tribune

After the FCC lifted the prohibition on communications imposed during the pendency of the broadcast incentive auction, deal-making resumed among broadcast station owners. On 8 May 2017, Sinclair Broadcast Group, Inc (Sinclair) and Tribune Media Company (Tribune) announced that they had entered into a definitive agreement under which Sinclair will acquire all of the issued and outstanding shares of Tribune for approximately US$3.9 billion.54 The combined firm (before any related divestitures) will own, operate and/or provide services to 233 television stations in 108 markets.55 In touting the advantages of the transaction, Sinclair stated that the enhanced scale would enable it to build advanced services based on the ATSC 3.0 next generation broadcast platform, which may include higher resolution pictures, enhanced mobile video and interactive services.56

The transaction presents a number of regulatory issues. In the Public Notice opening the docket to consider the transaction, the FCC noted 14 overlap markets in which both Sinclair and Tribune own a broadcast station as well as the application's statement that the ‘local television multiple ownership rules do not allow Sinclair to own both its current station(s) and the Tribune station(s).'57 The Public Notice also reported the parties' admission that the proposed transaction would result in Sinclair exceeding the national television ownership limit, which prohibits the transfer of a broadcast licence if the transfer would result in the transferee having an attributable interest in television stations that reaches greater than 39 per cent of the national audience, by 6.5 per cent.58 This calculation relies on the ‘UHF Discount' in 47 CFR section 73.3555(b)(e)(2), which provides that when calculating an interest holder's total ownership the population attributed to a UHF discount is reduced by 50 per cent. While the prior administration had abolished the UHF discount, the FCC under Chairman Pai's leadership reinstated it,59 which has been perceived as improving the prospects for the transaction.

Sinclair and Tribune must also secure approval from the DOJ for the transaction. In broadcast television transactions, the DOJ traditionally has analysed the impact on competition in markets for broadcast spot advertising to advertisers seeking to reach viewers in individual market DMAs.60 When the transaction has combined two or more stations affiliated with a major broadcast network and a combined market share in excess of 40 per cent, the DOJ has typically required the divestiture of one of the stations.61 In defining the relevant market, the DOJ has excluded possible substitutes such as syndicated advertising because it is sold on a nationwide basis;62 outdoor, print and radio advertising because it lacks the combination of moving pictures and sound;63 and cable, satellite and internet video advertising because they lack the reach of broadcast advertising.64 In a rapidly evolving video advertising marketplace, the continued vitality of this definition is increasingly dubious. Local cable and satellite advertising is sold in a bundle across interconnects of geographically complementary systems to expand its reach.65 Meanwhile, targeted video advertisements are served across OTT video services, video services such as YouTube and over social media platforms at a 30 per cent annual growth rate.66 Indeed, broadcasters have made adjustments to compete against digital advertisers by selling spots through programmatic platforms.67

In the most-recent broadcast transaction, the DOJ also defined a separate market for the licensing of broadcast television programming to MVPDs that retransmit the programming to subscribers in each DMA affected by the transaction. The DOJ alleged that one broadcaster negotiating retransmission consent on behalf of two major network affiliates in a DMA would allow the broadcaster to credibly threaten to withhold programming and therefore increase retransmission consent fees.68 This alleged competitive effect was a secondary basis for requiring a divestiture in overlap markets. The Sinclair/Tribune transaction presents this same dynamic in 10 DMAs, meaning that even if the parties persuade the DOJ of a broader market definition than broadcast spot advertising the DOJ may still challenge the transaction. Indeed, broadcasters have not been willing to challenge the DOJ's market definitions in court. As noted above, the parallel FCC review means that a defendant victory in a court challenge brought by the DOJ is insufficient to secure clearance of the larger transaction, making the decision to litigate over a handful of overlap markets a dubious proposition.

Notes

  1. United States v Western Elec. Co., 552 F. Supp. 131, 227-28, 231 (D.D.C. 1982), aff'd mem. sub nom. Maryland v United States, 460 U.S. 1001 (1983) (requiring breakup of AT&T's long-distance and local exchange carrier businesses).
  2. Communications Act § 230(b)(2) (stating that the Internet should be a ‘vibrant and competitive free market...unfettered by Federal or State regulation.').
  3. Commissioner Joshua Wright, Federal Trade Commission, Remarks at the Information Economy Project's Conference on U.S. Broadband Markets in 2013: Broadband Policy & Consumer Welfare: The Case for an Antitrust Approach to Net Neutrality Issues at 2 (19 April 2013) (‘I hope to make the case for why antitrust is particularly well suited for addressing the concerns raised in the longstanding debate surrounding net neutrality in a manner that best serves consumers, and to explain why I believe the FTC's core competencies as an antitrust and consumer protection agency make it equal to the task.'), available at: www.ftc.gov/sites/default/files/documents/public_statements/broadband-policy-consumer-welfare-case-antitrust-approach-net-neutrality-issues/130423wright_nn_posting_final.pdf.
  4. The White House, Press Release, Statement by the President on Net Neutrality (10 November 2014) (advocating for net neutrality regulation).
  5. In the Matter of Protecting and Promoting the Open Internet, Report and Order on Remand, Declaratory Ruling and Order, 30 FCC Rcd 5601 (2015) (the Open Internet Order).
  6. Open Internet Order at 135.
  7. Open Internet Order at 15-19.
  8. Open Internet Order at 37, 456-536 (forbearing from the requirement ‘to unbundle last-mile facilities, no tariffing, no rate regulation, and no cost accounting rules').
  9. 825 F.3d 674, 697-698 (D.C. Cir. 2016). Applying the deferential standard in Chevron U.S.A. Inc. v Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), the D.C. Circuit affirmed the Open Internet Order in its entirety, confirming the FCC's broad authority to regulate competition on the internet moving forward. See United States Telecom Association v FCC, 825 F.3d at 744.
  10. 32 FCC Rcd. ---, 2017 WL 2292181, paragraph 1 (2017).
  11. NPRM, 1n.1 (quoting 47 U.S.C. § 230(b)(2)).
  12. NPRM 10-43, see id. 44-48.
  13. NPRM 44-45 (citing studies of broadband investment asserting that investment has been depressed).
  14. NPRM at 48.
  15. NPRM at 55.
  16. NPRM at 72.
  17. NPRM at 74.
  18. NPRM at 81.
  19. NPRM at 83.
  20. NPRM at 85.
  21. See Open Internet Order 274 (‘[broadband internet access service' is a telecommunications service subject to Title II.... This finding both removes the common carrier limitation from the exercise of our affirmative section 706 authority and also allows us to exercise authority directly under sections 201 and 202 of the Communications Act in adopting today's rules.').
  22. See 15 U.S.C. § 45(a)(2); see also 15 U.S.C. § 44 (defining ‘Acts to regulate commerce' as including the Communications Act).
  23. FTC v AT&T Mobility LLC, Complaint, Case No. 14-CV-04785-EMC (N.D. Cal. 28 October 2014), at 43.
  24. FTC v AT&T Mobility LLC, 87 F. Supp. 3d 1087 (N.D. Cal. 2015); FTC v AT&T Mobility LLC, Order Granting Defendant's Motion to Certify, Case No. 14-CV-04785-EMC (N.D. Cal. 15 May 2015).
  25. FTC v AT&T Mobility LLC, Opening Brief, Case No. 15-16585 (9th Cir. 18 November 2015).
  26. FTC v AT&T Mobility LLC, 835 F.3d 993 (Ninth Cir. 2016).
  27. FTC v AT&T Mobility LLC, Order, Case No. 15-16585 (9th Cir. 9 May 2017).
  28. See, eg, FTC v AT&T Mobility LLC, Brief of Public Knowledge as Amicus Curiae, Case No. 15-16585 (9th Cir. 24 October 2016).
  29. See FTC v AT&T Mobility LLC, Brief of Federal Communications Commission as Amicus Curiae, Case No. 15-16585 (9th Cir. 30 May 2017).
  30. See FTC v AT&T Mobility LLC, Brief of Federal Communications Commission as Amicus Curiae, Case No. 15-16585 (9th Cir. 30 May 2017), at 3.
  31. Id. at 5.
  32. See FTC v AT&T Mobility LLC, Brief of Charter Communications, Comcast Corporation, Cox Communications, and Verizon in Support of the Federal Trade Commission, Case No. 15-16585 (9th Cir. 30 May 2017). (‘But the important regulatory goals that are at stake in this case cannot be achieved if the en banc Court accepts the panel's interpretation of section 45(a)(2), the FTC is sidelined, and any perceived regulatory gap is filled by a patchwork of well-intentioned yet inexperienced federal, state, and local agencies.')
  33. Open Internet Order at 203.
  34. NPRM at 78 (‘With the existence of antitrust regulations aimed at curbing various forms of anticompetitive conduct, such as collusion and vertical restraints under certain circumstances, we seek comment on whether these rules are unnecessary in light of these other regulatory regimes.'); see id. at 83 (asking whether antitrust law renders no-throttling rule unnecessary).
  35. Barbara van Schewick, ‘Net Neutrality and Quality of Service: What a Non-Discrimination Rule Should Look Like', 67 STAN. L. REV. 1, 16 (January 2015).
  36. Christopher S Yoo, ‘What Can Antitrust Contribute to the Network Neutrality Debate?', 1 INT'L J. COMM. 493, 502-03 (2007).
  37. See Verizon Commc'ns Inc. v Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398 (2004) (concluding that the antitrust laws did not compel incumbent network provider to share with a rivals); Pacific Bell Tel. Co. v linkLine Commc'ns, Inc., 555 U.S. 438 (2009) (concluding that when network provider has no duty to deal at the wholesale level and does not engage in predatory pricing at the retail level it has no obligation to set wholesale prices on terms that ensure its rival's profitability).
  38. Trinko, 540 U.S. at 407 (requiring proof of (i) monopoly power; and (ii) the acquisition, enhancement or maintenance of that monopoly power through exclusionary conduct).
  39. Barbara van Schewick, ‘Net Neutrality and Quality of Service: What a Non-Discrimination Rule Should Look Like', 67 STAN. L. REV. 1, 19 (January 2015).
  40. Leichtman Research Group, Press Release, 2.7 Million Added Broadband from Top Providers in 2016, (17 March 2017), available at: www.leichtmanresearch.com/press/031717release.html (reporting data that at least five broadband providers serve approximately 6 million subscribers and that none has a market share higher than 27 per cent).
  41. Senate Judiciary Committee, Questions for the Record Makan Delrahim Nominee to be Assistant Attorney General of the Antitrust Division (2017), Question 7 from Sen. Grassley, available at: www.judiciary.senate.gov/imo/media/doc/Delrahim%20Responses%20to%20QFRs.pdf.
  42. Id.
  43.  AT&T, Inc., Press Release, AT&T to Acquire Time Warner (22 October 2016), available at: http://about.att.com/story/att_to_acquire_time_warner.html (the Deal Announcement).
  44. AT&T, Inc., Q1 2017 AT&T Earnings Investor Briefing (25 April 2017), available at: www.att.com/Investor/Earnings/1q17/ib_final_1q17.pdf.
  45. Deal Announcement at 1.
  46. Thomas Gryta, ‘FCC Chairman Says Doesn't Expect Agency to Review AT&T-Time Warner Deal', Wall Street Journal (27 February 2017), available at: www.cnbc.com/2017/02/28/fcc-at-t-time-warner-deal-no-review.html.
  47. United States v Comcast Corp., Competitive Impact Statement, Case No. 1:11-cv-00106 (D.D.C. 18 January 2011) at 1.
  48. See United States v Comcast Corp., Modified Final Judgment, Case No. 1:11-cv-00106 (D.D.C. 21 August 2013).
  49. United States v Comcast Corp., Complaint, Case No. 1:11-cv-00106 (D.D.C. 18 January 2011), 49.
  50. Time Warner, Inc., Form 10K (28 April 2017), at 26.
  51. United States v Echostar Commc'ns. Corp., Complaint, Case No. 1:02CV02138 (31 October 2002), 39 (alleging that proposed merger between satellite firms substantially lessened competition because it resulted in the combination of two particularly close competitors and the only competitors in uncabled areas).
  52. See, eg, United States v WorldCom, Inc. & Sprint Corp., Complaint, Case No. 1:00-cv-01525 (D.D.C. 27 June 2000); United States v Echostar Commc'ns. Corp., et. al, Complaint, Case No. 1:02-cv-02138 (D.D.C. 31 October 2002); United States AT&T, Inc., T-Mobile USA, Inc. & Deutsche Telekom AG, Stipulation of Dismissal, Case No. 11-cv-01560 (D.D.C. 20 December 2011).
  53. Senate Judiciary Committee, Questions for the Record Makan Delrahim Nominee to be Assistant Attorney General of the Antitrust Division (2017), Question 1 from Sen. Franken, available at: www.judiciary.senate.gov/imo/media/doc/Delrahim%20Responses%20to%20QFRs.pdf (‘With respect to remedies, as a general matter, I tend to believe structural relief has many advantages over behavioral relief when antitrust law enforcers are considering whether and how to remedy a competitively problematic transaction. Evaluating the enforceability of any behavioral conditions should be an important consideration in determining the appropriateness of such a remedy.')
  54. Sinclair Broadcast Group, Inc., Press Release, Sinclair Broadcast Group to Acquire Tribune Media for Approximately $3.9 Billion (8 May 2017) (Sinclair-Tribune Press Release).
  55. Id. In broadcast transactions, geographic markets have traditionally defined as Designated Market Areas as defined by the A.C. Nielsen Company. See, eg, United States v Nexstar Broadcasting Group, Inc., et al., Complaint, Case 1:16-cv-01772-JDB (2 September 2016), 13.
  56. Sinclair-Tribune Press Release at 1.
  57. Federal Communications Commission, Public Notice, MB Docket No. 17-179 (6 July 2017) (citing 47 C.F.R. § 73.3555(b) which generally restrict the ability of one owner to have an attributable interest in more than one full-power television station in a local market).
  58. Id. (citing 47 C.F.R. § 73.3555(b)(e)(1)).
  59. In re Amendment of Section 73.3555(e) of the Commission's Rules, National Television Multiple Ownership Rule, Order on Reconsideration, MB Docket No. 13-236 (21 April 2017). The Order on Reconsideration has been challenged in the United States Court of Appeals for the District of Columbia Circuit, but the Court denied the petitioners' attempt to obtain an administrative stay. See Free Press, et al., v FCC, et al., Per Curiam Order, Case No. 17-1129 (D.C. Cir. 15 June 2017).
  60. See, eg, United States v Nexstar Broadcasting Group, Inc., et al., Complaint, Case 1:16-cv-01772-JDB (2 September 2016), 12 (Nexstar Compl.).
  61. Nexstar Compl. 23 (‘Defendants' stations accounted for at least 40 percent of such revenues, reflecting that in each of the DMA Markets, Nexstar and Media General own and operate stations that are affiliated with one of the major broadcast television networks.').
  62. Id. at 15.
  63. Id. at 17
  64. Id. at 19-20.
  65. See, eg, Comcast Spotlight, Markets (10 Jul 2017), available at: www.comcastspotlight.com/markets (describing reach of Spotlight local advertising in markets across the United States).
  66. See Andrew Meola, ‘Get ready for more internet video advertising over the next 5 years', Business Insider (16 June 2016), available at: www.businessinsider.com/get-ready-for-more-mobile-video-ads-in-the-next-five-years-2016-6 (‘Revenues from these ads will grow from $3.54 billion in 2015 to $13.3 billion in 2020, which marks a 30% compound annual growth rate (CAGR), according to PwC's annual Global Entertainment and Media Outlook report.')
  67. See eg, Videa, ‘The industry paper chase is becoming a thing of the past', (20 July 2017), www.videa.tv/about/.
  68. Nexstar Compl. at 29.

 

 

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