Captive Audience by Crawford Susan P

Author:Crawford, Susan P. [Crawford, Susan P.]
Language: eng
Format: mobi, epub
ISBN: 9780300153132
Publisher: Yale University Press
Published: 2013-01-08T07:00:00+00:00

11

The FCC Approves

THE COMMUNICATIONS MERGER PROCESS at the Federal Communications Commission, one content-industry employee told me, is “just awful.”1 It's a game: the companies that plan to merge know that if they can get the regulators to spend enough time considering the deal, it will probably go through. There may be a brief struggle with underfunded public-interest groups, but if no other large companies oppose the deal, the feds’ investment of time in working with the merging parties, coupled with their interest in moving on to other items on their agenda, generally overcomes any private concerns about consolidation of market power. Just two major media–telecommunications mergers have been rejected by the FCC in the twenty-first century: the proposed combination of the country's two major satellite video providers, EchoStar and DirecTV in 2002, and the proposed merger between AT&T and T-Mobile in 2011.2 Both rejections were unusual. In 2008, by contrast, the FCC approved the merger of the two providers of satellite radio, Sirius and XM, even after it became clear that the combined entity (Sirius XM) would, in fact, monopolize the satellite radio market.3

The merger-approval dance requires a series of steps. What is called a “record” of filings with the FCC is created over a period of months, amounting to hundreds of thousands of pages. Deals are struck before and during the process to make stakeholders (such as interest groups and trade associations) who might object feel that they have gotten something out of the process. In the Sirius-XM merger, for example, the Commission pointed to the new combined satellite radio company's voluntary commitment to offer lower prices for a three-year period as a public-interest benefit that would outweigh the long-term monopolistic harm generated by the transaction.4 Yet after all the filings and the hundreds of meetings, the last phase is often an unseemly scramble for concessions. “At the end,” the content-industry employee told me, “people will all be in the room trying to get something. It will matter who is in the room.”5 Mergers are fact-dependent—particular companies are involved, particular market power issues are at stake—but the final decision sets the stage for broad future policy even though only a few key actors are “in the room” at the end of the process.

For instance, after their last-minute struggles to merge at the end of 2005 with SBC and MCI, respectively, AT&T and Verizon voluntarily agreed to subject their DSL Internet access businesses to the FCC Broadband Internet Access Policy Statement, which entitles consumers to run applications and use services of their choice.6 The companies’ agreement made a nonbinding policy statement by the Commission appear suddenly binding—but for only part of the high-speed Internet access industry and not for the cable companies. The same 2005 merger approvals were used to pressure the phone companies to sell ten-dollar-a-month DSL services separately, divested from bundles of services, for two years. Commissioner Kathleen Abernathy felt that the Commission was overstepping the appropriate scope of its merger review by exacting these agreements, noting that

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