Trump Antitrust Enforcers Studying 5G Impact on Internet
2018-10-05 17:54:59.237 GMT
By Victoria Graham
(Bloomberg Law) -- The Justice Department is assessing 5G’s
impact on the broadband marketplace to determine how it changes
both the internet service and wireless markets, the head of the
Justice Department’s antitrust division told Bloomberg Law in an
interview.
Makan Delrahim’s Oct. 4 remarks come as Sprint Corp. and T-
Mobile U.S. Inc. await approval from the DOJ and the Federal
Communications Commission on their $26.5 billion merger. The
CEOs of both companies say the deal is needed to bring forth the
next generation of wireless, 5G. A key question for regulators
reviewing the deal is whether the promised 5G rollout — which
could transform wireless and internet service markets — is worth
any harm the tie-up might cause.
5G networks, carriers say, will be much faster than the
current LTE network and are ideal for emerging technologies,
like connected cars and internet-of-things devices. Delrahim
said 5G could be a competitor in the same market as fixed
broadband. “You may not need to have a home fiber, a cable line,
to be able to get internet if you can buy that from your mobile
phone provider,” Delrahim said.
“The reverse is not necessarily true. You can’t necessarily
buy cellular telephony from Comcast or Cox as a separate
network,” he said. “But we will study that.”
Currently, most cable companies that offer wireless
services operate as “mobile virtual operators,” meaning that
wireless service is leased from another larger provider, like
Verizon Communications Inc.
Delrahim wouldn’t specifically comment on the Sprint-T-
Mobile deal because the merger is still pending. The deal causes
concern from some consumer and antitrust advocates because it
would shrink the mobile wireless marketplace from four major
nationwide competitors to three. Verizon and AT&T Inc. occupy
the top two spots. T-Mobile ranks third, and Sprint is number
four.
Big Questions
Regulators are asking generally how cable companies will
impact the wireless market. This week the FCC queried several
cable providers, such as Comcast Corp. and Charter
Communications Inc., about their new mobile phone offerings as
part of the commission’s review of the Sprint-T-Mobile deal.
According to FCC filings, regulators want a better picture
of the revenues, costs, and profitability of new cable operator
wireless plans.
Such a move is a positive sign for the pending Sprint-T-
Mobile deal because it shows the FCC is interested in how cable
companies can boost the wireless market. The addition of Cox or
Charter in the wireless market could soften the blow of losing
Sprint as a competitor.
High Bar
Delrahim’s comments to Bloomberg Law build on his earlier
statement that the rollout of 5G will change the internet market
by giving customers a different way to go online aside from
cable or fiber fixed connections.
But the parties seeking a merger approval still have to
prove their case. “Efficiency” claims — i.e., that the merger’s
benefits outweigh any anticompetitive problems — must be
recognized as “merger-specific,” Delrahim said in the interview.
“That doesn’t mean that the merger will bring about
efficiency, it means that but for the merger that these
efficiencies wouldn’t be possible,” he said.
Efficiencies must also be verified, Delrahim added. “It
needs to be verifiable, so that a merger will actually do that,
rather than a pie-in-the-sky promise.”
The DOJ likely will take the lead in considering how Sprint
and T-Mobile’s tie up would impact market concentration, Matthew
Schettenhelm, a Bloomberg Intelligence analyst, said in a note.
In telecom mergers, the FCC reviews deals to determine whether
they’re in the public interest, while the DOJ analyzes them to
see how they could change competition.
Push Back
Delrahim also pushed back on an Oct. 3 New York Post story
that suggested the DOJ may investigate Alphabet Inc.’s Google
for anticompetitive concerns.
Delrahim said that the DOJ will investigate potential
anticompetitive conduct cases that the FTC declines to pursue.
However, “that doesn’t mean we actually will bring a case
in every situation,” Delrahim said. “And, if we were to bring a
case, we wouldn’t discuss it until it was public.”
Delrahim’s remarks come two days after Sen. Richard
Blumenthal (D-Conn.) asked FTC Chairman Joe Simons during an
oversight hearing if he would open an investigation into
Google’s search conduct.
Simons wouldn’t verify if the FTC was probing Google but
did say the company’s actions “could be” an antitrust violation.
“I would definitely say that they are not per se legal,” Simons
added.
To contact the reporter on this story: Victoria Graham in
Washington at vgraham@bloomberglaw.com
To contact the editor responsible for this story: Fawn
Johnson at fjohnson@bloomberglaw.com
2018-10-05 17:54:59.237 GMT
By Victoria Graham
(Bloomberg Law) -- The Justice Department is assessing 5G’s
impact on the broadband marketplace to determine how it changes
both the internet service and wireless markets, the head of the
Justice Department’s antitrust division told Bloomberg Law in an
interview.
Makan Delrahim’s Oct. 4 remarks come as Sprint Corp. and T-
Mobile U.S. Inc. await approval from the DOJ and the Federal
Communications Commission on their $26.5 billion merger. The
CEOs of both companies say the deal is needed to bring forth the
next generation of wireless, 5G. A key question for regulators
reviewing the deal is whether the promised 5G rollout — which
could transform wireless and internet service markets — is worth
any harm the tie-up might cause.
5G networks, carriers say, will be much faster than the
current LTE network and are ideal for emerging technologies,
like connected cars and internet-of-things devices. Delrahim
said 5G could be a competitor in the same market as fixed
broadband. “You may not need to have a home fiber, a cable line,
to be able to get internet if you can buy that from your mobile
phone provider,” Delrahim said.
“The reverse is not necessarily true. You can’t necessarily
buy cellular telephony from Comcast or Cox as a separate
network,” he said. “But we will study that.”
Currently, most cable companies that offer wireless
services operate as “mobile virtual operators,” meaning that
wireless service is leased from another larger provider, like
Verizon Communications Inc.
Delrahim wouldn’t specifically comment on the Sprint-T-
Mobile deal because the merger is still pending. The deal causes
concern from some consumer and antitrust advocates because it
would shrink the mobile wireless marketplace from four major
nationwide competitors to three. Verizon and AT&T Inc. occupy
the top two spots. T-Mobile ranks third, and Sprint is number
four.
Big Questions
Regulators are asking generally how cable companies will
impact the wireless market. This week the FCC queried several
cable providers, such as Comcast Corp. and Charter
Communications Inc., about their new mobile phone offerings as
part of the commission’s review of the Sprint-T-Mobile deal.
According to FCC filings, regulators want a better picture
of the revenues, costs, and profitability of new cable operator
wireless plans.
Such a move is a positive sign for the pending Sprint-T-
Mobile deal because it shows the FCC is interested in how cable
companies can boost the wireless market. The addition of Cox or
Charter in the wireless market could soften the blow of losing
Sprint as a competitor.
High Bar
Delrahim’s comments to Bloomberg Law build on his earlier
statement that the rollout of 5G will change the internet market
by giving customers a different way to go online aside from
cable or fiber fixed connections.
But the parties seeking a merger approval still have to
prove their case. “Efficiency” claims — i.e., that the merger’s
benefits outweigh any anticompetitive problems — must be
recognized as “merger-specific,” Delrahim said in the interview.
“That doesn’t mean that the merger will bring about
efficiency, it means that but for the merger that these
efficiencies wouldn’t be possible,” he said.
Efficiencies must also be verified, Delrahim added. “It
needs to be verifiable, so that a merger will actually do that,
rather than a pie-in-the-sky promise.”
The DOJ likely will take the lead in considering how Sprint
and T-Mobile’s tie up would impact market concentration, Matthew
Schettenhelm, a Bloomberg Intelligence analyst, said in a note.
In telecom mergers, the FCC reviews deals to determine whether
they’re in the public interest, while the DOJ analyzes them to
see how they could change competition.
Push Back
Delrahim also pushed back on an Oct. 3 New York Post story
that suggested the DOJ may investigate Alphabet Inc.’s Google
for anticompetitive concerns.
Delrahim said that the DOJ will investigate potential
anticompetitive conduct cases that the FTC declines to pursue.
However, “that doesn’t mean we actually will bring a case
in every situation,” Delrahim said. “And, if we were to bring a
case, we wouldn’t discuss it until it was public.”
Delrahim’s remarks come two days after Sen. Richard
Blumenthal (D-Conn.) asked FTC Chairman Joe Simons during an
oversight hearing if he would open an investigation into
Google’s search conduct.
Simons wouldn’t verify if the FTC was probing Google but
did say the company’s actions “could be” an antitrust violation.
“I would definitely say that they are not per se legal,” Simons
added.
To contact the reporter on this story: Victoria Graham in
Washington at vgraham@bloomberglaw.com
To contact the editor responsible for this story: Fawn
Johnson at fjohnson@bloomberglaw.com