This Week In AT&T/T-Mo — Everyone’s Favorite Telecom Reality Show
This Week In AT&T/T-Mo — Everyone’s Favorite Telecom Reality Show
This Week In AT&T/T-Mo — Everyone’s Favorite Telecom Reality Show

    Get Involved Today

    It’s been a fun few days in AT&T/T-Mo land to
    say the least. I swear, this has become my favorite telecom reality show since Death Star Reborn: The AT&T/BellSouth Telenovella finished its series run back in December 2006.

    On Monday, we at Public Knowledge filed our opposition to
    AT&T’s request to withdraw its application to acquire DT.

    We also urged the FCC to release the proposed Hearing Designation Order even if
    it granted AT&T’s motion to withdraw. We argued that AT&T sought to
    suppress an adverse decision by exploiting a procedural loophole. Given that
    AT&T has consistently tried to control the national debate and undermine
    criticism by declaring any potentially embarrassing information “highly confidential,”
    a practice we challenged during the course of this proceeding,
    we argued that the public deserved to see the questions staff raised about
    AT&T’s job creation claims, rural broadband deployment, and other public
    interest benefits.

    You can see AT&T’s responses to our filings
    here and here.
    I do particularly want to commend Jim Ciconni’s blog post responding to our
    legal arguments
    . (As opposed to his most recent blog post responding to the staff report, about which I shall have more to say below and in a separate post).  Not all of AT&T’s success comes from lobbying muscle.
    Jim’s response is well argued legally and well written. As it happens, I
    disagree with him regarding the nature of the FCC’s discretion here (I think
    they have it) and read the case he cited, Environmental Services, LLC v. FCC as supporting FCC discretion, not dictating the outcome. Still, that’s what
    makes the legal profession fun. Different lawyers read the law differently and
    do their best to persuade the decision maker that his or her position is the
    right one.

    (Mind you, this makes the current “response” to the staff report all the more disappointing. Guys, not only did staff meticulously analyze all your claims, but they pointed out that most of your claims were contradicted by your own internal documents. I know you are not used to getting called on that sort of obvious baloney, but when you are caught with your hand in the cookie jay and crumbs on your shirt it looks silly to say that it is procedurally unfair to send you to your room without your merger.)

    Tuesday, the FCC allowed AT&T and Deutsche
    Telekom to withdraw their applications without prejudice
    At the same time, it released the proposed hearing designation order as a
    staff report
    .  Not surprisingly, I consider this a major win for the public and the right
    thing to do. AT&T has spent millions of dollars to persuade the public that
    the merger will create jobs and bring other benefits while doing no harm to
    competition, but at the same time it refuses to submit these claims to an
    evidentiary hearing and uses broad claims of confidentiality to shield
    embarrassing admissions that undercut these claims from the public. In light of
    this, I find AT&T’s protests about procedural fairness a shade hollow.

    Additionally, it is an act of profound political
    courage by Chairman Genachowski. It would have been easy to grant AT&T’s
    request and bury the report, lamenting that AT&T had defeated him with a
    procedural trick. Instead, he decided to let the public (and the district court
    considering the antitrust case) see what the agency’s expert staff thinks of
    the evidence AT&T insists supports its claims. Answer: The expert staff of
    the expert agency don’t think very much of it.

    The staff report is so good, so comprehensive, so
    wonderfully vicious and snarky while simultaneously avoiding any suggestion
    whether the existing market might
    have some problems, that it is getting a post of its own as soon as I can
    manage. Seriously, I keep hearing the opening number from “Legally Blond – the
    ” (Omigodyouguys!) every time I read it. Oh, that I have lived to see
    this day! As others have noted, it basically says: “Do you think we are stupid? Not only are your models inaccurate and results driven, but your own internal documents show you don’t believe this nonesense you expect us to swallow. Oh, and that EPI report on jobs you keep throwing around, it doesn’t say this merger will create jobs. So please stop lying your ass off about this or prove it to an administrative law judge.

    Happens Next?

    Beats the heck out of me. We are in serious terra incognito here, and everyone is
    pretty much making this up as it goes along. But let me run through a few
    basics so we are all guessing under the same set of understandings.

    Status of the Report
    : AT&T is right when they point out
    that the report does not have any legally binding authority. In this respect,
    it is like any other staff report. In legal terms, as set forth in United
    States v. Mead Corp.
    , it is simply “persuasive authority” that a court should evaluate as the opinion
    of an expert but not a determination under the authority delegated by Congress
    to which a court must show actual deference.

    on Antitrust Case
    : Assuming AT&T continues its Black
    Knight v. King Arthur
     strategy, I expect them to show up at the next status
    conference all rarin’ to go. With this Order in their back pocket, I expect DoJ
    to be equally rarin’ to go. But I do expect Judge Huvelle to press both parties
    on whether there is any point in going on, given that AT&T has withdrawn
    its application and three Commissioners made it abundantly clear that if
    AT&T and DT come back with precisely the same application, they will vote
    the hearing designation order as soon as the FCC’s ULS database confirms

    It is also entirely possible that if AT&T wants
    to buy time, either to work out some possible new deal or put pressure on DT
    to renegotiate the break up fee by dragging things out, will ask the court to
    hold the case in abeyance. And, of course, DoJ could ask for that as well –
    although I don’t see why they would at this point.

    I do not expect Judge Huvelle to make any immediate
    decision at the status hearing. She may even ask the parties to brief the
    question of whether to hold in abeyance or not. My bet is, if no one asks the
    court to hold this in abeyance, then she probably won’t do it on her own. As I
    noted last time, nothing requires companies merging to go in any particular
    order and, until AT&T and DT officially call it quits, there remains a live
    controversy for the court to decide. So might as well stick to schedule and
    decide it now rather than wait to see if the parties restructure and go back to
    the FCC with something different.

    The Eternal Rumors Around “Plan B”: At every set back,
    we see a new swirl of rumors of some sort of possible settlement or restructuring by AT&T and DT. I have
    written before here and here why I find this unlikely, and the odds don’t
    get better the more radical the restructuring that gets proposed. I shall have
    more to say about the latest rumors in a future post (I hope)

    In the meantime, we should sit back and enjoy the show. With the mainstream media finally catching on that AT&T might have stretched the truth a bit, both about the benefits of the merger and the likelihood of closing, I’m not sure how long AT&T will continue to spin this out. But not to worry, I plan to sit through ’till the final episode.