House Republicans Question Wheeler on Definitions of Broadband and Competition

Claiming that, over the past five years, the FCC “has applied inconsistent definitions and analyses” in assessing the competitive state of the broadband, wireless and multichannel video program distribution (MVPD) markets, Republican leaders in the House have asked FCC Chairman Tom Wheeler to address changes in the FCC’s definition of broadband services since 2010, why the FCC “continues to fail to make a competitive finding for the wireless market,” and why the agency “does not have a definition of competition that it applies consistently.”

In a letter delivered to Wheeler last Friday, House Energy & Commerce Committee Chairman Fred Upton (R-MI) and House Communications & Technology Subcommittee Chairman Greg Walden (R-OR) took issue with the FCC’s trend over the past five years of concluding that broadband is not being deployed in a reasonable and timely manner pursuant to Section 706 of the 1996 Telecommunications Act. Upton and Walden also observed that, during that same timeframe, the FCC has declined to make “any competitive determination at all” regarding the nation’s wireless sector despite having concluded in years past that effective competition exists in the U.S. wireless market. Meanwhile, in contrast to these trends, the lawmakers noted that the FCC had “recently adopted a presumption that cable operators are subject to effective competition.” As they spotlighted the differences between the MVPD sector—which consists of “two nationwide providers and myriad local and regional providers”—and the mobile wireless market, which encompasses “four nationwide providers, more than one hundred regional providers . . . and nonfacilities-based options that also provide retail competition,” Upton and Walden took the FCC to task for failing to “offer any data or analysis to justify treating ‘effective competition’ differently in these two communications markets.”

With respect to broadband, Upton and Walden claimed that the FCC’s findings against reasonable and timely deployment are related to the agency’s “partyline” decisions in 2010 and 2015 to change the definition of broadband and to raise “threshold speeds for what services qualify as broadband.” Reminding Wheeler that “the plain language of Section 706 clearly states that the FCC should rely on the private sector to spur deployment—and that the FCC should help incent private investment by removing barriers,” Upton and Walden asked Wheeler to respond to a series of questions by February 19 “to help us understand the FCC’s decision-making and the impact of the FCC’s shifting definitions of broadband and effective competition.” Among other things, these questions cover (1) what actions the FCC has taken or intends to take to accelerate broadband deployment in the wake of its decisions to raise broadband speed thresholds, (2) how and why the FCC determined last year that minimum speeds of 25 Mbps download/3 Mbps upload should qualify as broadband, (3) what factors led the FCC to conclude that its previous threshold of 4 Mbps/1 Mbps was insufficient, and (4) “how many choices in a given market would lead the Commission to find that mobile wireless service [are] effectively competitive?” FCC officials offered no comment.

Senate Passes Judicial Redress Bill Regarding Privacy

One week after U.S. and European Union (EU) negotiators completed work on a new “Privacy Shield” framework to govern online data exchanges between the U.S. and Europe, members of the U.S. Senate took steps Tuesday to implement the Privacy Shield by adopting legislation that extends privacy protections to digital content transmitted to the U.S. by EU citizens. Passage of the bill, known as the Judicial Redress Act, is viewed as a key element in the finalization of the Privacy Shield, which replaces the 2000 U.S.-EU Safe Harbor agreement on trans-Atlantic data flows invalidated last fall by the European Court of Justice. While the Privacy Shield depends on the enactment of U.S. legislation that guarantees the personal privacy and judicial redress rights of EU citizens whose online content is transmitted to the U.S., the pact also remains to be ratified by the EU member states. Although the privacy protections outlined in the Senate legislation mirror those in a parallel bill passed previously by the House, the Senate measure also includes an amendment specifying that passage cannot impede U.S. national security interests. As such, the Senate version of the Judicial Redress Act must be reconciled with the House bill before the legislation is signed into law.

As House Judiciary Committee member James Sensenbrenner (R-WI) proclaimed that Senate passage of the Judicial Redress Act “brings us one step closer toward completing an important agreement between the United States and our European allies,” Information Technology Industry Council President Dean Garfield lauded the Senate’s action as “a signal to our friends and allies of our government’s continued commitment to respecting personal privacy.” Stressing, however, that “Congress’s work is not done,” Gary Shapiro, the president of the Consumer Technology Association (known formerly as the Consumer Electronics Association) urged House lawmakers “to swiftly approve the amended legislation.”

Senate Panel Hears Arguments for Greater USF Wireless Broadband Outlay

Wireless and satellite industry representatives converged last Thursday at a hearing before the Senate communications subcommittee to recommend changes in the FCC’s Universal Service Fund (USF) mechanisms that would boost wireless and other alternatives to fixed wireline broadband network infrastructure in rural areas. Witnesses at the subcommittee hearing on Ensuring Intermodal USF Support for Rural America included Competitive Carriers Association (CCA) President Steve Berry, ViaSat vice president Michael Rapelyea, Jimmy Carr, a representative of the Wireless Internet Service Providers Association (WISPA), and U.S. Cellular Chairman LeRoy Carlson, Jr.

With the goal of boosting broadband deployment, the FCC adopted rules in 2011 to establish the Connect America Fund (CAF) and Mobility Fund as USF funding mechanisms for fixed and mobile broadband services, respectively. Berry lamented over continuing delays at the FCC in implementing the second phase of the Mobility Fund, which would earmark at least $500 million in ongoing support for mobile voice and broadband services. Carr also told lawmakers that, rather than mandating a framework for the next phase of the CAF “that favors one technology over another,” the FCC should allow providers to “meet a threshold level of requirements” with the best available technology, be it fixed or wireless. At the same time, Rapelyea suggested that, because the CAF and Mobility Funds are administered by the FCC’s Wireline Competition Bureau, there could be a “tilt and bias” toward wireline solutions to broadband deployment in rural areas. Agreeing that “that mindset is still getting a disproportionate amount of funds,” Senator Joe Manchin (D-WV) replied, “that’s what we’re trying to correct here.”

EC Conditionally Approves Liberty Global Purchase of Belgian Wireless Carrier

Plans by Telenet Group, a subsidiary of international cable television conglomerate Liberty Global (Liberty), to acquire Belgian mobile network operator BASE Company have been cleared by the European Commission (EC), with conditions designed to preserve competition in the Belgian wireless market. Announced in April 2015, the US$1.48 billion deal represents Liberty’s first-ever acquisition of a facilities-based wireless carrier. Owned 56.67% by Liberty, Telenet offers wireless services to 900,000 Belgian subscribers as a mobile virtual network operator (MVNO) that leases network capacity from Mobistar, Belgium’s second-largest wireless operator. The proposed merger would give Telenet control of the network and 3.3 million customers of BASE, which is owned by KPN of the Netherlands and ranks as the third-largest provider of mobile phone services in Belgium. Upon completion of the transaction, Mobistar and the merged TelenetBASE entity would each control 30% of the Belgian wireless market, with a 40% share to remain in the hands of current market leader Belgacom.

To win merger approval, Liberty has agreed to sell BASE’s share of Mobile Vikings, an MVNO that uses the BASE network, to Medialaan, a Belgian broadcaster. In addition to transferring a portion of BASE’s customer base to Medialaan, Liberty has also pledged to grant Medialaan access to the BASE mobile network on favorable terms and conditions that will enable Medialaan to establish itself and compete effectively as an MVNO. Emphasizing that, “without effective commitments, a merger of these two dynamic players would have significantly reduced competition,” EC Competition Commissioner Margrethe Vestager told reporters: “we have made sure that [Liberty’s] merger with BASE will not reverse the trend of declining mobile prices in Belgium.”

AT&T, America Movil Approved as Sole Participants in Mexican AWS Auction

Mexico’s Federal Telecommunications Institute (IFT) has approved AT&T and America Movil (AM) as the sole participants in an auction of Advanced Wireless Service (AWS) spectrum that is scheduled to commence on February 15. News of the IFT decision came as the FCC closed its filing window Wednesday for existing or prospective wireless carriers to file applications to participate in the forward phase of the upcoming incentive auction, which is slated to begin March 29 with the submission of broadcaster’s bids to surrender their 600 MHz spectrum resources voluntarily to the wireless industry.

AT&T, which is expected to be counted among the FCC incentive auction applicants, entered the Mexican wireless market last year through its acquisition of Nextel Mexico and Iusacell. By the end of 2015, AT&T had reached 44 million potential customers in Mexico through its national 4G LTE network. The company is expected to expand that network to a population of 75 million by the end of this year. AM, meanwhile, outranks AT&T and a third competitor—Telefonica S.A.—as Mexico’s largest wireless carrier with a market share of 68%, although AT&T ranks as the nation’s top holder of AWS spectrum, which is considered highly desirable for the deployment of 4G LTE wireless broadband services.