AT&T as it exists today should never have been allowed to happen and is a prime example of how poorly consumers have been protected from monopoly.
The company doing business today as AT&T was, at the time of the breakup of Ma Bell, known of as Southwestern Bell. This was the regional Baby Bell that serviced Missouri, Arkansas, Kansas, Oklahoma and Texas. Over time they bought the midwest Baby Bell Ameritech and later the west coast Pacific Telesis. This undid a major portion of the broken up local service monopoly for landline phones. Later they bought up the long distance company still dba AT&T and took the name as their own. They also bought any number of cellular phone companies up and consolidated them into Cingular before rebranding them as AT&T wireless.
So the company broken up by the Feds has been allowed to largely reconstitute itself thanks to lax anti-trust oversight. It has since bought up DIRECTV and now Time-Warner.
Americans pay among the highest prices for telephone and internet service in the developed world. They also pay relatively high prices for TV. AT&T is at the center of all of this and our courts are allowing them to get even bigger.
4
As a young lawyer in the 1980s I participated in the litigation of several cases applying the completely nonsensical antitrust "doctrines" that had evolved over the preceding 70 years (see, e.g. the Supreme Court's Kodak case of the late 1980s). Antitrust laws have already been "rethought" and we are all better off as a result. Ironically the few antitrust principles that stand up to scrutiny have essentially been enforced by the E.U. ( e.g. its examination of the predatory and outrageous practices of Microsoft and Google) not by the U.S. ever since Dick Cheney pulled the plug on the Microsoft criminal conviction in 2000. Ownership of a successful TV series (the "Sex in the City" monopoly or "Game of Thrones" monopoly) does NOT market power make. Antitrust laws need to recognize the importance of incentives for producing new such programming in the future.
Recognizing the incentives sounds like Bork's conception. But the wording of anti-trust legislation puts consumers as a priority - something which is almost entirely ignored today. Today, anti-trust rulings ignore consumers and is entirely about shifting money among corporations. It's not supposed to be about incentives.
Bork argued strongly in favor of the rule of reason in narrow vertical contexts. However, in the case of global oligopolies there is an inherent risk of abuse from sheer size and its attendant economic and political power. Perhaps a "per se rule" is appropriate in such cases. There is a wide diversity of programming from hundreds of channels of content. An entity focused on the bottom line can easily drop less profitable channels or those that run contra to the preferred political view. Updated antitrust guidelines are necessary. Perhaps even updated revised antitrust laws.
One district court ruling is not a wholesale revision of the law. As a long time litigator I know from personal experience that judges don't give a hoot what "legal experts" think.
I am no lawyer or an economist who studies these complex mergers and acquisitions. But I buy into Judge Bork arguments that companies capture market shares because they cater to consumers and adjust to keep their loyalties.
But this alarmist view of this vertical merger might be too early and not well placed - especially for this content and it's distribution.
This content being the king has been "litigated" in the past.
How can we forget that during the dot com irrational exuberance - this very company, Times Warner fell to the stratospheric values of AOL stock. The thinking was AOL - today's Google or Fakebook - had a vast audience and a voracious appetite for content.
Shrewd innovators like Ted Turner fell for this - only to lose it all.
So, while content is still a king - and I should know. I have my own travel app which has an amazing appetite for content which I alone cannot satisfy.
Despite prominence of content, debacle of AOL should be a cautionary tale for many of us.
And as a 45 year veteran in the oil patch, I can emphatically say that Mr. Rockefeller model of vertical integration in our industry has served America extremely well.
James, the U.S. Congress, which is for the most part in the pockets of America's corporate criminal organizations, is not going to "rewrite" anything.
1
Shades of the film "Demolition Man" - "After the corporate wars and consolidations, all restaurants are Taco Bells."
1
Years ago, in the 1980s, and that is years ago, I had spoken to a professor of communications about the coming telecommunications boom about to explode. Yes, even then some folks were aware of the future. Remember basic cable, it was supposed to be commercial free, along with the paperless office.
We were discussing those who would be left behind in their knowledge of the news, and what was going on in the world that might affect them directly. Yes, economic segregation was about to come to fruition. And it did.
These large corporations are eliminating competition and the FCC just like the FDA have not said one word about the high cost of either sphere. Nor have any of the three branches of government.
2
Professor Bork is Dr. Pangloss: his faith in the market mechanism and the motives of the sellers is naive. Counterpoint a quote of (the) Adam Smith from 'The Wealth of Nations', “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” Which of these apply to the current situation, i.e., AT&T/Time Warner, Comcast/NBCU, and so on.
Vertical mergers can be problematic when the vertically integrated entity distributes its own content while carrying and charging for distributing content from others. true, efficiency gains often exist but will not be passed on to consumers since these markets are so concentrated that no competitive pressure will force the vertically integrated company to pass through the gains.
in that sense, vertical mergers, especially when the vertically integrated company controls a bottleneck (i.e. IS/landline/cellular/satellite) facility, the implications extend beyond that industry, especially when the bottleneck is unregulated. for example, as journalism migrates from print to electronic means, the bottleneck owner calls balls and strikes.
that is not good for democracy. vertical integration in such an important industry has important political implications. both the market and the fourth estate rely upon the presence of many providers. concentration, as in this merger, threaten the integrity of both
3
Why isn’t antitrust law applied to these so-called integrated health care companies? They are essentially vertical mergers of health insurance and the health providers, e.g. the hospital, the labs and the medical practices, and very anti-consumer. We have one in Pacific Northwest that is growing like crazy, Providence Health, that claims to be integrating care to lower the cost of care to patients, but the savings never actually get passed on to patients. Instead they are making the health care executives richer and richer. It is a racket that should be stopped with antitrust law (or single payer would be even better). Integrated health care providers like Providence even keep their prices secret (think of the infamous Chargemaster - supposedly a trade secret) all to the disadvantage of patients. There is no transparency and incentive for the health insurance side of the business to act as a check on the provider side of the business since they are both controlled by the same entity. Providence hired an Amazon exec a few years ago to help them with their strategy, so no secret there about the goal of being a mega health care company under the guise of “innovative” “integrated” care model.
4
Properly focusing on the monopolistic elements would be a good start, but that would require us to look at areas like broadcast spectrum, right-of-way, and franchise monopolies and how they derive their market power.
But instead we tend to reward these monopolies, and then we focus anti-trust on some arbitrary definition of size or competition.
2
In addition to greater concentration and fewer competitors, we're going to have some not widely foreseen consequences from the Time Warner-AT&T merger and the media content-distributor deals that are likely to follow. One likely result is increased collection and use of personal user data harvested from consumers. Since worldwide news organizations like CNN are expensive and harder to replicate than entertainment content, another result might be a less informed public and (if we have more politically segmented news audiences) an even more polarized electorate. These will be hard to reverse be in a media, internet and telecom environment that is more oligopolistic but likely to be less regulated (at least in the short-term) and characterized by more industry influence with Congress and regulatory agencies.
1
As a long-time antitrust lawyer with almost 50 years of practice, I had a different view of how the DOJ should have attacked this merger, which never should have been permitted. To me, it's simple: the people that own the pipes shouldn't also own the water. The real danger here is that by acquiring Time Warner's content, AT&T will obtain the ability both to censor any content that it fears may adversely affect AT&T's interests, and to exclude content from other content providers from its delivery systems unless AT&T owns or otherwise controls that content.
Consumers will in fact be harmed by being deprived of access to information and content, as will other content providers, who will be deprived of access to consumers. This threatens a classic reduction of output, innovation, and consumer choice--long recognized as harms the antitrust laws were intended to prevent.
This is where the antitrust laws and the First Amendment converge, and has long been regarded as an area where rigorous antitrust enforcement is not just appropriate, but essential, beginning with the Supreme Court's decision in United States v. Associated Press in 1945.
14
That's not a bug, is a feature, just like the drive to end net neutrality.
How can billionaires get away with looting our national wealth without tighter and tighter control of all mad news outlets?
This article is light on substance and doesn't give any compelling reasons why the deal should have been blocked. Likely they brought the case in the first place because Trump hates CNN.
The government went after Microsoft for Windows and given the rise of the smartphone and table and search Windows is a sideshow now. Folks thought the AOL/Warner deal should have been blocked and look where it went.
The DOJ is getting everything wrong these days...
3
In a world where two talented people can start a billion dollar media company in their basement, paranoia about this deal is completely misplaced. Yes, government must be sure that telecom companies don’t “block” competitors on their networks. Media producers all need to all be offered identical deals for network access, no matter who owns them. This is the only type of regulation that has any justification in the context of this deal. The repeal of so- called “net-neutrality” does not negate requirements that network owners provide all content providers access to the same network bandwidth deal, if those producers are all willing to pay equivalent costs. If Netflix wants to provide its customers with reduced internet prices, they should have the right to pay AT&T the same amount that it charges its own HBO division for the same deal. So called “net neutrality” stopped AT&T from offering any deal of this type to either company, only resulting in reduced consumer options. AT&T is surrounded by competitors valued in the trillions, none of which will hesitate to call out and fight any sign of abuse. This fact and existing business laws provide the government multitude of weapons. Creating a new raft of laws designed to regulate a completely unknowable future in advance is truly a fools errand, as was the governments case.
4
Yet, the FCC gave up any regulatory or legal authority concerning any of the wrongdoing that should arise from possible stifling of competition and monopolistic policies ISP and content providers might strike up. Now we must rely on an already hamstrung FTC which covers a much vaster scope of industries and in most cases can only enforce public agreements/contracts between companies to the letter of said contract. They do not have the ability to create new rules like the FCC did as the landscape evolves and these private companies attempt to wield and expand their market power. You make these claims as if there is existing regulatory rules regarding the contracts that have and are being made between ISPs and content providers, those were essentially thrown out when the FCC made its decision. You misunderstand how content providers operate, Netflix doesn't offer reduced internet prices, they purchase access to bandwidth from ISPs to store and operate their servers as so do consumers purchase access to bandwidth to stream and download from said servers. There is no guarantee that all contracts made between ISPs and content providers are equal, no provider is going to reveal the deal they landed with an ISP nor will the ISPs be transparent towards other providers; that is such a myopic and fantastical delusion and no way represents the reality of business. With Pai's redesign of the transparency rules regarding ISPs we will see much more opaqueness concerning their practices.
1
I don't understand how the move of Netflix or Amazon into original programming "changes everything." Yes, they are producing content as well as selling it, so in that respect, vertically integrated, but neither owns the "pipes," the distribution infrastructure that is at issue in this case. On the other hand, ATT, unlike Comcast, is "wireless," not cable. Barring a major change in pricing policy, won't most users prefer to stream over a hard-wired broadband connection/wi-fi rather than wireless? Is Direct TV (owned by ATT) really an effective substitute for cable in assessing ATT's power?
2
When 5G arrives everything will change. You will be able to access the internet at wired speeds but at wireless pricing. Those companies that invested heavily into wires (the last mile) may have to write off billions. As a consumer you will be able to play the wired companies against the wireless.
Sadly the infrastructure just will not be there for decades to come as all true "5G" towers will still need to be fed by a FTTdp system and fiber has been and continues to be hamstrung by the oligopolistic ISPs still trying to maximize their profits from the existing mesh of Ethernet cabling which in many cases was publically funded.
Theories are interesting, but it's evidence that wins or loses cases.
The government's case was based on the premise that Turner's programming content was "must have" for pay TV distributors. Thus, owning that content would give AT&T economic leverage over its distributor rivals.
DOJ's economic expert, Carl Shapiro, relied heavily on a slide deck prepared for Charter, an AT&T rival, by Charter's consultant, Mr. Bewley of Altman Villandrie. Bewley went on to testify that "Charter would be better off and would save a lot of money by cancelling Turner". So much for must have!
DOJ's Delrahim brought this fiasco on himself. He could have settled this case on the same basis as Comcast-NBCU. Instead, he wanted an outright win. He got what he deserved, an outright loss.
4
I'm not convinced that anything that makes ATT bigger is a good thing.
Seriously, can anyone point to a merger involving them that led to rate reductions?
ATT has stalked me all my life, starting with acquiring the local county cable company that had been run by a local phone utility. There was an immediate price hike.
4
I need a visual flow chart to understand today’s ownership pipelines. But from a purely consumer point of view, it doesn’t matter how many competitors there are if the product from them all is the same.
Horizontally, one company gobbles up others. Vertically, those “efficiencies” eventually eliminate the inefficient (aka, small) or force others to become even more efficient- a few big, efficient giants. As one comment here noted....then they all adopt the same price structure ( program packages) to increase profits and perfect the monopoly on consumers- different programs perhaps, but the package deal format- the same. They control our ever-limited choices. In my package, I enjoy MSNBC, but also am forced to subsidize Fox News. No Choice. Religious programming I’m also forced to subsidize, as well as uncounted infomercial channels.
The monopolistic feature in this version of capitalism isn’t the merger, it’s the contracts, the terms of use. Mega farms are efficient, but when small farms can’t be, then we lose. Just as rural America is losing....just about everything that was good about them. But hey, efficiency is so much more important. Lucky for us, we won’t know what we’re losing in programming, new formats, new ideas in communications. We won’t ever see it. Efficient.
7
". . . If AT&T wants to withhold “must have” programming from a rival telecom company, or charge more for it, that company cannot readily replace it. That was the crux of the government’s case — that vertical mergers, at least in this context, can reduce competition and harm consumers.
“The big question was whether Judge Leon would accept where academics and economists have gone with this, or whether he’d stick with the old approach,” said Mr. Wu, the Columbia law professor, who is also a contributing opinion writer for The New York Times."
I side with Tim Wu, and economists looking at the danger of price gauging. Common sense to me suggests that fewer and fewer mega corporation will reduce the power of consumers against monopoly and monopsony, single seller and single buyer. Since Amazon and Facebook, for example, buy any company that rises to challenge them, they both should be broken up, starting with, a cutting off of most of their acquisitions. Amazon's cutthroat hostile take over of Diapers.com is proof that our anti-trust laws need to be modernized and strengthened, or at least, more rigorously enforced.
David Lindsay Jr.'s father worked in the anti-trust division of the US Treasury in the Eisenhower administration. David Lindsay Jr. is the author of "The Tay Son Rebellion, Historical Fiction of Eighteenth-century Vietnam," and blogs at TheTaySonRebellion.com and InconvenientNews.wordpress.com
2
I am reminded that smaller than now Wall Street Banks had to not quite legal things in order to compete. Then they had to do a few more protect the false, one might say 'fake money' they had created. They needed to grow a little more because some foreign competition involved Governments. The magic 'fake money' the created went poof. Tax payers bailed them out the merger; 'Well Because the needed to to compete with each other."
Sort of like what is happening to the Republican Leaders and American Integrity today.
Must Have, in media products, the premise for the purported change, does not really exist. Anyone that makes purchase decisions based on desire to have it right now has the mentality of a 12 year old. Game of Thrones? Please! Look on the streaming services. You cannot get away from those dragons and swords. People have realized that we just need to reset the timeline for consumption. This AT&T merger may not work. The last time a tech company merged with Time Warner’s content created a gigantic fiasco.
As noted by one commenter, the Chicago analysis provides understandable guidelines that allow businesses to operate without running to courts and bureaucrats for guidance. I suspect the so-called outcry for change is really from people seeking a way for government to influence major business decisions, purposely introducing vagueness that can only be resolved by the “steady, all-wise hand” of a Federal bureaucrat. Sure, let’s have the DOJ review all merger and acquisitions, detailing the disposition of individual units and maybe toss in a few more labor and social welfare conditions while they are at it. After all, it is common knowledge that workers in the government are truly our top experts in financial management.
2
We live in an era of Citizens United, the repeal of net neutrality, and now mega-mergers that run completely counter to the spirit of antitrust laws. While such laws and regulations do need updating, such a premise assumes a majority of lawmakers acting in good faith, for the betterment of our citizenry. Given the corrosive effects of money in politics, I see nothing that will derail the kleptocratic takeover of our government by corporations and wealthy individuals.
25
The antitrust laws were meant to protect competition and consumers. At the cost and expense of competitors.
Unfortunately economics is not a science. There are too many variables and unknowns to craft the double-blind controls that provide repeatable and predictable results. Economics is gender, color aka race, ethnicity, national origin, faith, sociology, politics, education and history plus arithmetic.
2
And your point is...?
1
This administration and the Republican Party in general couldn't care less about anti-trust or benefits to consumers. That party, right on up through the conservatives on the Supreme Court, is all about increasing the power and reach of huge corporations, not limiting them. The GOP has already shown its tue colors in this regard by gutting the Consumer Protection Financial Bureau, supporting forced arbitration clauses for employees and much much more.
This particular action likely stemmed more from Trump's personal animosity toward one of the companies involved than any sincere policy objective.
Until Democrats regain control of the government, absolutely no progress will be made on this topic.
9
Bork was wrong before and he is wrong now. He has been wrong about many things.
10
This article makes it sound like there is a growing consensus that antitrust needs to change. As an aspiring antitrust practitioner, I can tell you that these voices are still a long way from becoming mainstream. The vast majority of antitrust practitioners and law professors still favor the Chicago School (i.e. what the article calls "Bork's approach"), and with good reason. It's the only unifying theory of antitrust analysis that has proved consistent. Do we really want to re-visit pre-Chicago antitrust with its crazy inconsistencies? Listening to Liberals argue about changing antitrust is like listening to Conservatives argue against climate change: they are both settled questions. The only thing up for debate is level of enforcement.
2
As a former Bork student, I think his approach was quite appropriate … in 1967.
The issue today is whether this will lead to the creation of a handful of vertical entities, each of which is available only on an all-or-nothing basis. So in a few years you will have to purchase the full package from each provider to get access to what you want to see (or stay with one and get what they want you to see).
This is also what we can expect in private sector health care. In a few years you will have a choice among three or four providers who control insurers, hospitals, doctors, and drug companies. Your current doctor may be in entity A, while the hospital you prefer is in entity B, and the drugs you need are in entity C.
Welcome to the future.
31
What? And slow down our steep glide into Mike Judge's brilliant Idiocracy? http://seniorjunior.blogspot.com/2018/06/idiocracy-in-making-at-gobbles-...
5
The nyt has only one “liberal” business agenda
You guys are fixated on manipulating your readers and government to reduce the growth of internet based companies.
There is a weekly drum by old media to reduce the growth of Facebook and google
But the merits of this from consumer angle are nil thus far. Internet businesses have largely made media cheaper and easier to consume to the masses in revolutionary ways. The nyt would prefer the old days when a select few would have to pay large amounts of money to get print news.
Expedia has come to dominate and decimate the travel business. Amazon is creating tumult in retail. This is progress for consumers because it’s cheaper and a better more convenient product.
If cable or other old line businesses would innovate and make their product cheaper, better or more convenient then they would grow. But instead they focus on shareholders and exacting every penny from consumers who they think are trapped.
Old line businesses tend to adopt similar policies that aren’t friendly to consumers and not compete. Eg airlines: they all have similar prices and policies and act as a monopolist group. If you want to fly then consumers understand that there will be fees. All their prices and policies change as a group.
I would ask the nyt to please not flavor it’s business articles with the business agenda of the nyt. You have an agenda
1
Let's see what happens when there are only 1-2 companies controlling the online ramp and what we have access to. As it is, my cable bill goes up but my quality channels go down. I used to have MLB and National Geographic in my package. No Showtime or HBO and my bill keeps going up. 500 channels and nothing on. I'm leaning towards cancelling my TV when I retire and just have internet. No landline or cable.
16
We cut the cable and satellite cords almost 2 years ago. We now use ROKU, although we're probably going to switch to Apple TV. Regardless, we haven't missed any of the old days.
1
I can remember when the Times costs 20 cents at my SunRay drug store. Around the time of the moon landing.