Will Lifeline guarantee high-speed Internet access for all?

Life, liberty and high-speed Internet access for all?

Under the Lifeline program, low-income Americans were guaranteed affordable access to basic phone services for the last 25 years. Soon, the program might also help subsidize their access to high-speed Internet as well.

On Tuesday, the Federal Communications Commission, which manages Lifeline, said it will spend $25 million on a pilot program to examine what it would take to ensure low-income Americans have affordable access to broadband Internet.

"About 32% of the country doesn't have broadband at home and that number is double for low-income families," said Mark Wigfield, a spokesman for the FCC. "Back in 1985 when the Lifeline program first started phone service was considered essential, and it still is, but broadband is taking over."

The announcement of the broadband pilot program was folded into a larger announcement by the FCC that it will overhaul Lifeline in order to address redundancies and waste in the program that the FCC said should result in up to $2 billion in savings over the next three years. This will be welcome news to Americans who help pay for the program via a Universal Service charge of $2.25 or $2.50 that appears each month on their phone bill.

Reaction to the announcement was mixed.

Rep. Anna G. Eshoo (D-Palo Alto), a member of the Communications and Technology Subcommittee, came out in strong support."The establishment of a broadband adoption pilot program will help close our nation’s digital divide, while addressing a key recommendation of the FCC’s National Broadband Plan," she said in a statement.

But Larry Downes, a Senior Adjunct Fellow at the think tank TechFreedom, was less positive. "While we share the goal of making broadband Internet available to all Americans, we're troubled by the Commission’s continued determination to regulate without authority from Congress," he said in a statement.

He added that he thinks it is imprudent to spend money on a pilot before it's clear how much will actually be saved from the reforms.

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Photo: Is broadband access for everyone the American way? Credit: Paul Sancya /Associated Press

Verizon abandons $2 'convenience fee' after consumer backlash

Verizon Wireless announced on Friday, after one day of consumer backlash and interest from a federal regulator, that it has decided to scrap a $2 "convenience fee" for credit and debit payments made either online or by phone.

"At Verizon, we take great care to listen to our customers," said Dan Mead, Verizon Wireless' president and CEO, in a statement. "Based on their input, we believe the best path forward is to encourage customers to take advantage of the best and most efficient options, eliminating the need to institute the fee at this time."

The decision to not implement the controversial fee came down "in response to customer feedback about the plan, which was designed to improve the efficiency of those transactions," Verizon said in the statement.

The $2 fee was supposed to go into effect on Jan. 15 and be charged to customers each time they paid their bills with a credit or debit card -- unless that customer was enrolled in automatic bill-paying options that can charge credit and debit cards or withdraw money directly from bank accounts.

The decision also came after the Federal Communications Commission said on Friday that it would look into the charge as well as an online petition at the website Change.org that contended the fee was unnecessary.

When Verizon introduced the fee on Thursday, it said it was doing so to help cover the costs of processing fees taken from credit and debit payments by credit card companies.

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Photo:  A Verizon Wireless store in Portland, Ore.  Credit: Don Ryan/Associated Press

Verizon's $2 'convenience fee' sparks online petition, FCC interest

Verizon Wireless' new $2 "payment convenience fee" for online credit and debit payments is sparking a consumer backlash and a some scrutiny from the Federal Communications Commission.

Since the fee was announced Thursday, customers of the nation's largest wireless carrier have complained about the charge on Twitter, in Facebook groups and pages and Google+ too. The $2 charge is set to go into effect starting Jan. 15 for Verizon users not enrolled in automatic bill pay options who pay their bills online with a credit or debit card.

On Friday morning, the FCC said in a statement that, "On behalf of American consumers, we're concerned about Verizon's actions and are looking into the matter."

Molly Katchpole, a Washington activist and Verizon subscriber, started a petition at the online activism site Change.org calling for Verizon to scrap the $2 fee.

The Change.org petition, launched late Thursday, is a tactic Katchpole used earlier this year when Bank of America attempted to institute a similar $5 fee for those who use its debit cards for purchases.

The Bank of America fee promoted a national outcry and eventually the bank abandoned the fee before it could go into effect.

Time magazine identified Katchpole's petition as one of the many instrumental actions that defeated the Bank of America fee and the activist is hoping to have similar success this time around with Verizon. As of the middle of the day on Friday, the petition had more than 37,000 signatures.

"Verizon just announced a new $2 fee for paying your bills online. Really. Even though paying via internet is fully automated," Katchpole's petition reads. "It's not just about the money (though if you're like me, you don't have extra cash to be sending to a giant phone company in order to pay your own bills.) It's that Verizon thinks it can do anything to its customers, and that we're powerless to stop it. (Spoiler alert: We're not.)"

Verizon, which has more than 90 million customers, said it was introducing the fee to help make up for the frees credit card companies take when they process payments.

In 2010, Verizon Communications, Verizon Wireless' parent company, reported a profit of $10.2 billion, down from $11.6 billion in 2009. Last quarter, Verizon doubled its profit from a year earlier to $1.38 billion.

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Photo: A sign at a Verizon store in New York. Credit: Seth Wenig / Associated Press

AT&T closes $1.9-billion purchase of Qualcomm spectrum

AT&T Inc. has officially completed its $1.9-billion purchase of wireless spectrum licenses owned by San Diego-based Qualcomm Inc.

The deal gives AT&T the ability to offer service on wireless spectrum that covers an area of more than 300 million people nationwide, with more than 70 million of them in five of the top 15 metropolitan areas, such as Los Angeles, San Francisco, New York, Boston and Philadelphia.

The nation's second-largest wireless carrier announced the closure of the purchase Tuesday in a short statement on its website after the Federal Communications Commission approved the purchase Friday.

The FCC's sign-off on the purchase followed AT&T's decision last week to drop its attempted $39-billion takeover of T-Mobile USA, the fourth-largest wireless carrier in the U.S.

Until the AT&T backed off its bid to buy T-Mobile, the FCC was reviewing both the spectrum deal and the takeover together -- a move that was expected to push any possible approval into next year.

AT&T's new wireless licenses applies to the 700 MHz spectrum, which the FCC described in its approval of the deal as "underutilized" by the telecommunications industry.

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Photo credit: Lisa Poole / Associated Press

FCC approves AT&T's $1.9-billion purchase of Qualcomm spectrum

The Federal Communications Commission has approved a $1.9-billion AT&T purchase of wireless spectrum licenses owned by San Diego-based Qualcomm Inc.

The purchase gives AT&T control over licenses that, according to the FCC, "cover more than 300 million people nationwide, including more than 70 million people in five of the top 15 metropolitan areas (New York, Boston, Philadelphia, Los Angeles and San Francisco)."

The FCC's decision on the spectrum deal was set to be delayed into next year as the regulatory agency was reviewing both AT&T's proposed Qualcomm purchase and the proposed $39-billion takeover of T-Mobile USA together -- that was until AT&T dropped its T-Mobile plans on Monday.

In its approval of the Qualcomm deal, the FCC stated Thursday that AT&T cannot use the spectrum in a way that would negatively impact other carriers using or roaming on nearby wireless airwaves.

The FCC said that, given that AT&T is the largest phone company in the U.S. and the second-largest mobile carrier, concerns of competitive harm were looked at, but any resulting harm wouldn't "outweigh the public interest benefits of this transaction," the FCC said in the order.

In fact, the FCC said it hopes the purchase will prod AT&T and its rivals to use the "underutilized unpaired 700 MHz spectrum" for mobile service, "thereby supporting our goal of expanding mobile broadband deployment throughout the country."

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Skeptical federal judge calls AT&T 'presumptuous' [TRANSCRIPT]

Today a government suit to block AT&T's $39-billion acquisition of T-Mobile was delayed until mid-January, with a federal judge asking the companies to file a brief "describing the status of their proposed transaction, including discussion of whether they intend to proceed with the transaction at issue in this litigation."

The delay was the newest obstacle to AT&T's embattled merger plans.  On Friday, federal U.S. District Judge Ellen Huvelle grilled the company's lawyers over whether the suit was wasting the court's time and taxpayer money. Of concern is the fading likelihood that the planned acquisition will gain legal and regulatory clearance by next September, when the deal contractually expires. At that point, AT&T would be obligated to pay T-Mobile a $4-billion breakup fee.

The transcript of Friday's hearing makes clear the judge's skepticism -- and even frustration -- as she repeatedly refers to the strategy of AT&T's lawyers as "presumptuous."  At the core of the issue is that, in order to complete its deal, AT&T must not only win or settle the Justice Department's antitrust case, but must also gain approval from the Federal Communications Commission, which controls national spectrum licenses. 

But AT&T withdrew its clearance application from the FCC last month.  So, Huvelle repeatedly asks, why should the case proceed in her courtroom if the company is no longer trying to get the necessary FCC approval, especially as the clock ticks closer to September?

Huvelle appears particularly piqued by the idea that AT&T is asking the court to hurry up so the company can use her ruling as leverage to get the FCC's clearance. 

The following are edited excerpts from the hearing, the entirety of which is transcribed here.

The judge's concerns

Judge Huvelle:  ...I have no assurance that you're gonna proceed with the FCC in any way to get this resolved in a timely manner. So to ask me to issue an opinion with enough time to allow for an appeal for the FCC, which we don't know what their timetable is -- you've had no discussion, I'm sure, or assurances from them, I suspect, unless you want to tell me otherwise. If I had assurances, I might be willing.

...But it's a bit presumptuous to say nothing has changed [since the withdrawal of the FCC application] and you should just keep doing what we convinced you to do over the objection of certainly the Department of Justice without me knowing for sure that the deal will be the deal. I mean, you could change the deal in a month and everybody's time will be wasted, including the third party [Sprint and others, which have also filed their own suit against the acquisition.].

...We don't have any confidence that we are spending the time and effort and the taxpayers' money as well as the money of these other parties, we have no confidence that we're not being spun.

AT&T's argument: the trial will help with FCC approval

AT&T's counsel: ...By having their complaint out there and unresolved, [the Justice Department is] having a pocket veto over our deal. In other words, if this trial gets pushed back, if all the things get pushed back, we don't make thresholds, [the] deal has to blow up. We have no alternative. Yet the government has never proved a single thing in court.

...With all respect, Your Honor, I understand Your Honor's concerns, but from the perspective of having a committed transaction with contractually set dates, we've all gated our expectations. We are moving forward with trial. We're making progress, and it will be of assistance to the FCC to have a decided case on the antitrust issues. It just will. And it will put us in a position --

Judge Huvelle: Nobody there said that to me. Have they said that to you?

AT&T's counsel: Pardon me, Your Honor?

Judge Huvelle: I said has anyone said that to you? Honestly. I mean, you think it will if you win, but --  

AT&T's counsel: Many people have that said to me.

Judge Huvelle: From the FCC?

AT&T: I have not spoken to the FCC, Your Honor. But, truthfully, it only makes sense that
if this court has decided the antitrust issues, the same government will be bound by those decisions as to the antitrust issues. There just doesn't seem to be -- I don't think that's a live issue.

"Use" the ruling to sway the FCC?

AT&T's counsel: We need to get those issues clear, and we need to move with the FCC as well. But the fact that we have chosen not to have parallel proceedings, but rather have chosen as a matter of -- pardon me. To essentially get those issues resolved here and use that --

Judge Huvelle: Yeah, use it. I understand that.

AT&T's counsel: -- with the FCC, but to have this court's guidance. And we think with this court's --

Judge Huvelle: You could have the FCC's guidance because they have a broader jurisdiction than this  court. And they could go first, and it would certainly be very persuasive, if not, according to you, collateral estoppel [a legal basis to avoid trying the same issues twice] because it's the government. So if you wanted the FCC, you win the whole nine yards, whereas here you don't make nine yards no matter what. I'm just one person along the way that you would like to have a decision to use. I agree.

AT&T's counsel: Not to use, to have our day in court.

AT&T's "self-made" problem?

AT&T's counsel: Your Honor, all that's happened with the FCC --

Judge Huvelle: I know. I know what's happened.

AT&T's counsel: -- is strategy for how to gain approval.

Judge Huvelle: I know. But don't you understand from those of us who are not one of the parties, that this "strategy" has a slight aura of using -- I think is the word that you used -- the court to some extent, and the third parties and the Justice Department?

Judge Huvelle: Your problem is also self-made with the FCC.

AT&T's counsel: No, Your Honor, we don't think it's self-made because we have to get this trial done. Forget about the FCC for a minute.

Judge Huvelle: That's what you may have done. I'm not doing that. I'm sorry.

'No reason' to keep going

Justice Department attorney Joseph Wayland: ... We filed [our lawsuit] in August thinking that we needed to do so because the FCC might complete its process, and we needed to be ready.

And that's what Section 7 [ an antitrust law] does. It gives us a right to block. We don't have to approve. The court doesn't have to approve. It's simply a blocking statute. We invoke it when we think we need to stop a transaction.

Right now, Your Honor, there's absolutely no reason to invoke it because this transaction cannot close, and they cannot get it closed until they file with the FCC.

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Image: AT&T and T-Mobile phones at a RadioShack in Los Angeles. Credit: Danny Moloshok / Reuters

FCC allows AT&T to withdraw application to purchase T-Mobile

 

The Federal Communications Commission agreed to allow AT&T Inc. to withdraw its application for approval of its proposed $39-billion purchase of T-Mobile USA Inc.

The agency also potentially dealt a further blow to the teetering telecommunications deal by announcing Tuesday it would release a report detailing its staff findings that the purchase was not in the public interest.

FCC officials said the 109-page report, which would be posted on the FCC's website later today, found that the combination of two of the nation's largest wireless providers -- AT&T has the second-most subscribers and T-Mobile is fourth -- would harm competition and despite the company's public claims would do little to expand high-speed Internet access and would not lead to more jobs.

The FCC staff analysis, which took six months and was based on more than 200,000 pages of documents, found that AT&T's acquisition of T-Mobile would lead to job losses, agency officials said. 

FCC Chairman Julius Genachowski signaled last week he opposed the deal when he moved to seek a hearing and review by an administrative law judge -- the steps the agency takes to oppose a transaction.

Afterward, AT&T and T-Mobile's parent company, Deutsche Telekom AG of Germany, said Thursday they intended to withdraw their FCC application to focus on winning an antitrust suit filed by the Justice Department to block the deal. 

Both the FCC and the Justice Department must approve the purchase. FCC officials said they will provide their staff analysis to Justice Department officials. If AT&T wins the suit or reaches a settlement, it can reapply for FCC approval. But the usual six-month review would start over from the beginning, FCC officials said.

AT&T objected to the planned release of the FCC report, which it said it has not had the opportunity to rebut.

"This report is not an order of the FCC and has never been voted on," said Jim Cicconi, AT&T's senior executive vice president for external and legislative affairs. "It is simply a staff draft that raises questions of fact that were to be addressed in an administrative hearing, a hearing which will not now take place. It has no force or effect under law, which raises questions as to why the FCC would choose to release it." 

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Photo: AT&T offices in Detroit. Credit: Associated Press

 

AT&T, T-Mobile temporarily withdraw bid for FCC merger approval

Acknowledging the mounting difficulties in obtaining government consent for their merger, AT&T Inc. and the parent company of T-Mobile USA Inc. said Thursday they had temporarily withdrawn their application to the Federal Communications Commission and will focus first on battling the Justice Department for approval of the deal.

AT&T also said it expected to take a pretax accounting charge of $4 billion in the fourth quarter of this  year "to reflect the potential breakup fees" it must pay to T-Mobile parent Deutsche Telekom AG of Germany if the deal doesn't get regulatory approval.

The moves highlight the growing unlikelihood the huge telecommunications deal ever will be consummated.

The announcements came after FCC Chairman Julius Genachowski on Tuesday came out in opposition to AT&T's proposed $39-billion purchase of T-Mobile, moving to refer the deal to an administrative law judge for a hearing that could sink its approval.

Facing a lengthy delay and the possible release at such a hearing of confidential information it had provided to the FCC, the two companies said they had electronically withdrawn their FCC application late Wednesday.

AT&T and Deutsche Telekom "are continuing to pursue the sale of Deutsche Telekom’s U.S. wireless assets to AT&T," the companies said in a statement posted on AT&T's website Thursday. But given the FCC move, the companies said they would "focus their continuing efforts on obtaining antitrust clearance for the transaction from the Department of Justice either through the litigation pending before the United States District Court for the District of Columbia ... or alternate means."

In August, the Justice Department filed a civil antitrust lawsuit seeking to block the deal, arguing it would harm competition in the wireless market. AT&T is second in subscribers only to Verizon Wireless, and the Justice Department said the acquisition of the fourth-largest carrier, T-Mobile, would lead to higher prices and fewer choices for consumers.

If AT&T and Deutsche Telekom win the lawsuit, or obtain approval through other means such as a settlement, they said they would then file again with the FCC "as soon as practical." Both the Justice Department and the FCC must OK the deal.

Gigi B. Sohn, president of advocacy group Public Knowledge, which opposes the deal, said the companies withdrew their FCC application to avoid disclosing just how bad the deal would be for consumers.

"AT&T's move will, for the moment, prevent the FCC from making public its many, well-documented findings that the deal is not in the public interest and will prevent the judge overseeing the antitrust lawsuit from seeing the FCC's conclusions," Sohn said.

She and Andrew Jay Schwartzman, policy director of nonprofit law firm Media Access Project, said AT&T should simply give up on its proposed acquisition of T-Mobile.

"This turkey is too big to be hidden by releasing it on Thanksgiving," Schwartzman said of the Thanksgiving Day announcement by the companies. "It is an act of desperation which will only hurt their shareholders by delaying the inevitable. It is time for vainglorious managers at AT&T to accept that there is no way that this deal can obtain approval of the FCC and the courts."

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Photo: Sign at AT&T company store in Chicago. Credit: Bloomberg.

Senate rejects attempt to overturn FCC's net neutrality rules

The Senate on Thursday voted to keep in place the Federal Communications Commission's controversial rules aimed at preserving open Internet access.

Republicans had pushed to overturn the so-called net neutrality rules, and a resolution to do so failed 52-46 in the Democratic-controlled Senate. The White House this week had threatened to veto the action if the Senate approved it.

The vote ends a months-long attempt by opponents of the rules to get them wiped out. In April, the Republican-controlled House voted 240-179 in favor of a similar resolution of disapproval.

Nearly all Republicans oppose the new rules, arguing the FCC overstepped its authority and that regulation of the Internet will stifle its growth.

"Over the past 20 years, the Internet has grown and flourished without burdensome regulations from Washington," said Sen. Kay Bailey Hutchison (R-Texas), who led the push in the Senate to overturn the rules. "If we’re going to keep an open and free Internet and keep the jobs it spawns, we should reject the FCC regulation on net neutrality."

Many large telecommunications companies have opposed the FCC's rules, including Verizon Communications Inc., which has filed suit to stop them.

Most Democrats, including Obama, argue that the regulations are needed to preserve an open Internet as the telecommunications industry becomes more consolidated.

"Net neutrality is not about a government takeover of the Internet, and it is not about changing anything," said Sen. Al Franken (D-Minn.) "Net neutrality and the rules the FCC passed are about keeping the Internet the way it is today and the way it has always been."

Public interest groups and Internet advocates have worried for years that providers of Internet service, such as Verizon, Time Warner Cable Inc., and AT&T Inc. might try to slow down access to online services, such as Netflix or Skype, that compete with their own offerings, or charge premiums to some sites for faster delivery of their content.

Major online companies such as Google Inc. have strongly supported net neutrality rules.

The Democratic controlled FCC voted 3-2 along party lines in December to adopt regulations that prohibit telecommunications companies from favoring their online services over those of competitors. The rules, which apply to wired and wireless services, forbid companies from blocking access by their customers to any legal content, applications or services.

The FCC also prohibited companies that provide wired Internet service from "unreasonable discrimination" in their treatment of access to content and services. The tougher requirement was placed on wired services because there are fewer providers than in the wireless industry.

Obama has been a strong supporter of net neutrality. He made it part of his 2008 campaign platform and appointed Julius Genachowski as FCC chairman. Genachowski pushed the rules into place.

Obama praised the FCC for enacting the rules last year, and the White House this week described them as "an enforceable, effective but flexible policy for keep the Internet free and open."

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FCC approves broadband Internet plan, promises 500,000 jobs

The Federal Communications Commission has approved a plan to expand high-speed Internet access in parts of the U.S. that currently have slower connections, such as rural areas.

The FCC, in a statement announcing its plans, said it has enacted "the most significant policy step ever taken to connect all Americans to high-speed Internet, wherever they live."

The new broadband internet access plan will come in the form of changes to the FCC's existing Universal Service Fund and intercarrier compensation systems.

"Those systems have been widely viewed as broken, and long overdue for reform," the commission said. "Efforts to expand high-speed Internet to rural America over the next six years will increase economic growth by $50 billion over that period" according to FCC estimates.

The reforms will result in the creation of a new Connect America Fund that has an annual budget of no more than $4.5 billion and will create hundreds of thousands of jobs, the FCC said.

"As a result, today's action has the potential to be one of the biggest job creators in rural America in decades," the agency said. "The FCC estimates that approximately 500,000 jobs will be created over the next six years by expanding high-speed Internet access to over 7 million Americans living in rural areas."

The broadband plan will result in higher consumer costs, the FCC warned, though it offered estimates that said the price increases would be "on average, an additional 10 to 15 cents a month."

The commission said that for every $1 in cost, $3 in benefits will result.

"And no additional charges can be imposed on consumer phone bills that are at or above $30 a month (inclusive of most fees consumers pay on their bills), nor can such charges be imposed on low-income consumers served by the FCC's Lifeline program," the FCC said. "Any new charges will begin to decline after six years."

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Photo: FCC Chairman Julius Genachowski talks about changes to the Universal Service Fund in Washington on Oct. 6. Credit: Christopher Powers / Bloomberg