CompTel, AT&T and The Tunney Act

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CompTel, AT&T and The Tunney Act

By David Sims

The news as of the first coffee this morning, and the music is Meatloaf's "Saturday Night (Love That Rock'n'Roll)" from The Rocky Horror Picture Show soundtrack:

Seems the latest kerfuffle here in our little corner of the telecom world involves the Competitive Telecommunications Association (CompTel) protesting the mergers of SBC and AT&T on the one hand and Verizon and MCI on the other.  

Little background: You may have heard of the $67 billion-dollar merger between AT&T Inc. and BellSouth proposed in March. It would give AT&T control of Cingular Wireless, the nation's biggest wireless operator. It seems CompTel, a trade association of small phone companies, "filed comments in early June asking the FCC to reject the merger," according to the Wall Street Journal's Amy Schatz on her good Washington Wire blog.

In June Jonathan Lee, Senior Vice President of CompTel, ended the suspense and said in his opinion "The proposed merger of AT&T and BellSouth would be disastrous for the communications market and would subject end-users to fewer choices and higher prices for any services that rely on high-capacity transmission as an input, including high-bandwidth business and wireless services."

Interestingly, new Federal Communications Commission member Robert McDowell, a Republican, used to work as a lawyer for CompTel, might be recused from voting on the AT&T-BellSouth merger. As Schatz says "McDowell handled political matters for CompTel, not regulatory work," nevertheless "he said he believes he will be automatically recused if his former employer filed comments." Others disagree, saying he would have the right to vote.

FCC Chairman Kevin Martin wants a vote by the end of October.

Schatz thinks McDowell's absence from the vote "could be a problem for AT&T. The company is hoping that few, if any, conditions will be placed on the deal. McDowell's absence from negotiations would give the FCC's two Democrats more leverage to seek conditions -- particularly on the issue of net neutrality, or rules requiring Internet traffic be treated equally," she points out, adding that "McDowell is firmly in FCC Chairman Kevin Martin's camp on that issue, both arguing the government doesn't need to step in unless there's evidence consumers are being harmed."

But back to the matter at hand, CompTel invoking the Tunney Act to protest the AT&T/SBC and Verizon/MCI mergers. What, you ask, is a Tunney Act?

According to an overview by liberal Jason Oxman, managing director of the leftist Law Media Group, the Tunney Act was created during the Nixon Administration to "keep the Department of Justice from making sweetheart settlements with powerful corporations." Congress wanted to prove that it wasn't cozying up to huge corporations facing antitrust suits, so the Act allowed "independent judicial review of decisions by the Department of Justice not to pursue antitrust action against giant corporations." Basically determining whether a proposed antitrust settlement is in the "public interest" or not, Oxman says.

It was signed into law by President Ford in 1974, and nobody heard of it again until 2004, when Congress didn't like what they thought were overly favorable terms given to Microsoft for their antitrust settlement, so they made Tunney reviews of DoJ settlements mandatory, instead of optional.

And as Oxman explains, the big hairy deal here is that the review of the SBC/AT&T and Verizon/MCI mergers "marks the first test case using the recently revised statute… this is the first time since the Tunney Act was overhauled by Congress in 2004 that a merger challenge has been allowed to go to a hearing."

Back in April the DoJ responded specifically to CompTel's objections to its handling of the Tunney review of the mergers, finding that "the mergers in question presented a relatively narrow competitive problem for Local Private Lines and related services in certain 2-to-1 buildings, and it negotiated a relatively simple, straightforward divestiture remedy to replace the competition that would otherwise be lost."

Yet Judge Emmet Sullivan of the U.S. District Court for the District of Columbia "last week rejected the DoJ/Bell request for a rapid review and instead scheduled additional proceedings and demanded additional evidentiary submissions from the government for his review," Oxman writes.

The government doesn't want a Tunney review. None of the companies involved in the mergers want one. CompTel wants one, since it represents dues-paying interests which believe they're harmed by the mergers. Oxman himself was until just a few months ago CompTel's Senior Vice President for Legal and International Affairs, so guess where his bias lies in this issue.

Yes, shockingly, Oxman, a former FCC staff attorney, former in-house lawyer for Covad, former CompTel exec, is… wait for it… opposed to the mergers. As far as the filing itself goes, he's arguing that the "core claim of petitioners in the Tunney Act case is that DoJ violated its statutory obligation to conduct a thorough review of these mergers, choosing instead to rubber stamp approval."

Translation: The DoJ reached a conclusion Oxman doesn't like. Had they reached one he liked he would have described the review as "logical, penetrating and fair."

Indeed, in the filing itself, CompTel charges that "Despite being given multiple chances by the Court to demonstrate that entry of its consent decrees (proposed amended final judgments, or PAFJs) is in the public interest, the Department of Justice has failed to provide the Court with anything more than argument, casual empiricism, and misleadingly-select portions of information collected from third parties in the course of its investigation."

That's gussied-up lawyer talk for "Copycat! Copycat!" What CompTel's saying is that the DoJ is simply parroting the companies' own arguments as its own argument: It is "striking," CompTel says, that "in light of what the DOJ asserts was a very extensive investigation, the DOJ would choose to rely so extensively on 'evidence' proffered by, or -- in some cases -- created by the Defendants."

Oxman's prejudices are made plain by his pious intonation of "the fact that a fair and independent federal judge is reviewing the DoJ's favorable treatment of AT&T and Verizon should give hope to all of us who fear the remonopolization of the telecommunications network. Judge Sullivan may be the only chance we have of bringing this era of Bell favoritism to an end."

Probably some of Oxman's fawning over Judge Sullivan is due to the fact that in May he allowed CompTel eave to participate as amicus curiae, or "friend of the court" in the SBC/AT&T and Verizon/MCI Tunney Act merger review proceedings at all. Of course should Sullivan find for the mergers, he certainly won't be described as "fair and independent" by Oxman, but rather as a sycophantic tool of the DoJ.

But that shouldn't be surprising. The Law Media Group itself was founded by left-winger Julian Epstein, D.C.  and operates as paid lobbyists -- you know, like Jack Abramoff -- dutifully pushing the drearily predictable lockstep liberal agenda like obedient soldiers. You might have heard Epstein repeating the standard leftist talking points on CNN, or you may have heard him on the leftist radio station Air America, but given their ratings the odds are more likely that you received Martian transmissions in your tooth fillings.

As far as First Coffee can make out, CompTel's argument itself, as summed up in the filing, is that the DoJ's decrees that everything's hunky-dory with the mergers "serve no purpose, other than to transfer the shame of passively allowing the two largest Bell monopolies to eliminate the two largest local competitors in their respective regions."

That's really the crux of it, there are dozens of pages in the redacted version of the filing itself, but if you can make sense of gobbledygook like CompTel's accusation that the court is attempting "to persuade the Court into granting it the excessive deference that it needs to survive an independent review" by "raising the specter that anything but blind acceptance of the limitations the DOJ now seeks to read into its Complaints would transgress the prosecutorial discretion of the executive branch," then you either wrote it or attended the same Obfuscation 101 writing class the author did.

CompTel itself has first-hand experience with mergers, as the boards of directors of CompTel and the Association for Communications Enterprises (ASCENT) agreed to merge the two trade groups in 2003, forming the CompTel/ASCENT Alliance. No word on whether there was a review by a "fair and independent" judge on the merger.

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