As James pointed out below, this week marked the anniversary of the announcement that the satellite radio firms Sirius and XM plan to merge, yet so far the companies have not been allowed to consummate the marriage. That’s because regulators are standing in the way, backed by well-heeled Washington lobbyists out to prove that ridiculous ideas still have an impact if they come with dollar-sign attachments.
For instance, the National Association of Broadcasters (NAB) has spent more than US$4 million lobbying to convince regulators that the XM-Sirius deal would create a radio monopoly. That’s like arguing that the Kindle, Amazon’s new wireless reading device, is a monopoly because it is the only e-book reading device that can download books using EVDO (evolution-data optimized) technology so the user can read them immediately. Yet neither new way of enjoying books or radio excludes all others.
NAB’s claims don’t hold up to scrutiny, especially when they try to have it both ways. As the Pacific Research Institute’s Daniel Ballon has pointed out, “the NAB concocted an absurd notion of competition” with its statement that “Sirius and XM compete directly with us, but we don’t compete directly with them.” George Orwell savaged that kind of logic in his novels, and it does not belong in the debate halls of the most powerful nation in the world.
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Today is a birthday of sorts. One year ago today, February 19, 2007, Sirius and XM announced plans to merge. And after 12 months of debate, investigation, deliberation and prognostication, the deal is still awaiting approval by the FCC and the Department of Justice.
This, despite the FCC’s much-heralded “shot-clock” — under which it has pledged to review mergers in 180-days. That shot-clock frankly looked a little shaky from the start, as the FCC didn’t even start the dang thing until 78 days had passed. Even with that, the FCC remained silent when the deadline passed.
Of course, we’ve come to expect such delay from the FCC, whose official seal contains a figure of a snail. (Well, not really, but it would fit). But the long-delay from the Department of Justice is more eye-catching. What can the Antitrust Division possibly not know about the deal by now?
Of course, rumors of imminent action at DOJ have frequently made the rounds: the DOJ is going to approve the deal, the DOJ is going to reject the deal, the DOJ is going to attach conditions on the deal. I’m half-expecting to read that the DOJ’s dog ate the files on the deal.
Enough delay. I’ve said before that the deal should be approved. Others disagree. But everyone should be able to agree that a year is long enough for the government to make a decision.
On this week’s show, TLF contributors Cord Blomquist of CEI, Hance Haney of the Discovery Institute, Jerry Brito of the Mercatus Center at GMU, and Adam Thierer of PFF talk about several hot tech policy issues that have been in the news recently. First, we discuss the latest activity on the Net neutrality front, with ongoing filings at the FCC and new legislation introduced in Congress. Second, we debate possible outcomes in the Microsoft-Yahoo merger proposal. Finally, we highlight some recent efforts to tax and regulate video games at the federal and state level.
There are several ways to listen to the TLF Podcast. You can press play on the player below to listen right now, or download the MP3 file. You can also subscribe to the podcast by clicking on the button for your preferred service. And do us a favor, Digg this podcast!
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So someone finally made the mistake of allowing me to be on television. If you’re interested in the marriage that might have been and could still be between Microsoft and Yahoo, check out my appearance on C-SPAN’s weekly show The Communicators, which is unfortunately only available in our favorite format, Real Media.
Though Mr. Ballmer’s proposal was rejected the first time, he’s not one to give up easily and he’ll likely barrow even more than the few billion he thought he’d need to increase the size of the dowry. Though he may want to pause, at least for a moment, as the Wall Street Journal reports that tech stocks are up after this weekend’s rejection of the deal by Yahoo!
Whatever one thinks of the merits of the Microsoft-Yahoo merger and Google’s immediate and vociferous opposition to it, Ed Felten is 100% right when he says of Google’s actions:
“Complaining has downsides for Google too — a government skeptical of acquisitions by dominant high-tech companies could easily boomerang and cause Google its own antitrust headaches down the road.”
That’s a drum we beat a lot around here at the TLF, but no one in the corporate world seems to listen. On the days their own butts are on the line, they tell us the antitrust authorities are villainous scum that must be defeated at all cost! The next day–when their competitors are in the crosshairs–the antitrust officials are regarded as benevolent knights possessing Solomonic wisdom, and we’re told that we should trust them to guide us to an economic promised land called “perfect competition.”
It’s all a big political game that does nothing more that make a lot of lawyers and consultants very rich.
Good piece in FT.com today by Tom Hazlett of George Mason University. In the essay, Tom takes stock of what the Microsoft antitrust case did and did not accomplish over the past decade. After pointing out that the case fell short of the mark in terms of injecting Java-based competition into the marketplace as some had hoped, Tom notes:
But the decade has hardly been a bust for competition. It flourishes on margins unimagined by those who were professing to protect its path. Rivalry has come not from Java, but from a resurgent Apple and the open-source Linux. One is a vertically integrated firm with proprietary innovation; the other a geekdom of code-sharers seeking karma and human capital. Meanwhile, Microsoft’s Internet Explorer is coughing up market share to Mozilla, Netscape and Opera, browsers that ride comfortably on Windows.
But operating systems and browsers turned out to be a side show. The profits of the decade have been stolen by entrepreneurs who saw what was unfolding over a distant horizon. And then traversed that distance in a flash.While the DoJ was filing against Microsoft, two youngsters at Stanford were crawling the web. With a search engine that could catalogue and rank the world’s web sites, matching key words while filtering out mish mash, their start-up quickly entered the language as a verb — a really popular verb. You can Google it.
Meanwhile, Apple has been making its own fortune under the shadow of the beast. It is crushing Microsoft in media players, finding its salvation in the holy i-trinity of Pod, Tunes and Phone. Domination of this digital consumer space was right there for the dreaming.
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One of the curiousities of intellectual battles is the ability of the intelligentsia of one school to retrench and come back, using the vocabulary popularized by another set entirely to argue the opposite point. (A curiousity because one would hope that the relatively clever would steer clear of rhetorical devices in favor of clarity and making real progress towards understanding).
Free-marketers in the nineteenth century, then known as “liberals,” became popular with the working classes and the poor because of their support for the abolition of the Corn Laws and other benefits of free trade; economic interventionists tried to capitalize on this popularity by calling themselves “liberals,” and today the original reference of the term is obscured, particularly in the United States.
Another more complicated example: The success of free marketers in demonstrating that competition and choice serves consumers; offering empirical support for the fundamental point that contracts are a basic building block of a prosperous economic order. Today advocates of regulation build on this legacy by borrowing the language of consumer choice to attack the ordinary contract.
The Wall Street Journal Europe explores a variation on this argument concerning the iPhone. Kyle Wingfield notes, “Yes, consumers benefit from economic efficiencies. But it cannot be said that economic efficiencies are gained simply by creating circumstances that are attractive to consumers.” And goes on to make some interesting observations about the leftist allegiance to labor, rather in tension with their stance on consumers.
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Art Brodsky’s 4,789-word article about Connect Kentucky and its offspring Connected Nation has been the talk of telecom circles over the past week.
Connected Nation is a non-profit entity that has become one of biggest players in the currently topical field of broadband data. Using their work in Kentucky as a model for mapping out broadband availability nation-wide, the group has become a driving force behind legislation that would provide grants for other states to duplicate these efforts.
Examples of legislation following the Connect Kentucky model are the Senate version of the current farm bill, H.R. 4212, which includes Illinois Democratic Sen. Richard Durbin’s “Connect the Nation Act,” S. 1190. Durbin’s bill would authorize $40 million a year, for five years, to state efforts to map out broadband inventory on the census block level.
The “Broadband Data Improvement Act,” S. 1492, by Senate Commerce Committee Chairman Daniel Inouye, D-Hawaii, takes a similar approach. The goal is, in the identical language of both bills, to “identify and track the availability and adoption of broadband services within each State.”
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Reading the tea leaves of delay, Reuters reports (via Drudge) that the DOJ may be gearing up to derail the planned merger, announced 10 months ago, between the nation’s two satellite radio providers:
The delay may be due to the complexity of the issues raised by the merger of the only two U.S. satellite radio companies — or because the Department of Justice (DOJ) is putting together a case to block the deal in federal court, analysts at Stifel Nicolaus said in a research note on Thursday.
Alternatively, top officials at DOJ may be leaning toward approval but might still be weighing arguments from staffers who oppose the deal, Stifel Nicolaus said.
Only in the mind of a regulator or a terrestrial radio broadcaster (i.e., competitor) could this proposed merger present issues of great complexity–the only issue on the table is the market definition, which may be contentious but is not overly complex, except perhaps to those who wish to make it so.
My suggestion: The FCC and DOJ should look at who’s opposing this merger in defining the market.
If this is a complex case, antitrust enforcement is, whatever its merits or lack thereof, just broken. It’s a wonder that any proposed merger gets through review, no matter the outcome.
For more on the merger, check out these thoughtful posts by TLF’s Adam Thierer:
- XM + Sirius = Good Deal (for the Companies and Consumers)
- More on XM-Sirius
I can’t help but notice how debased the Google-DoubleClick merger discussion has become.
It started this morning when I read on Scott Cleland’s blog that C|Net journalist Declan McCullagh failed to reveal that his wife worked at Google in publishing his great article exposing Commerce Committee Joe Barton’s selective interest in privacy and merger issues.
So selective is Barton’s interest in privacy that he favored the USA-PATRIOT Act and the REAL ID Act. Now there’s a privacy hawk for you.
Now I discover that the Electronic Privacy Information Center has petitioned to have FTC Chairman Deborah Majoras recuse herself from any review of the merger because of her and her husband’s relationships with a law firm that represents DoubleClick.
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The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.