Opinion

The Great Debate

from Breakingviews:

FCC needs thick skin to weather its moment in sun

By Daniel Indiviglio and Robert Cyran
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

The U.S. Federal Communications Commission will need thick skin to weather its moment in the sun. The usually low-profile telecom watchdog is tackling flashy issues involving mergers, internet neutrality and wireless spectrum. Resolving them won’t be easy, given the agency’s mandate to spark competition while also promoting efficiency and consumer choice. Current commissioners seem up to the challenge.

Chairman Tom Wheeler, a former lobbyist and telecommunications entrepreneur, leads the panel of three Democrats and two Republicans. Their experience as lawyers and legislative aides and with state regulation should help in navigating a long list of politically and technically difficult tasks.

At the top is deciding whether communications conglomerate Comcast’s $45 billion merger with Time Warner Cable serves the public interest. The commissioners must also determine how much wireless spectrum the likes of AT&T and Verizon can buy, strike a compromise on giving content providers equal access to the internet and find ways of freeing television broadcast spectrum for other uses.

The job is complicated by the industry’s fundamental economics. Communications companies deliver large and increasing returns to scale. Big firms have the money to build complex and efficient networks quickly but can also get lazy and act as monopolists. The Republican commissioners generally prefer to promote development by allowing companies free rein, while the Democrats tend to encourage competition by, say, limiting spectrum ownership and requiring net neutrality.

from Breakingviews:

AT&T deal dialing emits a shaky signal

By Robert Cyran
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

AT&T’s deal dialing is emitting a shaky signal. First, it wanted T-Mobile US for more domestic subscribers. After regulators nixed the idea and Verizon cleaned up its wireless joint venture, AT&T pursued Vodafone for European growth. Now, amid U.S. pay-TV consolidation, DirecTV or Dish beckons at home. The rationale is questionable and suggests the broader strategy is wayward.

The $190 billion company’s desire for a large-scale deal is understandable. AT&T’s revenue increased just 2 percent last year. Europe appealed because of a technology gap related to wireless speeds that AT&T theoretically was in a position to fill. The overseas market caught on, though, and the logic behind a foray there dissipated just as quickly.

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