Did The Telcos Break The Law In Getting Merger Approvals?

from the dishonest-telcos?--nah,-couldn't-be... dept

Wed, Jun 21st 2006 3:28am — Mike Masnick

In case you didn't already have enough information on how the telcos have lied and cheated their way to power, taking public funds and assets, and breaking the promises made to get that loot, here's another one for you. Larry Lessig points out that Gary Reback (the famed lawyer who spent a good part of the 1990s trying to get Microsoft taken down for antitrust violations) is focusing on a new case: showing how the telcos and the government broke the law in approving some of the recent big telco mergers (the same mergers that helped those telcos get rid of competition, now allowing them to do things like get rid of network neutrality). In this case, the claim is that the mergers were approved while the Senate held back the Justice Department appointee charged with enforcing antitrust law (over concerns that he might actually, well, enforce antitrust laws). Once the deals were approved, the Senate dropped their hold on the appointee. Following this, the Justice Department is accused of ignoring parts of antitrust law (the Tunney Act) that forbid backroom dealings between corporations and governments on antitrust matters, and approving the mergers before a judge could do a review to make sure the Tunney Act wasn't violated. Again, it's a bit early to know whether or not this case is going to get anywhere, but Reback is someone who doesn't tend to give up easily (even if his detour into the startup world didn't turn out to be hugely successful) -- and the telcos certainly have a history of this type of questionable behavior in making backroom deals with government officials (many of which they never live up to their side on). If, as we've been saying, the real problem is the lack of competition in the telco space, finding out that some of that lack of competition came about potentially through illegal means, raises an awful lot of questions.

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Jay Fude, 21 Jun 2006 @ 4:32am

Shocking
Isn't it shocking how competition makes things both cheaper and better. I switched from AT&T to my cable company's phone system. I get better service, more clear calls, and my bill went from $70 to $29. With more compitition, we could call anywhere in the world for $19.95.

Speaking of competition, I would love to see a law that you cannot purchace a computer with an OS pre-installed. If people had to pay the full price, not a hidden, backroom deal price, for thier OS, then Linux would be truly allowed to compete in the marketplace. MS would have to get better, and cheaper, and both worlds would benifit, mine and those useing MS.
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Rg, 21 Jun 2006 @ 5:34am

shocking indeed
There's already a law against in france : "vente forcé" or "forced deal",
meaning that car makers can't force you to buy their accessories for example...
Yet for computers, most of the population, the judiciary system and the politicians are illiterate in that regard, so while we saw a lawsuit billed and µ$ lost the case (special version of Xp and upcoming vista without IE or anything i think)
Still most of the time people think Windows is "better", hell you have to go specific shops to find a Mac, and a linux is available only if you your computer is not premade (mobile is out then)

so in short, if no one care about competition then no >.>

hope that was clear
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Danno, 21 Jun 2006 @ 5:41am

That would ony be true if that law had always been in existance.

As it is, most of the people that buy PCs will be buying them to run Microsoft applications because that's what they know. The basic install for Windows probablly would get a lot cheaper though. As it is, I think the main reason it's so expensive is to encourage consumers to just stop using the current PC they have and buy a new one from the manufacturers.

Vicious cycle.

(And Linux still has a long way to go on UX, but Ubuntu is making a lot of good moves).

And if anyone bought a Mac, they'd probablly still be buying OSX.
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Junyo, 21 Jun 2006 @ 6:00am

Forcing the OS and the PC to be unbundled is just as anti-competitive as forcing them to be bundled. It just moves the advantage to a different competitor. Absolutely nothing stops Linux from bundling their OS with a desktop and pointing out the price difference for the exact same hardware. In fact, it would be a brilliant idea for a company like Novell (which got killed by MS in the 90's because they had a network/server OS and a productivity suite, but still had to run it on their competitions desktop OS).This illustrates that most people have no idea how a free market economy is supposed to work.

Of course what this has to do with the alleged/inferred malfeasence of telcos I'm not sure...
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?, 21 Jun 2006 @ 6:00am

Why part deux
Why are we even asking if they broke the law? Isn't it already decided that breaking the law is what they are good at?
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Rg, 21 Jun 2006 @ 6:17am

precision
"That would ony be true if that law had always been in existance. "

they didn't wait for computer to come around to make that law, i know french politicians are dumb, stupid and all (well ... politician).
If you think about it, it's only natural.
Customer also have rights you know?
And by forcing you to rebuy a licence fee for a system you already own you repay for the same product :/
And on a mac, if people upgrade the computer but want to keep the old OS, they can get a refund...
try this with Windows >.>
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Rg, 21 Jun 2006 @ 6:17am

precision
"That would ony be true if that law had always been in existance. "

they didn't wait for computer to come around to make that law, i know french politicians are dumb, stupid and all (well ... politician).
If you think about it, it's only natural.
Customer also have rights you know?
And by forcing you to rebuy a licence fee for a system you already own you repay for the same product :/
And on a mac, if people upgrade the computer but want to keep the old OS, they can get a refund...
try this with Windows >.>
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Anonymous Coward, 21 Jun 2006 @ 7:17am

AT&T is the devil
I don't like AT&T. i dun much like any of the other telcos either, but i like my cell phone company. cingular has done very well for me. if AT&T/SBC merge with Bellsouth. then that will have undone what was done many years ago. and then AT&T will rip Cingular out of the market.

AT&T has done many things to hurt their customers. . let me give you one example. i hope all of you know what the work "Slam" means. if you don't "Slaming" is the proccess in which a company takes over your service without your permission. and yes it is Illegal. AT&T is the worst company in the world to slam you. they are so bad. that they have there own "Slamming hotline" if you don't belive me. go to atts website and click on contact us. then type in the first few of your phone number. and it will give you all the contact numbers. just scroll down, and you'll see the 'slamming hotline'

no tell me, if a company has something like that, then they know there doing something illegal. and there not getting hit by the government... then how many other things are they willing to try just to steal your money!
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Wizard Prang, 21 Jun 2006 @ 7:40am

It's all about choice...
> Forcing the OS and the PC to be unbundled is just as anti-competitive as forcing them to be bundled.

Rubbish. Anything that attempts to tie goods and services together is, by nature, anticompetitive. Think car dealerships and servicing. Razors and blades. Printers and (patented!) cartridges. Do you want to be locked in to one supplier? Of course not.

> Absolutely nothing stops Linux from bundling their OS with a desktop and pointing out the price difference for the exact same hardware.

Try is and see how long you remain on Microsoft's list of suppliers. If they can't stop you, they'll drop you like a hot brick. What "choices" will your customers have then? Linux or buy Windows at full retail price, but no cut-price bundled Windows.

> This illustrates that most people have no idea how a free market economy is supposed to work.

Neither, apparently, do you.

> Of course what this has to do with the alleged/inferred malfeasence of telcos I'm not sure...

Then let me explain.

Like most companies, Microsoft loves vendor lock-in, hates consumer choice and avoids competition wherever possible. The problem is in a legal system allows them to get away with it. Ditto for the telcos.
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Fomer Telco Guy, 21 Jun 2006 @ 7:48am

Phone Company Mergers
As a former Bell System employee I believe two things: first, the rank and file were incredibly loyal and truly worked to provide world-class service; second, that the senior managers were Machiavellian political animals who didn't give a darn about Universal Service, but worked for their own agendas. Self-centered, arrogant, and technologically clueless, they wasted money on ridiculous projects and did whatever they could to maintain their monopoly status. Carly Fiorina and Joe Nacchio are two rats whose true colors came out once they were exposed in the public spotlight. The Bell System execs who stayed with the Bells were just as bad. BTW the idiot who posted about slamming doesn't have a clue.
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scottrob, 21 Jun 2006 @ 8:21am

Re: Why part deux
Good point! Since we all seem to know that providing dial-tone isn't their forte!
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Roger McCook, 21 Jun 2006 @ 8:22am

Conspiracy Consmerashy
Conspiracy Consmerashy. Don't you children ever get tired of this tired, liberal game?
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Junyo, 21 Jun 2006 @ 9:20am

Rubbish. Anything that attempts to tie goods and services together is, by nature, anticompetitive. Think car dealerships and servicing. Razors and blades. Printers and (patented!) cartridges. Do you want to be locked in to one supplier? Of course not.
Which is why people have to be forced at gunpoint to bundle goods and services or buy all the components for a complete system from a single supplier. Your "reasoning" is so idiotic it's comical. When the bundling is forced, and the customer realizes no value from the add-on it's gouging, but that's not what's being discussed is it? You can buy another car, build a PC from components, use a straight razor. Beyond that, tieing goods and services togather is a classic way to add value and seperate your product from your competitior's.
Try is and see how long you remain on Microsoft's list of suppliers. If they can't stop you, they'll drop you like a hot brick. What "choices" will your customers have then? Linux or buy Windows at full retail price, but no cut-price bundled Windows.
The free market has consequences. If you piss off a major supplier then they have the right to not sell to you. But unless MS started subsidizing PCs when I wasn't looking whether or not the OS is purchased with the PC doesn't effect the cost of hardware. And if there was enough demand for Linux a retailer could easily justify annoying MS by being able to sell a PC with a higher hardware markup (after all the OS is free) to make up the lost profit. Why don't they? Because other than geeks, nobody wants a system where most of the limited PC knowledge they have goes down the drain, doesn't work with the apps the buy at Walmart, and is primarily supported by the aforementioned geeks.

And MS can only jack their prices up to what people are willing to pay for the compatibility and conveniance. At a certain point, the cost is so high that it's equal to or greater than the cost of switching to Linux, at which point it's neutral or advantageous to switch.

Neither, apparently, do you.
Ah, the "no, you are" school of Internet discussion. The Wiz, reppin middle school 4 life!

Like most companies, Microsoft loves vendor lock-in, hates consumer choice and avoids competition wherever possible. The problem is in a legal system allows them to get away with it. Ditto for the telcos.Again, I missed the part where Microsoft came to my house and forced me to remove Linux and BeOS from my computers at gunpoint. I was out the day that the tanks rolled into the village and confiscated all teh Macs. I missed when the hooded MS cadre burned a flaming Windows logo into Autodesk's lawn and told them not to make a Linux version "...if they knew what was good 'fer em". I missed the feeble sheriff/attorney general getting shot down in the street when he said something bad about Bill Gates. I was however there when MS was cranking out crappy, buggy OS's that ran on cheap, open architecture PCs rather than elegant but expensive Macs. I was there when OS2 was allowed to wither on the vine, and no vendor with a toehold in the corporate desktop space unerstood that doing one thing well was great, but the future was a comprehensive desktop.

The telco's have a natural and state sanctioned monopoly dependent of their ownership of the PSTN. MS has no such monopoly, nor state sanction thereof. Alternatives are readily, and indeed freely, available. Their power to coerce is limited to the financial pressure that they can apply to middle men, and the market saturation that they've achieved. The situations aren't even slightly analogous. 0 for 4 there Professor.
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anonymous coward, 21 Jun 2006 @ 9:23am

there is no need to break the law if you have politicians to write the law to meet your needs...
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NullBull, 21 Jun 2006 @ 9:24am

Yes, everyone... go back to sleep
McCook - You're right, there is no conspiracy. There is just a lot of fraud and payoffs and back-scratching going on in full view, and it's all just a biiiiiiig coincidence.

If you actually want to communicate with people, try addressing their argument instead of calling them names ("children") and using an utterly meaningless label ("liberal") to make your supposed point for you.

If you had a point you would have used something called "logical argument" to make it. But you don't, so you didn't.

The free market works great, when there's competition. When there is no competition, it falls on its keister. Can anyone think of an example of the deregulation of a market that had an insufficient number of competitors in it prior to deregulation?? How about the energy market in California in 2001. Anyone remember that? If you don't have enough competitors, there is no incentive to compete, and so the potential competitors just watch the rolling blackouts and keep raising their rates. Many people don't realize that this was the reason behind the crash and burn of energy market deregulation in that state.

So, unless you're willing to argue that there is significant competition in the telecoms industry in the US, then you have to admit the deregulating this industry at this time, would be a huge mistake. Maybe after more suppliers are in the game. But until then DEREGULATION = RECIPE FOR DISASTER.
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Random Nobody., 21 Jun 2006 @ 9:39am

Re: It's all about choice...
How about this, you remove the bundle and force people to "buy" windows at retail. That's a great idea for you nonconformists who praise linux, but ever stop to think "maybe microsoft will just lower their prices to again over shadow linux?"

Now maybe that would be good for people looking to save money on an OS. But that's not what your arguement was about. It was about how unfairly Linux has been treated.
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JM, 21 Jun 2006 @ 9:43am

Wow - I was unaware that this article had ANYTHING to do with whether or not people could buy PC's with a pre-installed OS or not.

For Christ sake - discuss the relevant topic people!
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Anonymous Coward, 21 Jun 2006 @ 9:47am

Re: Phone Company Mergers
as the 'idiot' who said something about slamming. i do have a clue. i also worked for the bells. thank you very much. i am probally more informed about the current statuses than you. the arrogance of the companies is why i no longer work the the 'bells' ATT included.
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Coogrrr, 21 Jun 2006 @ 10:19am

Re: Junyo gets it right.
If you need to comment please keep on topic (Telcos and back door deals) if you think your going to somehow improve on the Linux vs. MS game your not. Junyo got it right on all these topics and most of us should look to smarter people then ourselves for a clearer view.

Stop the chatter of the vs. game and lets talk about the telcos. I for one would welcome the deregulation not believing that it would equal anything like what Califonia went thru as this affects the whole contry and not one very bad off financial state situation.

Deregulation of the phone systems would be great except remember that if I layed all those wires in your nieghborhood I still own them so there will be a fee. This is what stops the competition. So what we going to do about that purchase state by state all the wires layed everywhere then allow any telco to buy/rent time or useage on any wire?

The telcos are making deals with politicians and the politicians are holding back the "cop" who would ensure our interests is of more WOW to me (please re-read this article) I feel like I would have my farm paid off (Uncle Jesse) but Boss Hog just locked up the check delivery guy comming to save my farm at midnight before I loose it.

We need to be up in arms more about what politicians do then MS and Linux and Mac (who now runs Windows XP) so we can ensure that deals dont prevent competition or that they at least arent illeagal.

Stop the computer debate and start one on this topic that addresses these real issues.

2cents
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dan, 21 Jun 2006 @ 10:47am

Re: AT&T is the devil
Ummm, AT&T was cingular. They sold it. I know, I have been with the same cell phone company for 12 years. Which happens to be right now cingular.
Before cingular, it was at&t. Pay your bill online, you'l still see verbage on the web page about AT&T customers.
My personal oppinion, If at&t was left alone years ago. We would never have seen a degrading of service.
My oppinion of your post.
hmmm
I know where you can buy some wine and cheese real cheap.

Dan Miller
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dan, 21 Jun 2006 @ 10:47am

Re: AT&T is the devil
Ummm, AT&T was cingular. They sold it. I know, I have been with the same cell phone company for 12 years. Which happens to be right now cingular.
Before cingular, it was at&t. Pay your bill online, you'l still see verbage on the web page about AT&T customers.
My personal oppinion, If at&t was left alone years ago. We would never have seen a degrading of service.
My oppinion of your post.
hmmm
I know where you can buy some wine and cheese real cheap.

Dan Miller
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Wizard Prang, 21 Jun 2006 @ 1:49pm

Good ide, but...
How about this, you remove the bundle and force people to "buy" windows at retail

Actually, unbundling might actually be a good idea in that the retail price of both hardware and software might go down... but the total price would go up. Currently the big-box-boyz are paying about $30 (guess) per OEM XP installation, and neither they nor Microsoft would want to upset that little applecart... and most users would balk at the idea of instlling their own OS.

But that's not what your argu[e]ment was about. It was about how unfairly Linux has been treated.

Was it? Where did I say that? Did I even mention Linux? Last time I looked, I was talking about forced-bundling of products and services being anticompetitive...
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Wizard Prang, 21 Jun 2006 @ 2:03pm

Did I even mention Linux?
Yes I did. Once. In passing.

I must be going mad. I'm talking to myself...
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Agonizing Fury, 21 Jun 2006 @ 9:36pm

Re: Re: AT&T is the devil
Ummm, AT&T was cingular.

ummm....no. Sorry, AT&T Was never Cingular. Cingular bought AT&T Wireless Which was spun off from AT&T years before due to poor perfomance. They were just allowed to keep the AT&T Name for while. Howver if the AT&T/SBC merger does go through, then AT&T will own a buttload of Cinguiar shares, so Cingulkar will probably be called AT&T Wireless again. (in fact I think I read about that on techdirt.
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sandman, 21 Jun 2006 @ 11:59pm

Light the fire
Keep your eye on the ball people. Educate your friends and your family. Get the word out.

Big Telco gets away with it because people are not as outraged as they should be, have their blinders on, or are easily distracted. Forget about the OS-PC bundling. Forget about the California rolling blackouts (you can thank Enron for that, btw), and forget about slamming.

Our telecommunications industry is a disaster, and until Mom and Pop Q. Public realize they are being directly impacted, then the greedy corporations and crooked politicans will get away with it. The vast majority of the public doesn't realize what they're being robbed of because they have no frame of reference. Nevermind that the rest of the world is far outpacing us in broadband deployment (in coverage density, bandwidth, and price), Mom and Pop Q. Public are happy to pay $40/mo for 3Mbps because they were paying nearly that for 56k dial-up just a few years ago. You can't miss what you don't know you should have.

Ignorance is bliss.
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Anonymous Coward, 22 Jun 2006 @ 9:05am

Sandman, nice thoughts, but your argument is full of holes. America isn't falling behind in broadband, Mom and Pop Q have broadband available to them, yet they choose slow DSL service, its a lot easier wiring Hong Kong and other countries like that vs. America because of distance, and right now, there still isn't widespread need for 100 mpbs downstream.
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sandman, 22 Jun 2006 @ 10:31am

Re:
"...Mom and Pop Q have broadband available to them, yet they choose slow DSL service..."

Let me see, my choices in my affluent neighborhood in Sacramento, CA (and I'm 3.9 driving miles from the main CO downtown; less than a quarter mile from my EO) are slow, expensive, monopoly DSL and slow, expensive, monopoly Cable. That's it. My mom in San Ramon, CA? She gets a choice of slow, expensive, monopoly Cable and nothing. She can't even get DSL, and she is a mile or two from that huge AT&T/SBC/PacBell/Borg campus regional headquarters. This is a choice?

"...its a lot easier wiring Hong Kong and other countries like that vs. America because of distance..."

Don't even get me started citing the numerous facts on how America is desperately behind in broadband. And I'm not referncing only mega-dense urban areas either, but if I were, how many people do you know in New York, Los Angeles, Boston, Chicago, and San Francisco that get 20, 50, even 100Mbps at their urban dwelling? Of those, how many get that for $40/mo...$30?...even $20?

"...there still isn't widespread need for 100 mpbs downstream."

Hahaha. Good one! Imagine your car was only able to go 3MPH for as long as you can remember. Suddenly, you're able to go 15MPH. You're thrilled. But then, would you go 60MPH if they let you? Would you drive farther? And over any distance, wouldn't you be more efficient?

Saying they don't need (or wouldn't make use of) it because they don't have it is no argument at all.
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Dickfaced MILF, 12 Mar 2008 @ 4:45am

Stupid Tesco
I had a dream. I had a dream that all network prices would be the same. I believe that tesco is very immature for destroying all competeion. God save the queen and let Lucas arts create star wars 6. I also wish for star trek to come back online because i really love their tv shows. Bless al you who spend their life trying to make a living on techdirt.com cuz all you nerds suck arseholes lolz
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Daniel Remik, 12 Mar 2008 @ 4:49am

FUCKFACE YO USHUT UP BITCH
now dickfaced milf you shut the fuck up before i beat your face in with a steak knife. god bless the jewish people and their horrible actionated remiks at the holocaust held in madison sqaure gardne. Also i hope godzilla doesnt attck man city again. Well all be fucked for good. G'day mate:) anyone want a sleeping buddy? trext me at 653-7899
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Guillotine, 9 May 2009 @ 7:23pm

nacchio
Nacchio is a cockroach.
CEO's like him got off light.
He's still having all his legal bills sent
to Quest.
When will this vermin get squashed?
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