FCC Approved T-Mobile Sprint Merger Without Even Seeing The Full Details

from the ill-communication dept

Surprising nobody, the Ajit Pai FCC last week approved T-Mobile's $26 billion merger with Sprint. The approval comes despite that fact that antitrust experts, consumer advocates, and a long list of others have pointed out the deal will reduce wireless sector competition by 25%, inevitably driving up costs and reducing the quality of service (40 years of US telecom history suggests as much). And while T-Mobile and Sprint insists the deal will create jobs, both union reps and Wall Street predict the deal could kill anywhere between 10,000 and 30,000 jobs.

Granted last week's vote of approval was really just a formality. The FCC's majority commissioners had already made it clear they'd be signing off on the deal. Troubling but unsurprising is the repeated allegations that the Trump FCC majority signed off on the deals before seeing most of the actual details, something FCC Commissioner Jessica Rosenworcel was quick to point out in a statement:

"...the process that got us here is equally troubling. Three of my colleagues agreed to this transaction months ago without having any legal, engineering, or economic analysis from the agency before us. Consumers deserve better from the Washington authorities charged with reviewing this transaction."

Yeah, who needs to see the actual details on a transaction that will dramatically alter the US wireless landscape before voting?

Former FCC lawyer Gigi Sohn shared a similar observation in a statement circulated to the media:

"Today’s decision is the culmination of one of the most irregular and opaque processes in FCC history. The FCC majority prejudged the merits of this merger two months before the Justice Department found the combination of T-Mobile and Sprint to be anticompetitive and required the creation of a new fourth competitor to pass legal muster. Despite this radical change in the merger, Chairman Pai has refused to put the new arrangement out for public comment."

No willingness to look at hard data, an active disdain for public input; where have we seen that before? Worth noting the DOJ has followed a similar tack, ignoring advice from its own staffers to sign off on the deal.

Both the DOJ and FCC continue to push a remedy for the problems the deal creates that few think will actually work. They're hoping to have T-Mobile shovel off some additional spectrum and its prepaid wireless brand to Dish Network, who'll then attempt to build a functional fourth competitor to replace Sprint over the next half decade. But Dish has a long, long history of spectrum squatting and empty promises when it comes to wireless (just ask T-Mobile). And this FCC has exactly zero credibility when it comes to holding telecom giants accountable for, well, anything.

To make that deal work, the government will have to helicopter mom the hell out of the deal; ensuring T-Mobile lives up to its obligations and Dish meets its goals. It will also have to hold AT&T and Verizon accountable when they inevitably try to scuttle the deal in a bid to prevent a fourth viable competitor from truly emerging, something that, even under optimal conditions, isn't supposed to happen for years. Imagine thinking that's a more sensible route than just blocking the same deal that's already been blocked several times because it's clearly harmful to workers, consumers, and the market?

Filed Under: ajit pai, competition, details, fcc, merger, telcos
Companies: sprint, t-mobile

FBI: Bring Us A Unicorn. Techies: They Don't Exist. Senator: Stop Complaining & Tell Us Where The Unicorn Is

from the wait...-what? dept

We've already discussed the ridiculousness of yesterday's Senate hearings with Jim Comey on "going dark" and the desire to backdoor encryption. But one thing that came out in the discussions that deserves further scrutiny is the fact that Comey repeatedly admitted that he had no proposed solution to the question of how to do this. He admits that computer scientists say it's not possible, but he insists it's because they're "not trying hard enough" to figure it out. And whenever Senators suggested different possible legislative fixes, Comey would sort of throw up his hands and say "well, we're not making any proposals here, we just want a conversation."

And there's a good reason for this, which was actually admitted after the hearings by former NSA top lawyer (and proud Techdirt disliker) Stewart Baker (who recently argued that Blackberry failed because it had too much encryption) when he went on PBS Newshour to say that the government won't put forth a proposal, knowing that it will immediately get shot full of holes by actual experts. In the segment, Susan Landau, one of the experts who has explained why this whole idea is stupid and won't work, points out that there are no proposals being put forth because it's impossible to actually do this in a way that doesn't create massive problems:

SUSAN LANDAU: The issue is that the government is saying exceptional access, without explaining how they want this done, and all security matters in the details.

And, immediately, Baker shoots back the admission that no one else has been willing to make that, of course the government won't come up with a plan, because then all the experts can give details for why that plan would be a disaster:

STEWART BAKER: So, I think one of the things that's clear is the government isn’t trying to say this is exactly how we want you to do it, because I’m sure that Susan Landau would be saying, well, that won’t work and we have got these objections to being told how to do it.

The amazing thing is that Baker doesn't even seem to realize what he's admitting, as he then immediately shifts to saying that the government just wants the industry to solve this problem. But the whole point is that there is no solution that doesn't make lots of other things much worse.

The fact that the government refuses to put forth any solution should be seen as a massive problem. But, incredibly, during the Senate Intelligence Committee hearing yesterday, Senator Barbara Mikulski blamed privacy advocates for not offering up a solution to the impossible (starting around the 58 minute mark).

In our briefing materials I read letters from the ACLU, whose views we so value, the Software Alliance, and I saw a lot of criticism of what we're pursuing here for some type of opportunity to not go dark. But I didn't see any solutions. I saw a lot of criticisms. I saw a lot of critiques. But I didn't see solutions. Now I believe, as Senator Heinrich said and others, we have tremendous technical know-how, and I believe that the people in Silicon Valley are indeed very patriotic people, and they don't want drug dealers and international traffickers and child pornographers to be able to get away with nefarious things. So, if we could perhaps actually get from those as well as the civil liberties community how we could start working to a solution that would actually be great.

This is the point at which you should be banging your head on whatever wall or desk is closest. All of those patriotic folks in Silicon Valley have been going into great detail about how there is no good way to backdoor encryption, highlighting many explanations of how it actually makes online security much, much worse. To then say that the people pointing out how there are no good solutions should be the ones responsible for offering up a solution, rather than the government, which is insisting that something must be done, is ridiculous.

It takes quite an incredible train of thought to argue that the people telling you that magic fairy dust doesn't exist need to be the ones to tell you how to make magic fairy dust, rather than the naive folks who believe in magic fairy dust. And yet, that's exactly what Senator Mikulski did. And that's because, as Stewart Baker rightfully points out, if the government actually produced a plan for magic fairy dust, actual experts would quickly point out that it's not magical fairy dust, and actually makes people ill.

How is it that these people are in positions of power and influence?

Filed Under: aclue, barbara mikulski, details, encryption, jim comey, proposals, security, stewart baker, susan laundau

Narcotics Team 'Loses' $294,000 In Seized Cash Because It Omitted The Location To Be Searched From Its Search Warrant

from the [LOCATION-TK]-[INSERT-FACTS-AND-SUCH] dept

Mississippi drug warriors had their eye on nearly $300,000 in "forfeited" funds but threw it all away by issuing one of the most deficient search warrants ever. It's not that it was loaded with errors or questionable probable cause assertions. It's that it omitted perhaps the single most important element of a search warrant -- the location being searched.

Appellant Mississippi Bureau of Narcotics (hereinafter “the State”) had a search warrant signed and executed at the home of Bobby Ray Canada and Beverly Turman. Section one of the search warrant, denoting the location for the search to be executed, was completely blank. The State collected, among other things, $293,720 from the home, and the State then filed a civil forfeiture action. Canada and Turman filed a summary judgment motion, arguing that the search warrant was blank and void, and therefore, the search violated their Fourth Amendment Rights. The trial judge granted the summary judgment motion. The State appealed. We hold the summary judgment motion to be well taken and affirm.

The State didn't deny that its officer had served a warrant with a blank space where the location to be searched should have been. But it claimed it had supporting documentation that made this omission irrelevant.

The State responded, arguing that the proceedings should be stayed because the affidavit and the underlying facts and circumstances sheet, listing the location of the search, were sealed by the State for other investigations, and they were needed to show the validity of the search warrant in the instant case. The State alleged that Judge Brown had seen and signed the affidavit and the underlying facts and circumstances sheet when he signed the search warrant. After the search warrant was signed – but before the search warrant was executed – both documents were sealed.

So the State briefly unsealed the documents to show the trial judge that, yes, the warrant was clearly and significantly deficient, but look, we wrote down the location in other places. The trial judge remained unimpressed by the officer's inability to fill out a search warrant properly. Summary judgement was granted and the State appealed, arguing that the warrant was still valid (really?) and even if it wasn't, the "good faith" exception applied.

The State’s argument hinges on the incorporation of the affidavit and the underlying facts and circumstances sheet. Yet the record before the Court contains neither the affidavit nor the underlying facts and circumstances sheet. In effect, the State has asked us to make a ruling on something that has not even been presented to us.

Despite the State's failure to produce these documents, the appeals court still entertained the government's argument. Even while pretending to have the relevant information in front of it, the court still found the government's arguments weak and unappealing.

Based on a plain reading of both the Mississippi and United States Constitutions, the State’s case fails; the warrant is void and unenforceable on its face. 5 ¶11. Further, in Miller v. State, 93 So. 2 (Miss. 1922), the Court faced a similar issue where one section of a search warrant was completely blank. In Miller, the search warrant was blank as to the name of the person to be searched and the place to be searched at the time of its execution. Id. at 2. After the warrant was executed, the proper person and place was filled in on the warrant. The Court held that “[a] blank warrant or a blank affidavit amounts to nothing."

As to the so-called "technical error" that resulted in the lack of a very important search warrant element, the court finds that the very malleable "good faith" exception cannot be stretched to cover this omission.

A warrant with a blank section cannot even rise to the level of “failing to particularize” a place. It is clearly, facially defective, and the whole premise of the good faith exception would be negated if we were to find the exception applies. Thus, we hold that the good faith exception does not apply, and the instant issue is, therefore, moot.

The Fourth Amendment wasn't erected to be an irritant to law enforcement and a criminal's best friend. It was put in place to protect citizens from government officials and employees who hold vastly more power than those whose lives they intrude on in the course of their duties. Walking around with a warrant that doesn't specify where or what is to be searched is no better than simply demanding random homeowners open their doors and allow the police to root around in their belongings. That's simply not allowed. If the government wants to breach the privacy of someone's house, it needs the proper paperwork. This clearly wasn't proper and this officer's omission -- although likely not intentional -- gave the warrant no more power than a random page torn from a notebook.

In doing so, the State just "lost" nearly $300,000. Given the state of asset forfeiture, it would be clearly erroneous to equate large amounts of cash with guilt, despite our government's proclivity for doing exactly that. The perverted incentives of asset forfeiture programs may have led to this glaring omission, as the drug task force named in the filing appears to have rushed through filling out its warrant in its haste to crack open a private residence and avail itself of the sweet, sweet cash it expected to find waiting inside.

Filed Under: asset seizure, beverly turman, bobby ray canada, details, mississippi, search warrant

More Than Half The Senate Skips Town Rather Than Attend Briefing About NSA Surveillance

from the that-one-time-when-they-almost-seemed-to-care dept

The NSA leaks have opened up somewhat of a dialogue in Washington, DC. Sure, there's a lot of yelling (some outraged; some defensive), but it finally seems as though some legislators might finally be on the same page as their constituents.

The Director of National Intelligence (James Clapper) and the head of the FBI (Robert Mueller) have both been questioned about the specifics of their domestic surveillance programs. Though the roots of these programs have been around for years, it's the first time many Americans have seen black-and-white proof of government-approved domestic spying. You kind of get the feeling that it's the first time for many of our lawmakers as well, even though many have claimed the NSA/FBI surveillance was all signed off and routed through proper channels, etc.

So, with all this heat coming down on Washington, how is it possible that less than half of our senators could be bothered to stick around DC long enough to catch a classified briefing on domestic surveillance?

A recent briefing by senior intelligence officials on surveillance programs failed to attract even half of the Senate, showing the lack of enthusiasm in Congress for learning about classified security programs.

Many senators elected to leave Washington early Thursday afternoon instead of attending a briefing with James Clapper, the Director of National Intelligence, Keith Alexander, the head of the National Security Agency (NSA), and other officials.

It's not as if the senators would have even needed to stick around until Friday. The briefing was scheduled for 2-1/2 hours after the Senate's last vote of the week, which took place at noon. Granted, the week for most representatives ends on Thursday and no one would think anything of it if this week had gone like any other. But it didn't, and the American public is still closely watching their representatives.

When all classified hell breaks loose, you would expect your elected officials to stay on point until a critical briefing is finished, at the minimum. It's rather disheartening to see legislators working for the weekend by 10 AM Thursday morning. If they can't be bothered to stick around until the end of the day on Thursday in order to stay current on the biggest issue, we've no reason to believe they're really looking to solve this problem.

Dianne Feinstein, oddly, was in the right this time:

“It’s hard to get this story out. Even now we have this big briefing — we’ve got Alexander, we’ve got the FBI, we’ve got the Justice Department, we have the FISA Court there, we have Clapper there — and people are leaving,” she said.

One small point in the defense of the departing senators: this was a "briefing," not a "hearing." While some lively discussion might have been had (possibly taking the form of shouting or loud coughs of "bullshit!"), it's much more likely this would be a one-way blast from the aggrieved parties. And since most senators presumably received a copy of the talking points roughly around the same time Techdirt did, there's really no reason to hear these delivered live, in-person.

Still, this doesn't excuse their actions. This was a missed opportunity for those who left town before the briefing. Reps from nearly every entity currently under fire had been gathered in one room solely to address interested senate members, many of which claim to be very interested.

Lawmakers have been quick to call for increased congressional oversight of the phone and Internet monitoring programs, but many have been unwilling to skip flights or make other scheduling sacrifices to learn more of the secret details.

Unfortunately, a roll call wasn't provided, so we don't know definitely who needs to be asked to put their plane tickets where their mouths are. But we're used to this -- legislators making concerned noises until the national "Business As Usual" light is flipped on in the cabin of the national plane. (Not only that, but we're used to being handed terrible metaphors, although usually by the legislators themselves, rather than a writer in search of a solid closing paragraph.)

Hopefully, this headcount will be leaked as well, resulting in a bit of shame-based focus from our men and women in Washington, who should return tanned and rested from the extended weekend and ready to start earning their paychecks slashing away at our surveillance overgrowth.

Filed Under: briefing, details, nsa, nsa surveillance, senate

Some Dell Shareholders Don't Know Much About This Leveraged Buyout, But They Know They Don't Like It

from the no-need-for-details,-just-be-angry dept

The Dell deal documents are out and they are short of juicy details; we'll have to wait for the proxy for details on things like just how much of a discount Michael Dell is taking on his shares or what exactly the terms of Microsoft's loan are. There is, though, the information that that loan will take the form of $2 billion of subordinated debt, and that the total cash equity investments from Silver Lake, Michael Dell and MSD will total $2.25bn. This seems pretty sensible; Microsoft is effectively writing half of the equity check, though for a fixed-but-subordinated return, plus emotional benefits or what have you. And if you're worried about how easily debt markets will swallow some $3.25bn of bonds, $5.5bn of Term B/C, and billions of assorted other secured financing,¹ which with $4bn of existing bonds brings Dell to around 4x total leverage, making $2 billion – almost half a turn – of the debt subordinated, long-term, and emotionally committed can’t hurt.

But for most of the fun stuff we’ll have to look forward to the proxy. And that isn't good enough for some people. Reuters reports that the first shareholder lawsuit over the deal has already been filed, one day after announcement, which I assume means it was in the works before the deal was announced. This sort of amazed me:

Some shareholders said they were angered by the lack of specifics about the deal, making it hard for them to determine if the price was fair. The company, which declined to comment on the lawsuit, had said the board had conducted an extensive review of its strategic options before agreeing to the buyout.

I would characterize myself as mildly saddened by the lack of specifics, but that's why I will wait until the proxy is out and then read the specifics. You know there's a whole section of the proxy explaining why the bankers thought the deal was fair, right?²

There’s nothing new here – as Reuters notes, "Almost every merger worth more $100 million prompts a shareholder lawsuit" -- but the speed continues to amaze. And it's becoming ever more a fact of life:

That’s from this depressing report, which also has a sad-comical list of 16 deals each with 15 or more lawsuits filed. (The tech industry averages 4.9 suits, so, y'know, look out for 3.9 more.)

You can sympathize a little. Management buyouts are of course all about bottom-ticking the stock price; management would be pretty dumb if they took the company private at its all-time high. Dell's various stakeholder communications -- all to the tune of "this will is the start of a whole new chapter for Dell, in which everything will remain exactly the same" -- make that pretty clear: the deal has little to do with operational changes and much to do with the fact that Michael Dell thinks that (1) Dell and (2) debt are both cheap right now.

But that's kind of the market, and the fact of life is that if shareholders think that $13.65 is too cheap for their shares, they can always vote the deal down. By all accounts this deal was pretty fully negotiated, so it seems unlikely that the lawsuit will reveal that Dell and Silver Lake would have coughed up an extra $1 a share if the board had just asked more aggressively. And it's no secret that Michael Dell thinks that his company is worth more than $13.65. Even if that hasn't been specifically disclosed yet.

Dell 8-K, Merger Agreement, Voting Agreement [EDGAR]
Dell Buyout Broken Down: Silver Lake Puts in $1.4 Billion [Deal Journal]
Dell Aims for Double-B Rating, Leverage Less Than 4x Ebitda [Deal Journal]
Dell investor sues to block founder’s leveraged buyout [Reuters]
Reasons to Be Suspicious of Buyouts Led by Management [DealBook]
Dell’s Talks Said to Break Up a Few Times Over Pricing [Bloomberg]

1. From the 8-K:

Each of Bank of America, N.A., Barclays Bank PLC, Credit Suisse AG and Royal Bank of Canada and, in some cases, certain of their affiliates (collectively, the “Lenders”) have committed to provide debt financing for the transaction, consisting of a $4 billion senior secured term loan B facility, a $1.5 billion senior secured term loan C facility, a $2 billion ABL facility, senior secured interim loan facilities consisting of a $2 billion first lien bridge loan facility and a $1.25 billion second lien bridge loan facility (or, alternatively, senior secured first lien and second lien fixed rate notes that would be issued in a high-yield offering pursuant to Rule 144A under the Securities Act of 1933), a $1.9 billion term commercial receivables financing facility and a $1.1 billion revolving consumer receivables financing facility, each on the terms and subject to the conditions set forth in a commitment letter dated as of February 5, 2013 (the "Debt Commitment Letter").

2. The answer is always along the lines of "because you paid us to think that," but still.

Other posts from Dealbreaker:

• BofA To Spend Mortgage Savings Telling Everyone How Not-Horrible It Is
• David Einhorn Wants Apple Shareholders To Vote On Voting On Issuing Preferred Stock
• Microsoft Will Take A Low Interest Rate On Its Dell Debt To Demonstrate Its Emotional Commitment

Filed Under: details, lawsuit, leveraged buyout, shareholders
Companies: dell, microsoft

Why Are New Zealand Prosecutors Seeking To Suppress All Images & Video Of Megaupload Raid?

from the seems-sketchy dept

As lots of publications are reporting, over in New Zealand, Kim Dotcom took the stand to testify about how the police treated him during the raid on his home as part of the international effort to seize and shut down everything related to Dotcom and Megaupload. I have no idea if the claims he makes of being kicked and punched and the like are accurate. I'm sure his detractors will question how trustworthy the testimony is. Frankly, I have no idea how accurate it is.

But here's the thing that I find most interesting. Buried all the way at the end of the Stuff article linked above is the following line:

The Crown is seeking for all images and CCTV footage from the raids to be suppressed.

To me, that seems like a point that should be made up top. If Dotcom is being inaccurate in his descriptions, then wouldn't showing the video and images that prove him wrong basically destroy all of his credibility and help the government with their case? The fact that they're trying to suppress that very evidence certainly lends credence to his claims, and (at the same time) calls into serious question the conduct of law enforcement during the raid.

Filed Under: details, evidence, kim dotcom, new zealand, prosecution, raid, suppression, video

Looking At The Details Of The Released Leaked ACTA Draft

from the still-doesn't-look-good dept

It's been a few days now since the latest draft of ACTA leaked, and people are looking through it in detail. Michael Geist has a very detailed take on how the stumbling blocks appear to be a fight between the US and EU negotiators over how broad ACTA should be. Believe it or not, the US negotiators are the ones trying to limit it by taking out patents and limiting the scope to "just" trademark and copyrights. Of course, even that seems to go too far. If this is an anti-counterfeiting agreement, it should be limited to trademark, which is what counterfeiting is about. The European negotiators, however, are pushing to include all intellectual property.

Of course, the US has its own problems as well, in that it appears to be using the transparency issue as a negotiating ploy. That is, despite all the ridiculous claims from the USTR that it supports ACTA transparency, it appears to be telling negotiators it will only allow transparency if it gets what it wants. How very childish. Meanwhile, KEI is pointing out that (again, despite claims to the contrary), ACTA's text (pushed by the US) on injunctions appears to contradict US law, by taking out the exceptions and limitations.

Over in the EU, some have pointed out that EU Commissioner De Gucht appears to have lied to the EU Parliament in his briefing on ACTA. During that briefing, he apparently claimed that there will not be a definition of "commercial scale" in ACTA. But, in the leaked text? There is, in fact, a definition. And, part of the language was contributed by EU members. Nice work.

Meanwhile, Glyn Moody points us to an analysis of the document that shows how the wording for sections on third party liability and on damages would almost certainly require a change to existing UK law (and, I would argue, would lock in certain aspects of US law). These are the same points that have been raised before, but are brushed off by ACTA defenders who insist that, technically, ACTA can't force the US to change its law. This is weaseling out of the issue. That it can't, by itself, require such changes, doesn't mean that it won't be used, forcefully, as the lever to force those changes. At the same time, it would lock in highly dynamic aspects of case law, such as third party liability, that haven't actually been reviewed by Congress. That's problematic because (in theory) Congress could decide to change the laws on third party liability. But with ACTA in place, we'll immediately hear screaming about our "international obligations."

Update: A few folks have sent over another detailed analysis of the new leak by Kim Weatherall, who compares it to the previous draft. Definitely worth reading.

Filed Under: acta, details, draft

Because When MetroPCS Says 'No Contract,' It Actually Means 'Well, Of Course There's A Contract'

from the truth-in-advertising dept

The mobile phone business seems to have a serious problem with taking words that have a pretty clear meaning in English, using them in advertising and marketing promotions -- but meaning something entirely different. For example, various mobile operators claimed "unlimited" broadband, but to them "unlimited" meant "really, quite limited." Well, it seems we've got another situation like that, such as MetroPCS's widespread marketing campaign that loudly proclaimed "No Contract." Well, guess what, it actually meant that there absolutely is a contract, and any customer who signed up for MetroPCS after seeing the "No Contract." advertisement would obviously know that, because in the welcome kit it sent, it pointed users to a URL, and at the bottom of that URL there was another link to a terms of service, and in the terms of service there was another link to "start a service request" which included some boilerplate about how you were agreeing to a contract. And, apparently, this is all very legal.

Filed Under: contracts, details, mobile phones
Companies: metropcs