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Tech at Night: Obama and Holder vs AT&T, CA tax corruption, Anonymous arrests are legion

Tech at Night

This is one of those weeks when all the important stuff happens at once, and there’s much to cover. I’ll start with the big national story. As I previously covered, The Eric Holder/Barack Obama Justice Department is coming after AT&T, using its own odd brand of economics to claim that the merger with T-Mobile would make the wireless market less competitive. When in fact, as history has shown with deals like Sprint/Nextel, prices are only going to come down as the market gets more competitive.

But, nonsensical as it is, the Obama administration is pressing on with the same tired thinking that gave us zero net job creation last month, and downward revisions in prior months. So let’s sweep around and look at what’s going on, what others are saying both about the news and about the prognosis, beyond the Culture of Corruption aspect I already covered.

First, let’s look at the FCC. I find the reactions interesting. The day after the announcement, I saw no reaction on the FCC mailing list from Chairman Julius Genachowski, but only from fellow Democrats Mignon Clyburn and (Free Press’s pet commissioner) Michael Copps. Copps, of course, is cheerleading. Also interesting beyond Genachowski’s silence was the statement by Clyburn. Is it just me or does Clyburn sound defensive, like she’s taking offense at the DoJ’s implication that the FCC wasn’t looking out for the public on this?

Rick Perry’s reaction is good to hear. He’s all for the merger. Again, party lines aren’t always great predictors on tech issues, so I’m glad that a leading Republican Presidential candidate has made such a strong statement.

At Forbes and at TLF, Larry Downes points out all tech firms should be concerned about Obama’s campaign promise to “reinvigorate” antitrust, and ought to take an interest in promoting smaller government.

I mean, sure, it’s great news to see Obama slapping down the EPA due to Republican pressure on the heels of the FCC erasing the Fairness Doctrine. But this is still an administration that loves to expand its reach. The net growth of government has been positive under Obama, and that threatens innovation, growth, and jobs. And the President seems to be encouraging an activist Justice Department.

Don’t be too discouraged, though. Mike Wendy says it’s not over yet, despite Clearwire and Sprint Nextel stocks surging in response to the massive favor Obama just did R. Gerard Salemme and Craig McCaw.

And again, remember: the reason those stocks are rising is that the Obama/Holder DoJ is taking action to reduce competition in the 4G market, currently occupied nationally by just Verizon and Sprint/Clearwire.

As for AT&T itself, the consensus seems to be they’ve been caught flat footed, and didn’t see this coming but perhaps should have. In any case, they’re now floating offers to sell a minority stake in the firm, though I don’t see how that will appease anyone when the motivation behind this lawsuit is ideology, not facts or practical observation of the market.

The number of seminar commenters even a nobody like me gets is amusing to watch, as they all come on and pretend to be Republicans as they push a big government, corporatist ideology.

So you may have heard that California is trying to extend beyond its Constitutional authority and make an out-of-state firm Amazon pay taxes to California. California isn’t the only state to propose this, but it’s one of few pig headed enough to push so hard at it. Why? In state businesses are grumbling that Amazon, with its innovative inventory and Internet techniques, can sell for less. They claim that if only Amazon charged sales tax, they wouldn’t succeed so well. It’s nonsense, but it doesn’t take much to get tax-and-spend politicians to tax and spend, does it?

Amazon responded to California’s plan by cutting all ties with California affiliates in the Amazon Associates program (I was one of them). As a result, California lost jobs and lost revenue, making a mockery of the delusional claims that this power grab would raise revenue. Amazon though also proposed a compromise: the firm would bring jobs to California above and beyond the affiliate program if the state would hold off on the tax long enough that Amazon could lobby for a national plan to pass the Congress.

But, the state is siding with Wal-mart against Amazon. Now, I like Wal-mart, but I don’t like government taking sides to pick winners and losers. So even a member of the Board of Equalization (that’s the socialist name for California’s tax organization) likes the Amazon compromise.

Now, I oppose the current talk in Washington pushed by Dick Durbin, as I believe it’s a first step toward a Canada-style Harmonized Sales Tax, including our equivalent of Canada’s Goods and Services Tax, a national sales tax. But if you wanted to tax revenue long term, Amazon’s plan is great. Once Amazon builds a distribution center here, then it becomes much easier on the long run to tax them.

The Democrats’ refusal to work with Amazon seems tor prove this plan is more about punishing Amazon than about “fairness.” It’s corrupt and it’s shameful.

Some quick hits to finish: Wikileaks strikes again, but cowardly tries to pass the buck.

The terrorist gang Anonymous continues to get rolled up in the UK. Ah, justice.

Media neo-Marxists like Free Press are well-funded astroturf, and here I am fighting them without a penny of funding. This is just me, all volunteer, folks.

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COMMENTS

  • drfredc

    The Obamacrats issue with the AT&T merger is more about them trolling for dollars.

    My guess is the Obamacrats are/were hoping for some sort of a deal like they forced Comcast into where Comcast has to pay for various handouts which somehow the Obamacrats are hoping they get credit for.

    It wouldn’t be a surprise if a couple weeks down the road it’s all smoothed out when AT&T promises to hand out Iphones or Ipads to welfare moms and their kids… Plus a healthy donation to the Obamacrat campaign…

  • tjpeco

    I just can’t see how the AT&TTMO merger would increase competition. Taking an already low-participant oligopoly and squeezing it down to even fewer members can’t be good in the end for consumers.

    Furthermore, the analysis that this merger would bring jobs to America is quite honestly silly. I can’t see how all the duplicitous jobs in Finance, Marketing, engineering and so forth are going to make it through a merger. I know this because the company I work for is going through a merger and we’re all sitting around waiting for the axe to drop on all of the positions that are duplicated due to the combining of two organizations.

    Are you saying that the T-Mo store across the street from the AT&T store is going to stay open with a new logo on their sign?

    Look at AT&T’s past history with mergers and acquisitions relative to job loss/gain. Its not one that says “5000 call center jobs created”.

    I’m all for getting rid of Barry O – good gracious he’s been a dismal embrasssment – but I think we need to be honest about attacking what his administration does. Just because it was Holder that blocked this merger, doesn’t mean that it’s wrong on face value.

  • http://www.hakubi.us/ Neil Stevens

    Wireless phone service has many participants, it’s hardly an oligopoly, if one at all.

    National 4G Internet service has two participants. T-Mobile is not one of them. Neither is AT&T.

    You can’t reduce competition at the high end by combining two non-participants, such that together they will be able to compete.

    Thus, the merger increases competition, rather than reducing it.

    Seriously, I’m alternately annoyed and amused by dilettantes who insist because they read an Econ book in high school, that they know that every merger reduces competition.

    Educate yourself on the actual markets in question and maybe you’ll understand why corporatist state action in this case is actually bad.

    Another Hint: Sprint’s stock wouldn’t go up if DoJ blocking the trade would in fact reduce competition in an oligopoly. Reduced competition would benefit the remaining oligopolists.

  • Vegas_Rick

    I really can’t see the downside of the merger. But I really wasn’t informed well enough to be sure. Now I am.

  • whit3

    As a current T-Mobile customer, i’m glad the DoJ is opposing the merger. Last fall, I thought about leaving T-Mobile. I looked around, and the next cheapest comparable voice only plan in my area was $20 a month more. AT&T was even more expensive then that! T-Mobile isn’t perfect, but these days, I can’t aford a higher bill. So, I stuck with T-Mobile.

    I was very afraid of what would happen when the combined AT&T/T-Mobile saw that my contact had expired. I figured that the rate increase was going to be more than I could bear, and that I would have to switch to another carrier.

  • http://www.hakubi.us/ Neil Stevens

    .

  • acat

    TracFone. Their per-minute cost is quite good, and they’re definitely voice-only…

    Mew

  • http://www.hakubi.us/ Neil Stevens

    ..

  • tjpeco

    No need to go high and mighty on me. I’m trying to see through your reasoning here. You bring up good points about Sprint’s stock price – however I’m not keen on identifying what seems like a momentary blip in stock price with this decision by the DOJ.

    As for T-Mo and AT&T’s competitiveness in the 4G market. Both AT&T and T-Mo own 4G LTE band spectrum. Both are capable of making capital investment in their networks to become competitive in the 4G market. In fact, a leaked AT&T document that was briefly posted at the FCC and partially redacted made clear that AT&T stated it would cost them less than $10bn in capital to upgrade their network therefore they would be paying a huge price in order to keep T-Mo out of the hands of their competition, or eliminate competition. To build their network from 80% LTE coverage to 97% LTE coverage would cost AT&T $3.8bn. To buy T-Mo, they are paying $38bn. What again does T-Mo bring to the table that AT&T couldn’t do by itself to compete with Verizon’s amazing LTE network?

    As for whether the market is an oligopoly or not, I suppose that if the magical coming together of ATTTMO would happen, then there would be another player in the LTE market eventually. However in the wireless market overall, not just the niche 4G market, there are only 8 players now – with maybe 5 that have features competitive to Verizon and AT&T. If AT&T and T-Mo join, then AT&T and Verizon will have ~75% of the wireless market in the country. Even the apparent singular source of my economics education says that’s an oligopoly.

    Take a look at page 15 and imagine the T-Mo slice and AT&T slice put together.
    http://www.google.com/url?sa=t&source=web&cd=1&sqi=2&ved=0CDsQFjAA&url=http%3A%2F%2Fwww.chetansharma.com%2FUS%2520Wireless%2520Market%2520Q4%25202010%2520and%25202010%2520Update%2520-%2520Feb%25202011%2520-%2520Chetan%2520Sharma%2520Consulting.ppt&rct=j&q=us%20wireless%20market%20share%20by%20carrier&ei=hoZjTtLmMcaWtweBnYCJCg&usg=AFQjCNF7SNMzSVMo9-cD0n2cLD6xe2VY9Q

  • http://www.hakubi.us/ Neil Stevens

    You don’t know anything you’re talking about with spectrum.

    Tell us, just where do you go ‘invest’ in more spectrum for LTE use?

    Hint: That’s what AT&T is *doing* right now, and corporatists like you are trying to block it with the People’s State Commissariat of Competition.

  • tjpeco

    You get spectrum licensed/auctioned by the FCC – to which AT&T has more than any other wireless company for LTE (or the 700 mhz band as its refereed to). YOu can find out who owns (or leases) what spectrum in any georgraphic location by going to http://wireless.fcc.gov/uls/index.htm?job=home and spending some quality time with the search page. (if you don’t know what you’re specifically looking for, it can be quite a beast)

    AT&T spent almost $2bn buying LTE spectrum from Qualcomm at the end of last year giving it the (download anyways) space it needed to build out its network to keep pace with Verizon. Again, if AT&T needed T-Mo to buildout their 4G network to compete with Verizon, why then does their document say they could do that with $3.8bn without T-Mo?

    You “invest” in broadband by putting up the infrastructure – towers/backbone/etc….

    Also, as a longtime RS reader- I’d hate to be called ignorant by a contributor, but to be honest, I’m quite offended that you went straight to the “ignorant” button right off the bat.

    As far as I can tell, you haven’t addressed (Which I’d like for you to enlighten me on):

    1) The claim that 5000 jobs would be created domestically is unrealistic/unbelievable
    2) AT&T’s own admission that it could buildout its 4G network for less than the cost of purchasing T-Mo
    3) The overwhelming amount of market share that would be held between two wireless providers after a merger went through.