It’s March again, a time when most sports fans root for underdogs.  Of course, a few people lean towards favorites, including a small and odd fan club assembling for AT&T’s proposed $39 billion acquisition of T-Mobile announced on Sunday.

What’s especially puzzling are the strange reasons that some cheerleaders and some casual observers cite in favor of this mega-merger – one that would increase concentration vastly in a market that already is highly concentrated – when most people see through the illusory claimed benefits.

Wireless users and wireless competitors alike are upset by the proposed acquisition, which would combine the second and fourth largest U.S. carriers, rocketing AT&T back into the top slot and giving it more than 40 percent of U.S. subscribers.

That combination inevitably would lead to fewer choices and higher prices for consumers and businesses that use mobile voice and data services.  It would affect not only current T-Mobile customers, but customers of other carriers as well, who would find themselves with fewer alternative providers. It would harm AT&T’s competitors too, most of whom already incur higher device costs and operating expenses directly attributable to AT&T’s exclusionary conduct.

Most of the early press coverage and popular sentiment about the deal has recognized these obvious problems, all stemming from the simple fact that fewer competitors means less robust competition, hence less incentive and ability for wireless providers to lower prices and improve service quality to win customers.

As the FCC has recognized in its annual study of competition in the wireless market, the presence of competitors with a nationwide footprint rivaling AT&T’s has done something – not nearly enough, but something – to keep AT&T’s prices in check. Even with the downward pressure on pricing exerted by competitors like T-Mobile, the company that kept a stranglehold on the iPhone for so long was still able to charge a premium for its subpar service just because of the popularity of the phones AT&T can keep away from its rivals.

If AT&T buys up one of those rivals, and indeed the only large one that uses the same technical standards as AT&T in its 3G networks, fans of T-Mobile’s typically lower priced and higher quality service would lose that option – as would all wireless users.

The isolated voices cheering the deal, and some analysts handicapping its odds of success from the sidelines, have come up with a few curious arguments for approval.  Some have noted that the wireless market, and especially the mobile broadband segment, is already dominated by two major players anyway.  Yet, the answer to flawed policies that allowed this duopoly to arise cannot be complete abdication by federal agencies charged with protecting consumers, promoting competition, and preventing abusive practices by dominant players like AT&T.

Others supporting the deal argue it would spur broadband deployment and create jobs, while simultaneously lowering prices or improving service for AT&T customers. These contradictory claims fall apart when stacked next to one another, and deserve close scrutiny in the context of a transaction so likely to run afoul of antitrust law and public interest standards.

Merger “efficiencies” are a corporate euphemism for workforce contraction and job losses, not gains. Any efficiencies that the newer, bigger AT&T realizes would translate into higher profits – what AT&T’s press release announcing the deal glibly refers to as “value-enhancing” and “straightforward synergies” designed “to create substantial value for shareholders.”

So don’t hold your breath as you wait for your AT&T wireless bill to drop once the company has taken out one of its main rivals.

You might need to wait a while too for expanded broadband deployment and new jobs when AT&T promises its shareholders to reduce costs through “support savings, reduced churn, and avoided capital and spectrum expenditures.” Buying spectrum-constrained T-Mobile would not solve all the problems with AT&T’s woefully inadequate network, but it would keep those spectrum assets out of the hands of other providers potentially willing to challenge AT&T’s dominant position.

AT&T’s acquisition of T-Mobile would be a bad deal for American consumers, workers, and businesses in the telecom sector and outside of it. It’s time for federal agencies charged with protecting consumers and competition to rethink possible and do their duty in reviewing this deal.

Matt Wood is associate director of Media Access Project, a nonprofit, public interest law firm working to protect free expression, innovation, and economic growth by promoting low cost, universal access to media outlets and communications services.

Throughout years of debate on open Internet protections, cable and telecommunications carriers have continually argued that strong net neutrality rules will hurt investment. They maintain that regulation to forbid discrimination in network management would cause them to back away from building and upgrading broadband infrastructure nationwide. These flawed arguments are intended to deter FCC Chairman Genachowski from imposing nondiscrimination rules for fear that investment will decline or even come to a halt, leaving the U.S. even farther behind in broadband penetration than it already is. So far, the arguments have worked.

But this is far from the first time the FCC has shown a lack of political courage or will to protect consumers in the face of powerful industry pressure. History shows us that the FCC has presided over a progressive decline in investment and competition in the Internet space over the last decade, due to deregulation brought on by the agency’s willingness to bend to pressure from the cable and telecommunications lobby Goliath. From placing broadband Internet access under a weak regulatory regime in 2002 and 2005, to weakening infrastructure build-out requirements from communications franchising rules in 2006, the FCC has erased more and more important policies that ensured competition and innovation in the Internet marketplace.

It is time for the FCC to end this downward spiral of deregulation, and to stand up for what is best for the economy, the public, and the future of competitive business. Contrary to the agency’s actions earlier this decade, it is not the absence of regulation that will ensure investment and consumer protection. In fact, without the strong likelihood of a financial return, companies cannot be trusted to spend funds strictly for the benefit of the public without adequate regulation. (I wish I had a penny for the number of times this was proven true.) An effective government demonstrates the leadership necessary to ensure that the free market system operates fairly. It proactively eliminates opportunities for companies to place the bottom line before the public interest.

The following review of Internet policy deregulation in the last decade should be a significant cause for alarm.

From Competition to Duopoly

The 1990s was the age of dialup Internet, with its myriad of Internet service providers vying for the attention of consumers. America Online, Earthlink, NetZero – many of these companies still serve low-income and rural households.

The kind of intense competition available for dialup, but not for cable, DSL, FiOS, or mobile wireless, is due to “common carriage” rules imposed on carriers by Title II of the Communications Act of 1934. Among other things, Title II requires these companies to open up their networks to competing Internet service providers. Telephone service has had to abide by these requirements for a century or more (and thus, dialup does too).

Cable carriers soon entered the Internet service provision market – but in 2002, their massive lobbying might convinced the FCC not to impose the same requirements for cable modem service. Cable carriers used the same threats about investment to avoid common carriage that they are using today to avoid net neutrality rules: they said competition from other Internet service providers would place too much of a financial burden on them to carry out upgrades and build-out needed for increased bandwidth capacity, or would diminish their incentive to invest if they cannot monopolize the returns on that investment.

The result of this harmful FCC decision is evident in today’s cable broadband market: subscribers in most markets can receive cable Internet only via one incumbent cable carrier. The carrier gets to name the price for its services, and unsurprisingly, Internet users pay much more for slower service than those in other nations do. They also receive about half the broadband speed advertised by their providers.

In 2005, in another radical policy departure in support of large incumbents, the FCC extended the same treatment to telephone company broadband offerings. The agency reclassified DSL, which is transmitted via the same phone lines used to provide dialup, removing it from Title II of the Communications Act. The ruling thus removed common carriage requirements on DSL providers, diminishing consumer protections for the vast majority of high-speed Internet service users.

Today, DSL carriers offer similarly high prices for snail-like speeds compared to the broadband offerings of other developed and even developing nations. They also fail to provide consumer choice for DSL service in most regions.

In 2006, deregulation continued when the FCC dramatically eased build-out requirements in local franchising laws across the United States. Franchise agreements are made between local and state governments on one hand, and providers of video services like cable television on the other. The agreements dictate the terms by which companies build their video systems, which typically are the same systems they use to provide Internet service. The Bush-era FCC’s decision limited state and local governments’ ability to require companies to connect underserved and unserved regions in their own communities. Instead, it permitted carriers to cherry-pick lucrative areas to provide broadband service.

The Investment Scare Continues

For a few short months, current FCC Chairman Genachowski gave the public impression that he understood the importance of an effective regulatory agency. He asked an independent team to develop a National Broadband Plan. He spoke in support of strong network neutrality rules applicable to both wireline and wireless networks. Later, in response to new challenges, he developed an agenda to “reclassify” broadband under Title II, albeit with some new limitations on FCC authority.

He even commissioned the Berkman Center for Internet & Society at Harvard University in 2009 to study “open access” in the broadband context, tipping his hat to the Telecommunications Act of 1996, which encouraged line sharing to ensure broadband competition.

The Berkman study came out with strong, compelling evidence, based on international comparisons and economic analysis, that line sharing is a critical component of a country’s strong broadband development. In the countries studied, the report stated,

“open access policies – unbundling, bitstream access, collocation requirements, wholesaling, and/or functional separation – […] provided an important catalyst for the development of robust competition which, in most cases, contributed to strong broadband performance across a range of metrics” (13).

But after asking for public comment on the Berkman report, the FCC did not follow through on the report’s recommendations. Blair Levin, former director of the National Broadband Plan team, poured cold water on any hopes of FCC action on the issue in an interview earlier this year.

Many recommendations made by the National Broadband Plan were similarly underwhelming, proposing universal broadband speed targets lower than those proposed or already achieved in many other nations. And the agency still has not moved to reassert its authority over broadband access, so that it can implement strong network neutrality protections.

Instead, the FCC hosted closed door meetings without public interest involvement to develop a watered-down industry compromise on what only the carriers could believe passes for network neutrality. Worse, because the agency has not acted to make sure that it can oversee broadband access, it is unclear how any net neutrality rules it creates could be enforced. All because some large providers threaten to withhold investment in their infrastructure if the FCC dares impose any tangible regulations on them. (Yet somehow, Comcast, AT&T, and Verizon can afford to pay for expensive commercials, billboards, sponsorships, and outdoor advertising like virtually no other commercial industry in business today.)

Time for a Stronger FCC

When carriers warn of the looming downfall of investment due to network neutrality rules or broadband reclassification, their scare tactics should rouse considerable feelings of déjà vu in any historian or longtime advocate of communications policy. These are not new arguments. They are tried-and-true weapons used to weaken the FCC’s political will. And the long-term memory loss of the Washington policy world provides a perfect excuse for their continued use.

The solution to the FCC’s rightful concern about investment is not the abandonment of net neutrality protections. Doing so would leave carriers free to discriminate against or block traffic on the Internet, gutting free expression, technological innovation, and competition in online commerce. Doing so would also fail to provide any concrete assurance that carriers will in fact invest to expand and upgrade broadband networks, as they promise to do.

If the FCC is truly concerned with investment, it will strengthen its competition policy, not weaken it. It will create rules to ensure consumer choice and infrastructure development, instead of bowing to carriers’ intimidation tactics by enacting diluted, unenforceable network neutrality provisions.

Kamilla N. Kovacs is communications and development director at Media Access Project, a DC-based nonprofit, public interest law firm working to advance policies that promote freedom of expression, independent media, and low-cost, universal access to communications services.

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Federal Communications Commission Chairman Julius Genachowski should remember one simple message as his agency clarifies its authority over Internet access services: The agency’s job is to serve the public. Accordingly, the FCC’s primary concern should be the needs of the nation, not those of big telecommunications or cable carriers.

Yet last week, Chairman Genachowski held closed-door meetings with industry, in an effort to search in vain for a compromise on open Internet principles and other public interest protections. Despite its goal to serve the public, the FCC did not invite citizens’ organizations to the table at these meetings, and did not divulge details regarding the discussions that took place.

The agency should put a stop to such private meetings with industry, and must continue an open dialogue on the future of broadband directly with the American people, who are the real stakeholders in these critical decisions. Keeping the process transparent will stay true to the Obama promise of an open government.

Roughly two years have passed since Candidate Obama began to build a nationwide following around common dreams of “change” and “hope.” He spoke of encouraging public service and fostering a culture in which the American people could take on serious energy, health care, finance, and foreign policy challenges. He promised an open Internet, to give all communities equal access to information and self-empowerment in the digital world. In fact, Candidate Obama built his remarkably successful campaign using the open Internet. His statements on all of these topics promised a government built on dedication, honesty, and transparency, and he motivated thousands of undecided or apathetic voters to believe that corporate influence and backroom deals would no longer rule Washington.

These dreams can still become reality, but they require bold leadership at all layers of government – including the FCC. Chairman Genachowski must engage his Commission to follow President Obama’s leadership on transparency and accountability. Yet the FCC’s closed-door meetings did not echo such an approach.

The groundswell of corporate lobbying dollars being spent by AT&T, Verizon, Comcast, and others to weaken Chairman Genachowski’s stance on his broadband oversight proposals should not surprise the Commission. These companies are doing their jobs as profit-seeking entities working to ensure maximum returns for their shareholders.

But as our nation has experienced, and as Candidate Obama recognized, the private sector sometimes does not act in the public’s best interest. Unchecked market forces actually can foreclose possibilities for growth and access, shut out innovation, and even cause environmental, financial, or medical disasters. The federal government must set reasonable rules of the road for us to have fair and safe markets, promoting innovation, investment, and industry by ensuring a level playing field for all.  Regulators must fill in gaps and close harmful loopholes to ensure long-term national benefit.

The truth is that Internet service providers have never been leaders in innovation. The seemingly limitless possibilities for access, collaboration, and commerce online that we see today are the work of content and application producers, who have relied on the open Internet to create brand new businesses and products. With a strong and effective FCC, able to continue protecting users’ access to the Internet, this new economy will continue to grow.

Without fair and clear ground rules set by the FCC, on the other hand, big cable and telecom companies will decide how and when their customers can access information on jobs, educational opportunities, health care, and civic participation.  Historically marginalized groups will have to continue to endure media representation that has little or no relevance to the struggles these communities face daily. And as recent disasters on Wall Street and in the Gulf have shown, we all lose when powerful business interests get to set their own rules and prioritize their own huge windfalls over public safety and transparency.

The FCC has proposed restoring the light-touch oversight of broadband Internet access that the agency exercised during the last several years. The proposal is fair, reasonable, and timely. Chairman Genachowski must move ahead with the transparent, committed proceeding he promised to implement in that plan. He must not compromise on open Internet principles, and cannot allow special interest pressure at the FCC and on Capitol Hill to weaken the Commission’s power to protect consumers online.

Genachowski’s actions today will define the future of online business and public access to information on the most democratic, participatory communications platform of our lifetime.

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