Volume 48; 1995-1996 • Issue 2

Articles

Whither Goest NTIA? The Fate of a Federal Telecommunications Agency
by Richard E. Wiley and Paul E. Misener

In the past year, Congress has sealed the fate of the National Telecommunications and Information Administration (NTIA). Although President Clinton has pledged to veto any action that abolishes the Commerce Department, in which the NTIA is located, Congress will ultimately dismantle the NTIA. Thus, the question becomes what entity will shoulder NTIA’s workload, which includes among other responsibilities managing federal use of the radio frequency spectrum, developing executive branch telecommu nications policy, and administering the Federal Grants Program.

Although the Federal Communications Commission (FCC) appears to many a natural successor to the NTIA’s varied responsibilities, the Authors suggest other agencies are more appropriate. For instance, relocation of NTIA’s spectrum management functions are better suited to the General Services Administration (GSA), Office of Management and Budget (OMB), or the Treasury Department. The Authors indicate that these agencies are in a more neutral position than the FCC because they do not have a relationship with the private sector which makes balancing the needs of competing groups difficult. Moreover, the NTIA’s policy-making functions should remain with an executive branch agency in order to provide the president the ability to take independent positions on telecommunications issues.

Mergers in Mobile Telecommunications Services: A Primer on the Analysis of Their Competitive Effects
by John W. Berresford

Mergers in Mobile Telecommunications Services: A Primer on the Analysis of Their Competitive Effects – Part 1

Mergers in Mobile Telecommunications Services: A Primer on the Analysis of Their Competitive Effects – Part 2

Mobile telecommunications businesses are undergoing an unprecedented period of mergers which may result in a national network for Personal Communications Services. All of these transactions require the approval of the Federal Communications Commission (FCC), which is in the process of issuing thousands of local, regional, and nationwide licenses. The FCC grants the licenses under “the public interest” standard of the Communications Act of 1934, which requires an analysis of each proposed merger’s effect on competition.

The Author begins his description of the analytic framework used by the FCC by describing its variables. Part I describes the “product market,” which must be defined and established for each party to a proposed merger. Generally, the boundaries of these markets are determined by the interchangeability of use and demand for the product and its substitutes. The Author provides four general rules for defining product markets and provides a description of cases in which these rules were employed. The Author then provides an alternative, more precise method of defining a product market which is found in merger guidelines published by the Department of Justice and the Federal Trade Commission. The Author concludes this section by applying the classic rules and the alternative definitions to determine a product market in a hypothetical mobile services merger.

Part II deals with the “geographic market,” the area of effective competition. The Author begins by providing the definition of geographic market found in case law. The Department of Justice and the Federal Trade Commission also publish recommended guidelines containing a more precise definition of a geographic market. Both the case law definition and the federal guidelines definition are then applied to a hypothetical mobile services merger to determine the resulting geographic market. The Author concludes this discussion of the analytic framework by discussing the differences in horizontal, vertical, and conglomerate mergers. A horizontal merger is between companies performing similar functions; a vertical merger is the acquisition of one company which buys the product sold by the acquiring company or which sells the product bought by the acquiring company; and a conglomerate merger is one that falls under neither of these headings.

Once the Author details all of the variables of the framework—the product market, the geographic market, and the classification as vertical, horizontal, or conglomerate—he describes the actual analytic framework used in a typical horizontal merger. This framework has two parts: determining the degree of “concentration,” the amount of power held by a small number of companies before and after the merger, and determining the potential for pro- and anti-competitive effects. Concentration can be determined by classic objective measurements like the Herfindahl- Hirschman Index (HHI), which requires a calculation of the market share of each competitor in the premerger relevant market, squaring this calculation, and computing the sum of all of these squares. The difference in the pre- and post-merger sums is an estimate of the change in that market’s concentration. In an unconcentrated market, a horizontal merger will have no anticompetitive effects. The Author provides an example of the HHI for a hypothetical mobile services merger.

The HHI is not wholly dispositive of whether a merger will be anticompetitive, but it does establish a burden of proof against the merger if the HHI numbers are favorable. This anticompetitive condition may result in diminished innovation, price fixing, and limitation of output. The Author concludes the discussion of horizontal mergers by noting that they may enhance competition by reducing the need for governmental regulation, creating efficiencies in the form of financial savings, economies of scale and scope, and creating easier conditions of entry into the market for other competitors. The Author also includes a brief discussion of vertical mergers, which are generally viewed as conducive to competition, and their potential competitive pitfalls for the mobile services industry. The Author closes by describing the types of actions taken by the Federal Trade Commission if a merger is deemed anticompetitive.

A Different Time, A Different Place: Breaking Up Telephone Companies in the United States and Japan
by Richard E. Nohe

Currently, the Japanese government is in the midst of a decision with respect to the future of the now privatized Nippon Telegraph and Telephone (NTT) of Japan. The divestiture of AT&T, NTT’s United States counterpart, occurred over a decade ago. The Japanese government is contemplating the use of AT&T as a model for the break up of NTT. Because of NTT’s history as a monopoly service provider, the central issue confronting Japan is how to create a market that can withstand competition nationally and globally.

The Author adopts a comparative approach in seeking to provide guidance to policymakers in Japan. First, the Author highlights some of the fundamental differences between the American and Japanese telecom munications markets, including the different regulatory structures. Ultimately, the Author suggests that if the divestment of NTT mirrors the break up of AT&T, Japan’s ability to compete effectively with global counterparts in the near future could be undermined.

Notes

A Double-Barrelled Assault: How Technology and Judicial Interpretations Threaten Public Access to Law Enforcement Records
by Jamison S. Prime

Recently, an explosion of media coverage has revealed gross misconduct on the part of many police officers in the United States. From Rodney King to Mark Furman, the events have raised grave questions about whether existing checks against police misconduct are effective. Yet, at this crucial period, technological advances and judicial interpretations undermine the ability of the public to access police records. The Author argues that most Freedom of Information (FOI) statutes provide inadequate access to police records in light of technological advances and narrow judicial interpretations of FOI statutes.

Freedom of Information Statutes: The Unfulfilled Legacy
by Laura Schenck

When members of a state legislature debated and then voted on a controversial amendment to the state budget, the legislative clerk denied two reporters from a local newspaper access to a record of the roll call votes. The state supreme court upheld the denial in the face of a Freedom of Information (FOI) request. This example illustrates the shortcomings of most freedom of information statutes; in most cases, the legislative branch has quietly exempted itself from disclosure requirements. Consequently, voters at both the state and federal level are not legally entitled to know how their representatives have voted.

The Author argues that the legislative exemption from FOI statutes is fundamentally unacceptable in a democratic society and should be eliminated. The Author focuses on constitutional issues and concludes that FOI statutes should be extended to the legislative branch.

Copyright:

Copyright © 1996 by the Federal Communications Law Journal. Except as otherwise provided, the author of each article in this issue has granted permission for copies of that article to be made for classroom use, provided that (1) copies are distributed at or below cost, (2) the author and the Journal are identified, (3) proper notice of copyright is attached to each copy, and (4) the Federal Communications Law Journal is notified of the use.