Convergence Mergers: Where

1
Convergence Mergers Wheres the Relevant Market?

• Glenn B. Manishin
• Practising Law Institute
• San Francisco, August 2000

2
Telecom Mergers Redux

• 1999 e.g., BA/NYNEX, SBC/Ameritech
• DOJ and FCC act at cross-purposes
• FCC imposes costing/OSS and sep. sub. conditions
  in view of potential competition
• 2000 e.g., ATT/MOne, WCom/Sprint
• Improved agency coordination
• DOJ applies traditional LD market definition
• Incremental issues (cable concentration v.
  broadband competition)

3
Changing Market Definition(s)

• Local v. long-distance telecom (and Section 271)
• Telecom v. Internet transport
• Broadband v. cable television
• Landline v. wireless
• Portals v. gatekeepers

4
Dueling Doctrine(s)

• Market definition
• Clayton Act v. public interest/diversity
• Interconnection obligations
• Essential facilities v. necessary and impair
• Cable broadband unbundling (open access)
• Refusal to deal v. Title II v. Title VI

5
Relative Agency Competence

• DOJ
• Institutional competence
• Competition standard with concrete guidelines
• H-S-R Act imposes timing restraint

• FCC
• Record of parties and analysis
• Public interest sliding scale gt Clayton Act
• License transfer provides policy
  leverage/extortion

6
Open Access and AOL/TW

• Neither horizontal nor vertical overlaps
• Politics makes strange bedfellows
• Content v. caching v. messaging
• Impact of City of Portland
• Limits of voluntary commitments
• Externalities
• Broadband build-out DSL competition
• AOL overreaching (IM)

7
Doctrinal Conflict

• Antitrust
• Unilateral refusals to deal permissible
• Narrow Section 2 exception for firms with market
  power
• Market definition differentiates video and
  Internet access

• Communications
• 1996 Act not reflect convergence
• Proponents assume cable has/will have market
  power
• Title II (carrier) v. Title VI (video) v.
  diversity policies

8
Conclusions

• Doctrinal instability will continue as agencies
  and private parties temporize
• Market definitions still wedded in 20th Century
  notions
• Open access raises core conflict between
  government interventionism and long-term market
  development
• Political pressures will only increase!