[1st-mile-nm] DOJ Opens Review of Telecom Industry

[Marianne Granoff]

 From another list.

>  http://online.wsj.com/article/SB124689740762401297.html
>
>
>DOJ Opens Review of Telecom Industry
>
>
>By AMOL SHARMA
>
>JULY 6, 2009, 12:42 P.M. ET
>
>
>The Department of Justice has begun an initial review to determine
>whether large U.S. telecom companies such as AT&T Inc. and Verizon
>Communications Inc. have abused the market power they've amassed in
>recent years, according to people familiar with the matter.
>
>The review of potential anti-competitive practices is in its very
>early stages, and it isn't a formal investigation of any specific
>company at this point, the people said. It isn't clear whether the
>agency intends to launch an official inquiry.
>
>Among the areas the Justice Department could explore is whether
>wireless carriers are hurting smaller competitors by locking up
>popular phones through exclusive agreements with handset makers,
>according to the people. In recent weeks lawmakers and regulators have
>raised questions about deals such as AT&T's exclusive right to provide
>service for Apple Inc.'s popular iPhone in the U.S.
>
>The Justice Department may also review whether telecom carriers are
>unduly restricting the types of services other companies can offer on
>their networks, one person familiar with the situation said.
>
>The scrutiny of the telecom industry is an indication of the Obama
>administration's aggressive stance on antitrust enforcement. The
>Justice Department's antitrust chief, Christine Varney, has said she
>wants to reassert the government's role in policing monopolistic and
>anti-competitive practices by powerful companies.
>
>The statute that governs such behavior ­ the Sherman Antitrust Act ­
>was used by the government in cases against giants ranging from
>Standard Oil to Microsoft Corp. But it lay essentially dormant during
>the Bush years, with the agency bringing no major case.
>
>Now Ms. Varney plans to revive that area of U.S. law, and the telecom
>industry is among several sectors ­ including health care and
>agriculture ­ that are coming under scrutiny, the people familiar with
>the matter said. She is already tackling one high-tech area by
>investigating Google Inc.'s settlement with authors and publishers
>over its Book Search product.
>
>Through a spasm of consolidation and organic growth, AT&T and Verizon
>have become the two dominant players in telecommunications, with the
>largest networks and major clout over equipment makers. Combined, they
>control 90 million landline customers and 60% of the 270 million U.S.
>wireless subscribers. They also operate large portions of the Internet
>backbone, ferrying data across the country and overseas.
>
>A Justice Department spokeswoman declined to comment.
>
>Some antitrust experts said the government would have a tough time
>opening a Sherman Act case against telecom providers if it chooses to
>do so. To bring a case, the government must show that a company is
>abusing its market power.
>
>"It would be a very hard case to make," said Donald Russell, a
>Washington attorney who reviewed a number of major telecom mergers as
>a DOJ antitrust lawyer in the Clinton Administration. "You don't have
>any firm that's in a dominant position. Usually, you need to show a
>firm has real market power."