Please read this article then answer the two questions below baffling week for c

Question

Please read this article then answer the two questions below

baffling week for competition policy in America

The DOJ is right to oppose the AT&T-Time Warner deal. The FCC is wrong to scrap net neutrality WHY is America’s Department of Justice (DOJ) trying to block a merger between AT&T, a telecoms giant, and Time Warner, a media conglomerate? Simple, say some: President Donald Trump has it in for CNN, which is owned by Time Warner. It matters to the independence of America’s trustbusters whether Mr. Trump’s tastes have steered the DOJ. But he happens to be right when he says that the deal is “not good for the country”. The real problem is not the DOJ’s move, but the contradictions in his administration’s competition policies. A day after the DOJ filed its complaint, the Federal Communications Commission (FCC) announced plans to repeal rules which protect “network neutrality”, the principle that internet-service providers (ISPs) must treat all sorts of digital traffic equally. That would enable AT&T and others to charge more for certain types of content, so long as they are open about it. A set of policies that simultaneously thwarts AT&T from bulking up and gives it much greater license to raise prices, and does both in the name of competition, is incoherent. Not on their watch The marriage of AT&T and Time Warner would be a “vertical” merger, meaning that two firms from different bits of the supply chain are combining. The deal would bring together an owner of the infrastructure that distributes content (fixed, satellite and mobile connections) and a firm that creates it. Trustbusters have not looked too closely at vertical deals—and America’s courts have been tolerant of them. The content business is also being disrupted by Amazon and Netflix. That is why Rupert Murdoch is tempted to throw in the towel by selling off bits of 21st Century Fox (see article). AT&T and Time Warner argue they are just legacy firms trying to adapt. Time Warner owns sports rights and many channels, some of which reach nearly all the 100m American households that subscribe to pay-tv. The DOJ worries that the combined firm could exploit this unfairly to win new distribution customers. It thinks it could jack up the fees it charges other video distributors, such as cable and wireless providers; if they balk, subscribers might decamp to its own offerings. This is possible. And there is another worry, particularly as more people consume content seamlessly over mobile devices as well as TVs and computers: that AT&T strong-arms its wireless, satellite and wireline customers to buy more Time Warner content. A vertical merger is dangerous when one of the parties is so powerful. One in two Americans are wireline, satellite or wireless customers of AT&T, which extracts a fat return on capital of 17% (excluding goodwill). A combined firm would be America’s eighth-largest by revenue, with huge lobbying power. An AT&T-Time Warner tie-up would be even more worrying in light of the FCC’s plans. Ajit Pai, the commission’s newish chairman, thinks that strict rules enforcing network neutrality are not needed. Instead, he wants ISPs to set their own policies and get another agency, the Federal Trade Commission, to enforce them case by case. That might work in countries with fierce competition among fixed broadband providers; in America, where millions of households have only one choice of high-speed supplier, it would surely fail. Big ISPs can charge startups and others more for bandwidth, slowing innovation and leaving consumers with less choice. America needs to get competition policy right. Concentration has risen across most of its industries over the past two decades. Giants such as Facebook and Google raise profound questions for trustbusters (see article). This week’s signals from the Trump administration could not be more mixed. The DOJ’s more vigorous approach is the right way to go. IMO the DOJ is not being aggressive enough, it should be arguing complete severance of content producer and "retail level" internet distribution. The specific problem is ISP's are favoring their own content. WRT bandwidth (speed), my AT&T Internet contract specifically states that if bandwidth to my computer constrains bandwidth to their U-Verse TV product they will throttle my computer in favor of the TV. That I'm using my computer to feed Netflix to my TV and am not using AT&T's U-Verse TV service at that time is irrelevant to them. WRT price, does anyone expect AT&T Internet service to change AT&T U-Verse (content) service the same price they'll charge Netflix for streaming its content? A far, far better environment going forward would be multiple ISP's offering a variety of delivery services competing against each other and a completely different set of multiple content providers competing against each other.

Questions -

1-Has competition risen over time (especially with the global marketplace) so the “need” for American regulation has diminished? Why or why not? -

2-When agencies disagree, which one “wins”? Which one SHOULD win? Why?

Explanation / Answer

1. Yes, this is true that with globalization the competition is rising with respect to time, the utility or the consumers needs are rising and many new firms by understanding this needs are coming up in the market, thus giving fierce competition to existing firms, for example:- time and day specific television programs are almost impossible to watch for majority of the working public, thus understanding this dilema companies like Netflix, Amazon Prime come up, giving direct competition to existing TV channels. Now the point is, is the need for american regulation has diminished, the answer is no, regulation is still required only the perspective for regulation is changed, in the above article in the name of vertical mergers government cannot simply stop or ban the merger of AT&T and Time Warners, instead of banning on the name of net neutrality, a proper regulation, or framework to regularize the Internet Service Providers(ISP's) is needed strongly, so that over pricing of the content is stopped.

2. When various government agencies disagree's with the implementation of such framework overseeing new competiotion policy, in reality nobody wins, because competition is the result of both the innovations as well as the market requirement, by adhering to the previous laws and mindsets any disagreement will result in neglegience of this innovations which is a negative in prospect. In the above article the FCC should win because sometimes it is possible that a single regulatory board is insufficient to handle each and every perspective, so based on the domain knowledge various agencies should collaborate in order to give way for certain innovations.

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