Medical condition pending california an average workers are deprived of an annual basis because their employers or refuse to pay them overtime. I have dedicated my life and my career to helping working families in the Central Valley. I will go to washington and continue to fight for us here in the Central Valley and all of californias because i know california is a great thing. We live in a Great Community yet we are the poorest Congressional District or one of the poorest in the country and one of the richest agricultural economies in the country and one of the richest states in the country. Valadao thank you for the opportunity. Ive enjoyed the conversation we have had. Ive worked for the last four years doing everything i can for the district. Everything ive ever focused on is to make sure people in Central Valley are happy. We started off at the right time. At the end of the day when you have a Representative Congress that makes as much effort as i do tube go to small communities to make sure mike caseworkers are taken care of so you see those stories on tv about a veteran that was helped thats been my goal and to make sure the people in Central Valley are successful. Ive always focused on the issues that are the most important and i position myself on committees tied to get to the Central Valley. Everything ive ever done in my role in Political Office has been to the Central Valley. My personal experience as a Business Owner and a farmer and someone who has to deal with regulations and hosted have a better understanding to make sure if we create jobs in connection with the ability to track businesses as a Business Owner i feel like a primitive table. Mods that they have appeared when these two men will be representing california 21st Congressional District at the start of 2017. Congressman thank you for being here and we wish you both the best of luck as you hit the home stretch less than three weeks now. For my colleague evan onstot i am kevin scott at kg kg ett v. Pick you up to that began as an thank you for spending time with sms always go out and make an informed decision and go to the polls on november 8. Goodnight. Host this week in the communicators a discussion about the proposed merger between at t and time warner. Here to discuss that our two men who have covered and watch Telecommunications Policies here in washington. Harold feld Senior Vice President of Public Knowledge and Scott Wallsten is president of Technology Policy institute. Lets begin with you. What would this merger mean to at t . Are what happened . Guest at t wants to live the content. Apparently it sees that this is the future of industry and the comcast nbc merger time warner at t its something we vertically integrate with time warner. Host you say vertical. What does that mean . Guest in a horizontal merger you have two Companies Compete directly with each other so the attempted at t, tmobile merger would have been at merger because of concerns related to that. A vertical merger is when you have upstream and downstream companies combined so there are separate markets so you are not changing the concentration, the industry concentration in either one and the Justice Department tends to look at it differently. Generally speaking of vertical merger is easier to get through than a horizontal merger. You have to show they were be improved efficiencies from the merger niechta show there will be an effect. Typically its less like way of vertical and horizontal. Host harold feld who would this mean to a consumer of at t or time warner . Guest i do think there are a lot of reasons to be very skeptical about this merger. Particularly based on how the industry has evolved and the increasing concentration within the industry as the wedding of particularly the Marquee Program not just whatever clips we have been watching you to put the program in like hbo and evening movies coming out if the studios that are critical for the success of on line streaming service. The big concern here i think is the thing that consumers ought to be most concerned about is at t is a National Carrier and they recognize that this shift is watching video moving from the big screen on the wall to being in the handheld device as well. For at t a lot of that money comes from data overages, limiting your data. A lot of money in advertising that they are increasingly getting the Company Involved in. The fcc voted yesterday in one of the things they found in looking at raw demand and Companies Like at t have a tremendous window because as your every device becomes connected to the internet and the cell phone connected to the internet at t as your provider to see what you get for birth is that if youre smart refrigerator and when you go to work in the morning, when you were walking by a mcdonalds on the way to work and combined them with its content that would get from this to essentially dissect every element of your life as a consumer and market it back to you with these advertisements. One important concern for consumers is you really want at t following you around figuring out how to best sell you stuff. Some people may like that but a lot of people are uncertain about that. The other is the pricing and the lockin on information. At t will have an incentive to push people towards its content and away from the content of others. We have some rules about that right now. They cant directly interfere with my going to a rival news company but what they can say is they do want to watch their data. If you want to watch msnbc or bloomberg or fox news on your mobile headset you will. They will have this capacity to push people in a particular direction and particularly when it comes to things like news that is very troubling for democracy. Host before we go any further lets get lydia beyoud the bloomberg dna involved issues of senior tech and telecom reporter. Guest you mentioned vertical integration there was less antitrust concern but im curious if both of you can speak to what is legal and regulatory issues might be raised by opponents who oppose this deal . Guest i probably should let terrell talk about the legal issues because i dont know the laws. Together we know nothing. Specifically on issues that are important one of the things that harold mentioned is how time warner will treat content and its content relative to how time warner will treat content. Thats the potential way that this vertical merger could be anticompetitive. They treat their own content differently than others. Of course thats going to be the Biggest Issue that the Justice Department will want to look at and who want to propose conditions to make that not so simple. That i think is going to be the biggest one. Harold is bringing in the privacy issue here and im not quite sure that comes into the merger itself. It seems like a different issue but i think its definitely going to be a question of whether at t has the incentive and the ability to foreclose on rival costs and in trying to think that through they are going to look at incentives on different sides. On the one hand you can imagine att would keep content from others and so on. On the other hand, at t has about 25 of the subscribers and the majority of internet subscribers. If they try to withhold content than they lose advertising and other marketing opportunities. Its not at all clear that they would have the incentive to do that. That being said im sure is that what the doj will primarily focus on. Guess that there are couple of things here from a legal perspective. One is that there is a big question whether the federal communications commission, the fcc, which one would think would be absolutely in the thick of Something Like this one is dealing with one of our largest communication providers, our largest news and entertainment producers but because of the way the world works its not clear what role the fcc will have. There is a lot of speculation that because at t which is the company that is regulated at the fcc is the one buying time warner, that the deal can be structured in a way that completely avoids fcc review and that is scott is right to display and not always but traditionally a lot of the concerns we have been talking about, the concerns to democracy in news production, the concerns about privacy are more the subject of fcc Public Interest reviews and the department of justice. But i do want to emphasize that we are actually add an important shifting point in antitrust and antitrust law in antitrust review. These are evolutionary changes. They dont put tape lace overnight but we are certainly seeing within the last decade, first a change in the literature around antitrust. Scott has exactly describe what traditionally these trusts have been for the last 40 or so years and if you go to an antitrust lawyer thats exactly what they will tell you the department of justice does. The same time and support to recognize that we have been seeing a gradual evolution particularly around each kind of vertical merger and particularly in these very large complicated forms. The comcast nbc merger and what happened after that is something that people point to sew on the one hand certainly look at that and say well the department of justice reviewed it and they ultimately proved it on the other hand we have six years of administering those conditions and as we found out in the comcast Time Warner Cable merger offer which was again horizontal but a lot of the concern about it came from its expanding that vertical integration with the enhanced to reach that would have after the acquisition. I think in fact there is a lot more scope and a lot more challenges for at t with regard to some of these vertical issues than we previously thought. Guest i agree there will be more challenges because of the political environment and so on. Even if they were able to get rid of some make sure that no licenses changed hands theres no way the fcc can stay out of this. I think the comcast at t merger is depressing. You say what has happened since then but you know there hasnt been, what bad things that happen that are pervaded to the merger itself from comcast nbcu . Both companies are doing pretty well. Nbc was a terrible network at the time of the merger and most of the critiques i have seen are things that dont have to do it the merger itself. Guest what has really come up and came up in the discussion of the comcast Time Warner Cable was the ability of the department of justice to actually enforce and monitor the behavioral conditions so the biggest problem was when news corp. Would potentially have become a competitor. The allegation was that despite a merger condition that said comcast would not try to interfere with that there was evidence that ryan roberts had gone to the heads of news corp. And disney making these decisions and saying well you know maybe you guys ought to consider comcast might want to invest more in you if you dont do this deal so a potential new competitor was squashed. This was precisely the danger the department of justice was concerned about them precisely where they posted the condition and they didnt know about it until after the fact that they were investigating another. The department of justice apparently felt strongly enough about it because it never went, because they withdrew and never had a complaint. We never knew for certain but i can point to that. I can point to the effort by there is a startup called concord which tried to gain access to video programming under the video access condition that didnt work out very well. With that example thats a tough one because these are all negotiations with Cable Companies paying the content creator. If somebody doesnt get on is it because of the reasons youre talking about her because the negotiations in work . Will never be able to separate that out. Guest i agree but thats part of the reason theyre such caution. The old attitude i would say of course we dont know. We should let the merger go through. I think theres an emerging sensibility if we have a lot of concentration the market already we are seeing a lot of difficulty in competitors emerging when we cant prove that its safe to me should be more skeptical rather than let it go through and hope we have the condition to stop it. Guest ive a question for you both. This merger announcement comes at a Pivotal Point for our nation and that of course its the president ial election. Hillary clinton is not really taken a position. She said folks should look into it and regulator should look into it. Donald trump said he would disapprove it if he becomes president. What do you think the essential outcome of the election might play in not just on this merger and the federal regulators might be in charge of that but also another subsequent mergers including the white house . Guest for surviving the timing is interesting. Donald trump said he wouldnt approve the merger but on the other hand at this point in time the president could have a say in it because a person has to appoint the next head of the antitrust division and a share of the fcc and potentially a litmus test of what they want for the outcome of what they would like to see. In this case he could see the president having a big effect at least to the appointment process. Of course with donald trump it might be Something Different tomorrow. Guest i do think what is important here is you are right clinton did the president ial thing and said well if i were president i would make sure we studied it very carefully which is the thing you are supposed to say and do and this is though a time when the Democratic Party generally and certainly the progressive wing of the Democratic Party, but even the dash has made it clear that they think antitrust needs to be revised, strengthen and what i like to call the new new antitrust. The old antitrust, the Teddy Roosevelt trust sponsor were very suspicious of being generically bad with too much power concentrated. The new antitrust which we have had since the 1960s and 70s that has now become the standard antitrust is economic efficiencies versus the potential for very technocratic and the new new antitrust goes a step further says we need to be concerned about both. We need to recognize the limits of our Economic Analysis and a lot of times we are just guessing but because of the potential dangers of concentration when we are unsure we should these ethical rather than let it go through. I think particularly if the democrats are elected we are very likely to see even if it doesnt affect this merger specifically and attorney general and veaux at the department of justice and other agencies who are much more interested in these new theories host Scott Wallsten on the surface doesnt make economic sense . Guest is hard to see the harm in it. They are clearly separate markets. Both industries are evolving and where it will end up nobody really knows right now. They are all trying different things. It could turn out to be a terrible idea. It might turn out to be a great idea and i think its partly for that reason that if you can show there isnt isnt necessarily harm and have conditions that protect against those harms it allows you to experiment because if the merger doesnt work out thats their problem. As long as associated with it. Host lydia beyoud. Guest the data they could potentially leverage from this combination helps reduce the cost of the content or advertisements. You mentioned the evolution of antitrust laws and how might this data that combined at t time worker be able to mine and combined through multiple platforms planned here not just in the economics of the merger but also in the review of it . Guest one thing i still dont understand is exactly how the new privacy rules at the fcc will interact with that and we dont have that drafted the order yet. But in principle at t will be operating under one set of privacy rules in the content will be under another set so i dont know how those two things will be put together. Setting aside for the thing about the rules and whether at t should be under different rules than the content side i dont know how one puts those two together when they are under a separate regime. I honestly dont know how to answer that question. Guest from the Economic Perspective there a number of things to look at. One is we have seen movements in the European Union to use information harvested and collected in in the elements of the antitrust review. Theres a wreck nation that this has value and theres a recognition that it can be combined with other information in the market in ways that you have an anticompetitive effects. Also it can be used to impact consumer behavior. I knew how to make it harder for you to switch i can reduce the ability of people to compete with you. Similarly i can likewise use this some would say to give you something this good for you that is a positive benefit of also two know when competitors are trying to offer you competing services and do my best to interfere with that. There was always a concern about this that goes back to when we drove up the at t monopoly and where we said okay we really have to segment these businesses because we cant have people who know all of the information also be the ones doing the longdistance and being able to have those pieces direct. We did it with the cable act of 1992 where we did a lot to try to break up content and the cable industry and i think when it comes to privacy it raises very serious concerns. It is a concern that is again not in the traditional antitrust but is one that adds Digital Information as it becomes more important and its impact on competition becomes more important. We are seeing it coming in. Guest i think theyre a couple of things here. One is on the eu point. Harold is absolutely right in the eu they are starting to look at data as potentially anticompetitive but they are still arguing about that and its not clear that having data creates an anticompetitive barrier to entry and also having data is a value in itself. That is an actively debated question that second about the historical looking back and seeing how we separate content and put it back together again, also the point that the boundaries arent set. Sometimes we do things in house and sometimes we do things out of house and sometimes they take things out and bring things in. It will depend on what they choose to do inside a much they choose to do outside in the transaction involved and what is the right answer today will be the wrong answer tomorrow and vice versa. Its a fluid thing. Guest congress has scheduled one hearing for this merger in the Senate Judiciary committee. What role do you expect or would you anticipate congress playing in looking at this merger . Guest congress when you have a large merger like this place a combination of holy pulpit and public temperature. What you look at the people are getting a lot of phonecalls about i hate this, dont let this happen you will see members of congress ask much more aggressive questions. You will see more skepticism about the deal. Those are signals that are often picked up by the agencies who after all are accountable to congress to get the budget through congress and even though the doj in the antitrust division have very professional staff and do their best to try to insulate themselves from concerns they are human beings like anyone else. The other thing that was part of our broader popular oversight and debate about this. When you have these kinds of public hearings they are important to advance in the public the nature of the arguments for and against and i think they play a very valuable role not necessarily in the decisions by the staff that sort of the broader sense in the country of whether we need to do Something Like reexamine our basic ideas about antitrust or whether we are happy with the way things are going. Guest also theres another issue with congress right now its not just a hearing. We know that certain senators will be very opposed to it. Elizabeth warren and al franken do not like this deal and they will have hearings and senators will make speeches and representatives will make speeches but they also acted go through the confirmation process. This will come up during the confirmation process as well. Congress will have an impact on the merger nonsense and also the staff at the og on the fcc, its amazing how much they work to stay insulated from politics. Host Scott Wallsten you mentioned almost offhandedly that the fcc will find a way to get his hand into this. How can that happen . Guest that is a good question. Guest maybe i should take that one. Every attorney at the fcc is putting her of the documents make sure they can get to that. Its hard to imagine how an agency such an important part of your xray process of at t and time warner would manage to stay out. Guest i would say first of all if you are tom wheeler you are really happy this is happening now rather than when you are likely to have to stick around to deal with it. Im sure that chairman wheeler is saying i dont have to figure this out. But there are a number of ways in which the fcc could be brought into this. The first phase by the department of justice. The department of justice can consult its sister agency. Its a good working relationship between the staff and its a little known fact that the fcc has a current antitrust jurisdiction with the department of justice over common carriers and providers like at t. Even though they are not part of the merger review process is certainly appropriate to bring the men as part of the antitrust review. That would be one way. There are also certain licenses that time warner has. Some of them are the one tv station that they have got. Thats easy to get rid of in terms of deal structure but there are a lot of other licenses. As id like to remind people every one of the little tour buses that they have got in the time warner studios has an fcc license to use their twoway radio. All of those are transferred as part of this deal. Guest there are 50 Satellite Base stations. Guest there are many many licenses. Normally the deal that doesnt involve the fcc thats what are called pro from her payer pro firma. Theres a big case around us in the 90s with the merger with mobil. That produced the largest transfer of licenses in the fcc issued a statement saying we dont review it but in this case where you feel the fcc ought to be involved but they are not involved because at t time warner might be a case where they say normally we dont get it but these types of licenses but this time we really got it. Guest the Justice Department has to challenge the merger. The fcc s
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