Sep 3, 2019 - Economy

Big Telecom's sweet summer of revenge

Illustration of a phone laying out on the beach under an umbrella.

Illustration: Aïda Amer/Axios

One byproduct of the techlash: After years of frustration that Silicon Valley companies seemed to get special treatment in Washington, telecom giants are finally gaining the upper hand.

Between the lines: Telecom companies like Comcast, Verizon and AT&T are now starting to feel more able to compete with tech giants like Facebook, Google and Amazon as they all jockey to dominate how we communicate and access information.

What's new: Agencies that typically govern communications and the internet, like the FTC, FCC and DOJ, under the current Republican Administration are showing signs of increased scrutiny over Big Tech, and less scrutiny over the telecom industry, which has historically been more heavily regulated.

  • A similar pattern is happening at the state level, where Republican attorneys general are applying more scrutiny to Big Tech and less to telecom.
  • "It seems like what's happening is the Democratic state attorneys general are interested in regulating telecom. With a few exceptions, Republican state attorneys general seem to be more interested in regulating Big Tech," Matt Stoller, a fellow at the progressive Open Markets Institute, told Axios' Sara Fischer last month.

For example, this summer:

1. While increased antitrust scrutiny means Big Tech companies' acquisition ambitions are mostly on ice, Sprint and T-Mobile secured FCC and Justice Department approval for their long-awaited merger.

2. Two key regulators — the FCC and DOJ — sent shots across the bow earlier this summer.

  • In a June speech, DOJ Antitrust Division Chief Makan Delrahim laid out ways his agency could could go after Big Tech for anti-competitive behavior.
  • In a June Senate hearing, FCC Chairman Ajit Pai said, “The greatest threat to a free and open internet has been the unregulated Silicon Valley tech giants that do, in fact, today decide what you see and what you don’t,” he said.

3. The FCC has also continued to loosen regulations on Big Telecom, allowing the industry to better compete with rivals.

  • For instance, the agency this summer passed rules giving cable companies more leverage in reaching franchise agreements with municipalities and retired some copper line-era regulations for the big phone companies.

4. Broadband providers like AT&T and Verizon look like heroes in their efforts to roll-out 5G, thanks to smart marketing and an administration sympathetic to the "global race" narrative.

5. Congress is warming to the idea of revising part of a law — Section 230 — that, as it currently stands, protects tech platforms from legal liability for the content they host. Telecom companies have not enjoyed those same type of legal protections.

Meanwhile, this summer brought an onslaught of bad news for tech. On Friday, Politico reported Google agreed to pay as much as $200 million to resolve an FTC investigation into YouTube over children’s privacy law violations. Last month the FTC approved a $5 billion fine against Facebook for privacy violations.

What to watch: The D.C. Circuit Court is expected to announce its decision on the FCC's roll-back of Obama-era net neutrality rules any day. If the FCC's action is upheld, as many expect it to be at least in part, it would be a major victory for broadband providers.

The bottom line: The balance of power between the two sets of companies has been shifting as policymakers ratchet up scrutiny of Big Tech. This summer's events lays out just how clear of an advantage Big Telecom has gained in both politics and business.

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