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The actions by the Federal Communications Commission and the Department of Justice to block this transaction do not change the realities of the U.S. wireless industry. It is one of the most fiercely competitive industries in the world, with a mounting need for more spectrum that has not diminished and must be addressed immediately. The AT&T and T-Mobile USA combination would have offered an interim solution to this spectrum shortage. In the absence of such steps, customers will be harmed and needed investment will be stifled.

“AT&T will continue to be aggressive in leading the mobile Internet revolution,” said Randall Stephenson, AT&T chairman and CEO. “Over the past four years we have invested more in our networks than any other U.S. company. As a result, today we deliver best-in-class mobile broadband speeds – connecting smartphones, tablets and emerging devices at a record pace – and we are well under way with our nationwide 4G LTE deployment.

“To meet the needs of our customers, we will continue to invest,” Stephenson said. “However, adding capacity to meet these needs will require policymakers to do two things. First, in the near term, they should allow the free markets to work so that additional spectrum is available to meet the immediate needs of the U.S. wireless industry, including expeditiously approving our acquisition of unused Qualcomm spectrum currently pending before the FCC. Second, policymakers should enact legislation to meet our nation’s longer-term spectrum needs.

“The mobile Internet is a dynamic industry that can be a critical driver in restoring American economic growth and job creation, but only if companies are allowed to react quickly to customer needs and market forces,” Stephenson said.

I was curious about what legislation in particular AT&T wanted "to meet...longer-term spectrum needs." Behold, I discovered this tidbit from The Hill:

Federal Communications Commission (FCC) Chairman Julius Genachowski said on Tuesday evening that language in the House GOP payroll tax bill that restricts his agency's ability to regulate the airwaves could "threaten U.S. global leadership in spectrum-related innovation."

"Several provisions of the House bill would tie the agency’s hands in ways that could be counterproductive, reducing economic value and hindering innovation and investment," he said in a statement after the House approved the bill 234-193.

Ah, this would be the bill that the House is trying to force into a conference committee rather than taking the Senate's bill and voting on it. And there's more:

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It's about time. Of course, the monopolies will fight it tooth and nail, but I don't think they'll be able to stop this idea for long:

Culminating a year of extensive outreach and study, federal regulators on Tuesday will propose an ambitious, decade-long road map to extend high-speed Internet access to every corner of the country and make the United States home to "the fastest and most extensive wireless networks of any nation."

The plan by the Federal Communications Commission sets a goal of assuring that at least 100 million homes have affordable access to so-called broadband networks that allow them to download data from the Internet at speeds of at least 100 megabits per second -- 20 times or more faster than most people get today. The proposal, which will be sent to Congress, also seeks to put super-fast Internet access of 1 gigabit per second in public facilities such as schools, hospitals and government buildings in every community.

The FCC released the proposal's executive summary Monday.

Another key component of the plan is creating a new wireless network for police, firefighters and other public safety workers so they can communicate and share data and video between departments during major emergencies. Lawmakers and public safety organizations have pushed for such a network since the Sept. 11, 2001, terrorist attacks, when first responders at the World Trade Center had trouble communicating. In 2008, the FCC tried to use the lure of cheap access to public airwaves during a major spectrum auction to convince private companies to help build such a network, but the effort failed.

Tapping into the wireless airwaves is a key part of the FCC's plan. It wants to reallocate a huge chunk of radio-frequency spectrum to use for high-speed Internet service, regarded as a much cheaper and quicker way of spreading broadband service than laying wire of fiber cables -- particularly in rural areas. But that spectrum is assigned to TV and radio broadcasters, who are expected to strongly oppose any proposal to take it away.

John Conyers and some allies on the House Judiciary Committee have come up with a fabulous way to get the insurance industry in line - by threatening to remove their anti-trust exemption.

Many people don't know that the insurance industry, under the McCarran-Ferguson Act of 1945, has a broad anti-trust exemption that facilitates regional monopolies. The Act allows states to regulate the insurance business instead of the federal government, but also allows that, as long as the state regulates the industry, federal anti-trust laws would not apply.

As a result of this exemption, states have seen markets for health insurance where one or two companies predominate. In the state of Maine, Wellpoint controls 71% of the market. In North Dakota, Blue Cross controls 90%. Using the Herfindahl/Hirschman Index, a metric for market concentration, a 2007 study by the AMA found almost every health insurance market in the United States is highly concentrated.

This edition of the study analyzed 313 MSAs. This compares with 292 metropolitan areas in the 2005 study, 84 in the 2003 study, 70 in the 2002 study, and 40 in the 2001 study.

In terms of market concentration (HHI), the study found the following:

In the combined HMO/PPO product market, 96 percent (299) of the MSAs are highly concentrated (HHI>1,800), applying the 1997 Merger Guidelines.

In the HMO product market, 99 percent (309) of the MSAs are highly concentrated (HHI>1,800), applying the 1997 Merger Guidelines.

In the PPO product market, 100 percent (313) of the MSAs are highly concentrated (HHI>1,800), applying the 1997 Merger Guidelines.

Here's the AMA study. Paul Rosenberg has a lot more on this.

The point is that the concentration of the health insurance market among regional monopolies leads to higher costs for consumers, almost by definition. What the legislation by Conyers (D-MI), Hank Johnson (D-GA) and Diana DeGette (D-CO) would do is end that anti-trust exemption for health insurers, allowing for enforcement in all of these highly concentrated markets. The Senate has companion legislation:

“This legislation would specifically prohibit price fixing, bid rigging, and market allocation in the health insurance industry,” said Conyers. “These pernicious practices are detrimental to competition and result in higher prices for consumers. Conduct that is unlawful throughout the country should not be allowed for insurance companies under antitrust exemption. The House Judiciary Committee held extensive hearings on the effects of the insurance industry’s antitrust exemption throughout the 1980s and early 1990s. It became clear then that policyholders and the economy in general would benefit from eliminating this exemption.

“The legislation we introduced today is intended to root out unlawful activity in an industry grown complacent by decades of protection from antitrust oversight. In doing so, we aim to make health insurance more affordable to more Americans. I want to thank my friend Senator Leahy for his leadership on the bill and for working with the House on this joint introduction.”

Many of the actions taken by the insurance industry over the years simply violate federal law. Repealing their anti-trust exemption would force the industry to end their criminal ways or face punishment. As a companion to insurance regulations designed to lower prices for consumers, but perhaps without the kind of enforcement necessary to maintain it, I couldn't think of anything better. And if nothing else, this legislation is a powerful whip to keep the industry in line as they try to extract more perks from the health care bill. Combine this with the multiple investigations into industry practices from Dennis Kucinich, Henry Waxman and others, and you have real pressure on the industry for the first time in a while.

Good for John Conyers.

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During today's presser, President Obama was asked several times about his support for the public option. He rebuffed the health care industry's talking point that a public plan would put them out of business.

Q: Won't that drive private insurers out of business?

THE PRESIDENT: Why would it drive private insurers out of business? If private insurers say that the marketplace provides the best quality healthcare, if they tell us that they're offering a good deal, then why is it that the government -- which they say can't run anything -- suddenly is going to drive them out of business? That's not logical.

President Obama is still being vague about his overall support for the public option, but then gives ample information about how strong it would be. It's like he's holding out hope that a deal will be struck in Congress without pressure from him to demand the public option out right. But that's not going to work in the end. As we've seen, senators with small populations and health care monopolies are hijacking the debate and denouncing a public option. And it's coming from members of his own party. Republicans and the Health Care Industrial Complex only want to muddy up the waters with talking points while they kill off all attempts at real competition and a real health care system that helps the American people finally get quality, affordable health care instead of enabling CEOs to purchase new villas and vacation homes while the rest of America suffers.

The President: Now, if it turns out that the public plan, for example, is able to reduce administrative costs significantly, then you know what? I'd like insurance companies to take note and say, hey, if the public plan can do that, why can't we? And that's good for everybody in the system. And I don't think there should be any objection to that.

Full transcript below the fold via The LA Times.

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Paul Krugman picked up on a Digby post about Blanche Lincoln called Monopoly Money and came to this realization:

The truth is that the notion of beneficial competition in the insurance industry is all wrong in the first place: insurers mainly compete by engaging in “risk selection” — that is, the most successful companies are those that do the best job of denying coverage to those who need it most. But in any case, Arkansas is in effect a one-insurer monopoly state, with no competition at all — unless a public plan is created.

In fact, I may have a new hypothesis about the political economy of the health care fight. One thing that’s obvious, if you look at the balking Democrats I chided in today’s column, is that almost all of them come from states with small population. These are also, by and large, states in which one or at most two private insurers dominate the market. So here’s a suggestion: while the opponents of a private plan say that they’re trying to defend market competition, what they’re actually doing is defending lucrative local monopolies.

Why are these few Senator's being allowed to hijack the debate on a public option?

When they announced yesterday that the Department of Justice was beefing up the antitrust division, the first likely target I thought of was cable TV. How about it, guys? We can't take much more of these monopolies' skyrocketing prices:

Last month, the nation's No.2 cable company Time Warner Cable announced plans to test a new billing system known as "metering" that charges Internet customers depending on how much they download. Customers who exceed their limit--say, by viewing online videos--would face steep penalties on top of their subscription rate.

Time Warner Cable's usage penalty would take the unlimited service we enjoy today (albeit slow compared to other nations), and make Internet more like cell phones, where you get overcharged by companies making record profits. It is the latest version of the Net Neutrality debate: should the companies that deliver Internet be allowed to block it, slow it down, or in this case, overcharge for it?

Here's why this issue threatens the Internet as you know it: Cable companies Time Warner and Comcast, and phone giants AT&T and Verizon sell the vast majority of high-speed Internet service in the United States. Phone and cable companies like these have no other competition in 97% of US markets, thanks to corrupt policies passed by the Bush Administration at the companies' behest.

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