OVERNIGHT TECH: AT&T claims merger is about ‘consumer demand’

THE LEDE: AT&T and DirecTV executives will make the case to lawmakers on Tuesday that the proposed $49 billion deal to merge the two companies is necessary to stay competitive.

“This transaction is about meeting consumer demand,” AT&T CEO Randall Stephenson told members of the House Judiciary’s Antitrust subcommittee in his prepared testimony. “It’s about providing consumers with the integrated video and broadband Internet services they want, delivered over any type of device, to nearly anywhere in the country.”

{mosads}AT&T offers phone and Internet service, but its television offerings do not turn a profit and “cannot meet the needs of enough consumers,” Stephenson claimed, noting that the company’s U-verse service operates in less than one-quarter of the country. And even in those markets, AT&T doesn’t have the “scale” to “forge strong relationships with programmers and compete effectively against the dominant cable companies,” he said.

DirecTV, which has about 20 million TV subscribers in the U.S. but no Internet service, needs the deal in order to keep up with the changing market, the satellite company’s chief executive Michael White added.

“If we want to compete effectively in today’s Internet-driven marketplace, we must adapt,” he claimed in prepared testimony. That means “integrated bundles” of TV and Internet service, like the deals offered by competitors at Comcast and Time Warner Cable, as well as the ability to offer subscribers chances to watch television online with companies like Netflix.

For subscribers, the deal should lead to a “higher quality experience,” Stephenson claimed, though he did not specify whether that would translate to lower monthly bills. The company would save about $1.6 billion over three years, however, which would pave the way for new broadband infrastructure to extend high-speed Internet access to about 15 million new people, many of them rural.

Not everyone agrees that the merger would be good for consumers. Ross Lieberman, the top lobbyist at the American Cable Association, which represents many small and medium cable companies, claimed in his prepared testimony that the deal could lead TV channels to charge higher prices to competitor companies.

All three executives will testify in separate hearings in the House and Senate on Tuesday. They will be joined by a smattering of consumer interest advocates expected to warn that the deal would reduce competition and should be blocked.   

Companies, public interest groups hail cellphone compromise: Wireless companies and public interest advocates are applauding a compromise over a Senate bill that would allow users to switch their mobile devices to different wireless networks. Senate Judiciary Chairman Patrick Leahy (D-Vt.) and ranking member Chuck Grassley (R-Iowa) announced that the committee had reached a bipartisan compromise over their cellphone “unlocking” bill and would consider it at a meeting Thursday.

The Senate bill comes after a 2012 decision from the Librarian of Congress that users violate copyright law by unlocking their cellphones. Since then, wireless companies have reached a voluntary agreement to let users bring their phones to competitors’ networks when technologically possible, and the House has passed a cellphone unlocking bill.

CTIA-The Wireless Association — which includes major players in the wireless industry such as AT&T, T-Mobile, Verizon and Sprint — praised the Senate’s movement on the cellphone unlocking bill. The group’s Vice President of Government Affairs Jot Carpenter said in a statement that CTIA is “pleased this bill achieves that objective without imposing any obligations on carriers.”

Public Knowledge Vice President of Government Affairs Chris Lewis also praised the compromise, calling the bill “important reform that responds to hundreds of thousands of Americans who called for the restoration of their right to unlock phones that they legally own.” Lewis called on the Senate to pass the bill quickly. “Restoring the right to unlock cell phones serves as an example of other circumstances when circumventing technological protection measures doesn’t infringe on copyrights and should be permitted,” he said.

House members add to the chorus: Lawmakers in the lower chamber also cheered the Senate’s work on the unlocking bill. In a joint statement, the leaders of the House Judiciary Committee and its Intellectual Property subcommittee said the issue is one of “consumer choice and flexibility, plain and simple.”

Despite opposition over eleventh-hour changes to the bill, the House passed a similar cellphone unlocking bill in February, and lawmakers said they plan to work together with the Senate to finish the job. 

GAO study finds problems with rural Internet loans: A new study from the Government Accountability Office points to issues with the U.S. Department of Agriculture’s (USDA) Rural Utility Service (RUS) program that lends money to efforts to boost Internet access in rural areas. According to the study, 43 of the program’s 100 loans were either rescinded or have defaulted, creating an “inefficient use of RUS resources,” as “approving a loan requires significant resources.” Despite these inefficiencies, the program “has not gathered information or performed analysis to better understand what might lead a project to default or otherwise make a project a poor candidate for receiving a loan,” the report said, suggesting that the program improve its risk-assessment practices.

The study also suggested that USDA realign the metrics it uses to evaluate the program’s success with the stated goals of the program, including increased economic development due to broadband deployment. “Performance goals aligned with the program’s purpose may help USDA and Congress better monitor the outcomes of the loan program,” the report said.

Google tests Web address registration service: Google announced Monday that it is starting to test its domain name registration service. “Businesses will be able to search, find, purchase and transfer the best domain for their business — whether it’s .com, .biz, .org, or any of the wide range of new domains that are being released to the Web,” the company said in a Google Plus post. The testing is invite-only for now, but Google said that it hopes to make the service “more widely available soon.”

Hacker pleads guilty to stealing thousands of credit cards: A Massachusetts hacker pleaded guilty on Monday to stealing thousands of people’s credit card data and snooping on local police and community college records.

Cameron Lacroix, 25, admitted to stealing information about more than 14,000 people’s cards between 2011 and 2013. In some cases, he also was able to grab identifying information such as people’s full names, Social Security numbers and bank routing numbers. Lacroix also confessed to hacking into a local Massachusetts police department and its chief of police’s email in 2012 as well as a community college in Bristol, Mass., in 2012 and 2013. 

Study finds consumer electronics becoming more energy efficient: More and more consumer electronics are making their way into American households but the devices account for a lower share of home electricity use than they did three years ago, according to a new industry survey. The Consumer Electronics Association study found that devices accounted for 12 percent of residential electricity use last year, compared to 13.2 percent in 2010.

Televisions, for instance, are the most widely owned consumer electronic device in 97 percent of households, but new technologies have reduced the amount of electricity they take up by 23 percent since 2010. 

ON TAP:

Lawmakers in the congressional International Anti-Piracy Caucus unveil their 2014 country watch list at 9:30.

At 10 a.m., Microsoft’s Brad Smith talks about global technology and privacy at the Brookings Institution.

The House Judiciary Committee takes a look at the AT&T-DirecTV deal at 10:30 a.m. The Senate panel follows suit at 2:30.

The Commerce Department will hold the next in its series of meetings to craft a privacy-enhancing code of conduct for companies that use facial recognition technologies starting at 1 p.m.

In the evening, FCC Commissioner Michael O’Rielly leads a discussion on the commission’s authority over broadband service providers.

IN CASE YOU MISSED IT:

American mayors voted Monday to keep Internet providers from charging websites for better access to users.

The House is entering a “critical period” in the battle over immigration reform, according to the group launched by Facebook chief Mark Zuckerberg and other tech leaders.

Groups representing teachers, schools and libraries are frustrated with the Federal Communications Commission’s (FCC) new plan to boost their Wi-Fi access.

Russia wants Twitter to block or censor some “extremist” accounts, a top regulator said on Monday.

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