Archive for April 2011

Threats and Technology

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Norman Leboon was sentenced Thursday to 24 more months of jail, plus three years’ supervised release. His crime? Threatening Congressman Eric Cantor. What makes the case slightly relevant for this blog is the nature of the threat—a Youtube video. Unfortunately his account’s been terminated, so the video in question is no longer available on Youtube (although if you dig around you can find clips of him). Now, Leboon’s a little crazy. Take his threats against Cantor:
You are a liar, you're a Lucifer, you're a pig, a greedy f------ pig, you're an abomination, you receive my bullets in your office, remember they will be placed in your heads. You and your children are Lucifer's abominations.
But should this be punishable? Recall Watts. Guy who’s been drafted speaks out at an anti-draft rally: “I am not going. If they ever make me carry a rifle the first man I want to get in my sights is L. B. J.” The Supreme Court overturned Watts’ conviction for threatening the President without even a hearing, noting the conditional nature of Watts’ threat and the reaction of his listeners (laughter, as opposed to, say, storming the White House). The facts of Leboon’s case aren’t so different from Watts’. Both were part of a political debate; both involved speakers far removed from their supposed targets; and both, in my opinion, merited an amused response. The distance between speaker and target is a common aspect of online threats. Combine that with the Internet’s tendency to bring out the worst in people and you run into a whole mess of First Amendment problems. Should courts be stepping in to protect individuals from vague online threats? Of course, some cases allow for easier bridging of threatener-threatened distance than others. One recalls Brandenburg’s imminence test—if a coworker posts on your Facebook wall “I’m going to stab you at your desk tomorrow,” that’s different than that same coworker posting “I’m going to stab President Obama at his desk tomorrow.” (As long as you don’t work in the Oval Office.) Leboon did plead guilty, so his particular case isn’t as interesting as it could have been. But online threats aren’t going away any time soon, and without a clear framework to work from, it’s hard to say where courts will go on the issue. Hopefully the Supreme Court will have something to say soon. (Ha!)

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April 13th, 2011 at 2:10 pm

What the Fukushima Daiichi Disaster Means for Nuclear Siting

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The ongoing nuclear crisis at Japan’s Fukushima Daiichi nuclear power plant has brought to mind nuclear disasters from the past, specifically, the accidents at Chernobyl in 1986 and Three Mile Island in 1979.  While experts will work in the coming years to determine what actually happened in Japan and how it compares to the events at Chernobyl and Three Mile Island, there is an  interesting lesson to be drawn from the Fukushima Daiichi disaster  by comparing it to a nuclear plant that wasn’t even built: New Jersey’s Atlantic Generating Station.  The Atlantic Generating Station (AGS) was extensively covered by John McPhee in The New Yorker in an article published May 12, 1975.  That article was also included in McPhee’s 1979 collection of essays, Giving Good Weight.  The proponent of the AGS, Public Service Electric & Gas Co. (PSEG), dropped its plans for the plant in 1978, but the story of the AGS nonetheless can provide a valuable lesson. The most notable feature of the AGS was that it would be located on a floating barge in the ocean several miles off the Jersey shore.  To protect the plant, PSEG planned to build a large breakwater that would extend seven fathoms to the sea floor around the site where the barge would be anchored.  The site that was chosen for the AGS was off the South Jersey Shore, 2.8 miles from Little Egg Inlet and 11 miles northeast of Atlantic City.  According to McPhee, the primary reason PSEG wanted to build a floating nuclear plant in the ocean was that it had run out of sites on land where plants could be located.  Richard Eckert was the PSEG engineer who dreamed up the AGS one day while in the shower: as McPhee writes, “a large part of his job was to seek out new sites for power plants—an assignment that had once, in a less complicated era, called for a person who could look at a map and find a river.  Now difficulties had thickened to a point near desperation, and plant siting required scientific and diplomatic talents undreamed of in the age of the pluming smokestack and the good five-cent cigar.” Because of the great harm that a nuclear plant can do if something goes wrong, engineers must design a plant to minimize the risk so that the expected harm from the plant is reduced to a satisfactory level.  This kind of risk management is part of the cost side of a cost-benefit analysis: take the harm that could happen, multiply it by the chance that it will occur, and you will have the expected harm.  In addition to the standard expected harm that comes along with any nuclear plant, the AGS had the potential to do greater harm, and was exposed to greater risks.  A worst case scenario might have seen nuclear waste contaminating some sizable portion of the New Jersey coastline—perhaps the shores of neighboring states and even the Gulf Stream.  Floating in the ocean, the AGS would be exposed to risks of hurricanes, high tides, and out of control ocean tankers.  PSEG thought it could respond to this greater possible harm and greater risk profile by building greater safety measures, namely the breakwater that would surround the plant.  Taking measures to reduce the risk would have resulted in a proportional decrease in the expected harm from the plant. However, such efforts cannot eliminate the expected harm altogether; they can only reduce it to what is thought to be an acceptable level.  The designers of the Fukushima Daiichi plant knew there was a risk that a tsunami could hit the plant, and, accordingly, they built the plant to withstand a 5.7 meter tsunami—preparing for a tsunami greater than 5.7 meters would have made the plant safer, but it apparently would have been extraneous according the cost-benefit analysis.  When the 14 meter tsunami of March 11 hit, the expected harm came home to roost.  In some ways, the Fukushima Daiichi disaster can be summarized by the cliché, ‘accidents happen.’  Seeing the results of that accident has reinforced the conclusion that PSEG's decision to drop plans for the AGS was the right choice. Even if PSEG was right that it could reduce the risk of a catastrophic accident from occurring at the AGS to an acceptable level in a statistical sense, it is possible that the actual harm that could have been done by the AGS in a worst case scenario was so large that it should not have been taken on.  In a casino, the house is big enough and plays often enough that it can afford to be risk-neutral.  When regulators are called upon to consider a project that gambles the shoreline of the nation’s most densely populated state, they should adopt a more risk-averse posture.  Real property is not a liquid asset, and irreversible harms should not be lightly risked.  This is not to say that nuclear power is altogether unacceptable; however, siting decisions should be made to minimize potential harm, not to ease the bureaucratic process.

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April 3rd, 2011 at 10:19 pm

AT&T and T-Mobile Merger Confronts the Horizontal Merger Guidelines

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Last week’s announcement that AT&T is buying T-Mobile from Deutsche Telekom for $39 billion should raise serious antitrust concerns with regulators analyzing the deal under the horizontal merger guidelines of the Department of Justice and Federal Trade Commission. The Wall Street Journal reported that antitrust specialist Herbert Hovencamp thinks the deal will face difficulty with the merger guidelines.  Hovencamp stated that “it’s a pretty highly concentrated market” and “the guidelines would say this is a highly questionable merger unless there is a significant provable efficiency.”

Guideline Factors

Many of the factors which make a merger questionable under the guidelines are present in this deal.  First, the deal would eliminate substantial head-to-head competition between AT&T and T-Mobile, the 2nd and 4th largest wireless carriers nationally.  Second, it would eliminate T-Mobile’s arguable “maverick” or disruptive role in the market caused by its cheaper wireless plans. Third, it would dramatically increase AT&T’s market shares in the relevant market and increase market concentration.  The merger would give AT&T approximately 129.2 million subscribers compared to Verizon’s 94.1 million subscribers and Sprint’s 49.9 million subscribers.  AT&T and Verizon would together hold more than 70 percent of the “U.S. mobile service provider market” with Sprint and other competitors far behind. A calculation of the deal’s Herfindahl-Hirschman Index (“HHI”), a tool used by regulators to analyze market concentration, in the national market for mobile services demonstrates the intense market concentration.   This analysis gives a pre-merger HHI of 1990, post-merger HHI of 2406, and change in HHI of 416.  A mere change in HHI greater than 100 can raise the eyebrows of federal regulators.  Here, we have an significant change in HHI of 416 in a market that is near highly concentrated (anything greater than 2500 is highly concentrated).

AT&T Counter-Arguments

AT&T will challenge federal antitrust regulators with at least three potent counter arguments.  First, the numbers used to calculate market concentration above are incorrect because the relevant geographic market is not the United States.  AT&T wants to calculate market concentration on a city-by-city basis in order to demonstrate that the largest markets, which may have more market players, are more competitive than the United States as a whole.  Second, Hovencamp’s “significant provable efficiency” exists in the efficiency gains created by combining the wireless spectrums of AT&T and T-Mobile.  Indeed, the merger guidelines contemplate that efficiencies matter in antitrust analysis.  Third, when all else fails, AT&T might be willing to divest itself of a “substantial” number of subscribers to satisfy regulators. Still, the guidelines will be a significant hurdle in the months ahead.  But AT&T is confident, given that the company has committed to pay Deutsche Telekom $3 billion if the merger does not close. After all, it seems unfathomable that AT&T would attempt this purchase if the company's highly-sophisticated team of lawyers did not believe the deal could overcome antitrust concerns raised by the elimination of a head-to-head competitor, the elimination of a disruptive market player, and the significant increase in market concentration and market power.

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April 3rd, 2011 at 10:04 pm

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