Current Events in September 2011

Google has acquired Zagat, the survey company and multimedia publisher known best for its print guides to local restaurants.

As Google spins it, the acquisition strengthens its local-search arsenal, helping it compete with other review sites, like Yelp, OpenTable and TripAdvisor.

You may recall that Google tried to buy Yelp for about half a billion dollars a few years ago.  It reportedly paid less than $66 million for Zagat, which would seem to be a bargain.

Zagat, though well-known for its printed guidebooks, is a relatively small presence on the Web, with an estimated monthly audience of barely more than 600,000 compared to Yelp's 15 million.

But small though Zagat may be, the deal means that Google is taking ownership of another big chunk of content, raising questions about how fairly it will direct searches to its competitors in the content field.

How neutral?

The acquisition could give “search neutrality” advocates — and possibly even the Federal Trade Commission — more reason to be skeptical of how neutral Google's search results really are.

Even some Google fans have expressed concern about the deal.  Journalism Professor Jeff Jarvis, author of  “What Would Google Do?” is quoted by Gigaom as worrying aloud about the potential conflicts the deal presents.

"Google buying Zagat as a content company would concern me. It would bring channel conflict and put Google in the content-creation instead of the content-linking business, competing with the other side of links and raising conflict-of-interest questions," Jarvis said, according to Gigaom.

Walmart is bringing back layaway … sort of. The big retailer axed layaway five years ago, saying most consumers preferred to use credit cards. But that was before the U.S. economy took a wrong turn and the lower-income families who are Walmart's core consumers began ratcheting back their spending.

So now, Walmart says it is reviving layaway, but only for the holiday season and only for electronics and toys, the most popular holiday gift categories.

Walmart, which has been losing customers to dollar stores and other discount outlets, is also trying to make some calendar adjustments, in effect jump-starting the holiday shopping season. It will begin stocking Christmas items in September, a month earlier than usual, hoping to cajole shoppers into the holiday-buying spirit.

A Walmart spokeswoman has more details about the program in this video.

Whether Walmart extends the program beyond the holidays remains to be seen. Many of its competitors have been offering layaway programs of varying complexity in recent years. Kmart last year gave customers 12 weeks to pay for layaway purchases and Toys R Us began offering layaway during the 2009 holiday season. It has expanded the program since then.

Despite current financial problems, Bank of America (BOA) said it has no plans to close additional branches, as had been reported.

WCNC-TV in Charlotte, N.C., reported Wednesday that BOA would close 600 of its 5,900 branches in an effort to streamline operations and drastically cut costs. The TV news report cited unnamed sources.

Thursday, however, the station issued a retraction and said it regretted the error.

Earlier this week, BOA's CEO Brian Moynihan laid out a plan to reorganize the company's management, aligning the company's operating units with its three core customer groups: individuals, companies, and institutional investors.

Moynihan appointed David Darnell and Tom Montag to the newly-created positions of co-chief operating officers, accountable for all of the company's operating units. This reorganization is effective immediately.

"Today is a significant step in the continued transformation of our company," Moynihan said on Tuesday, when he announced the change.

Moynihan called the changes “de-layering and simplifying at the sale in which we operate.” He says the move removes a layer of operatins management and aligns company leaders with customer groups. He said it's part of Project New Bank of America.

BOA reported a loss of $8.8 billion in the last quarter, much of it tied to its acquisition of Countrywide Financial, one of the nation's largest marketers of subprime mortgages during the housing boom. As recently as last month, US Bancorp sued BOA to force the bank to repurchase mortgages sold by Countrywide in 2005.

That suit claims Countrywide ignored its own underwriting guidelines when it made those loans, which it packaged and sold to US Bancorp for $1.75 billion.

Since 2008 a number of states have also sued Countrywide, including Oregon, Michigan, Indiana and West Virginia. Fifty state attorneys general are also attempting to hammer out a settlement with major banks, including BOA, over accusations of fraud, related to using robo-signers to execute foreclosure documents.

If you have a flat-screen TV and it's operated perfectly in the years that you have had it, you might count yourself lucky. Problems with flat screens, almost regardless of the brand, show up in hundreds of reviews submitted to ConsumerAffairs.com.

“I have horizontal colored lines filling the screen,” Mandy, of Mokena, Ill., told ConsumerAffairs.com this week. “Pushing the on button causes the TV to turn on and off continuously, only stopping when unplugged.”

Mandy said she bought her Samsung TV in March 2009, paying nearly $2,000. She was told it could cost about half that to have it fixed.

Repair

Mandy's complaint is echoed by others, who say they can't understand why their expensive TV sets only last two years or so before needing major repair. Dave Maltz, who owns Dave's TV Repair in Grants Pass, Ore., hears many of the same complaints and is very familiar with the problem.

“This is a new technology that still has a number of flaws,” Maltz told ConsumerAffairs.com.

Poor design

For starters, Maltz, who has been repairing TV sets for 17 years, isn't a big fan of how most of these sets are designed.

“If you took apart one of these things, you would be amazed at how many components they're trying to compress into a six inch space,” he said.

And because they are so many, they are extremely small, making it hard – and expensive – to work on these sets. Maltz has produced a number of YouTube videos about repairing flat screen TVs, including the one below in which he conducted a poll on how long flat-screen TVs last. Six years was as long as anyone owned a trouble-free set.

Capacitor plague

Some problems are easier to repair than others. For example blown capacitors – a common problem affecting power to the set – are cheaper to repair than display problems.

“Because of the tiny connections, repairing a problem with the display can be difficult and expensive,” Maltz said.

Plasma sets, he says, are especially expensive to repair.

While replacing capacitors is not all that complicated, it might not be required so often if manufacturers used higher quality parts. The capacitors on many sets are cheap. Why?

“There's a lot of competition among manufacturers to sell the cheapest TVs,” Maltz said.

Little consolation

That's not a lot of consolation to consumers like Tim, of Pittsburgh, Pa., who says his Sony developed purple and yellow lines in the display one week out of warranty. Matthew, of Watertown, N.Y., says his 50 inch Sanyo plasma no longer works.

“I have had this TV for only a little over a year,” Matthew said. “I bought the extended warranty but Walmart says it is not their problem. I was directed to the web site. I called the number but of course no one was there. What is the problem? Who can I call to fix it? Did I pay $1000 dollars for a paper weight?”

In Matthew's case, it might just be a case of replacing some capacitors. For others, it might not pay to have it repaired.

“When customers ask me if they should repair their sets, I usually tell them if they're had it for five years, it probably isn't worth it,” Maltz said.

American consumers used more credit in July, according to the latest accounting by the Federal Reserve.

Despite a weak economy, consumers were willing to increase their credit spending by nearly $12 billion. Non-revolving credit, which includes auto loans and loans for educational purposes jumped $15.4 billion.

However, that was offset by a $3.44 billion decline in credit card spending. The revolving portion of consumer credit, which includes credit cards, $792.5 billion after the five percent decline.

Since the credit meltdown of late 2008, consumers have generally been scaling back their credit card purchases, and in many cases it hasn't been voluntarily. Early in 2009 many credit card issuers began an aggressive campaign to lower credit limits and, in some cases, close consumers' credit card accounts.

At the same time, many consumers have begun making more prudent use of credit cards and many consumers have curtailed spending in general. While credit card use rose in May and June, some analysts think July's numbers represent a return to “normal” activity.

The drop in credit card spending in July coincides with other economic data that emerged during the month suggesting the U.S. economy was slowing again. If consumers are becoming more cautious about spending, and about adding to their credit card balances, it could present some serious headwind for the recovering economy.

According to the Fed's figures, credit card debt peaked in 2008 at $957.5 billion. It is now 17.2 percent lower, a sign that consumers continue to pay down their credit card balances.

R, of Clifton Springs, N.Y., along with her husband, recently applied for "no hassle" credit cards from Capital One, thinking they'd be convenient and easy to use. The very first month, she says, their bills arrived in the mail, with no delay by the post office, judging by the postmark, just one day short of the due date for payment!

“Although we mailed our payment the same day, we were charged late fees,” R told ConsumerAffairs.com. “When we contacted the company to complain and ask why our bills were not mailed to us until it was already too late for us to timely pay, we were told that the company does not take responsibility for the timing of billing and refused to cancel the late charges!”

But hold on. The CARD Act, which took effect February 22, 2010, requires issuers to give card account holders "a reasonable amount of time" to make payments on monthly bills. One day probably isn't going to pass that test.

Interestingly, R says the Capital One rep suggested it would be best if she just paid the late fee in order to retain her good credit.  If R still retains the statement envelop with the postmark, she should send a copy of it, along with her complaint, to the new Consumer Financial Protection Bureau.

Lottery scam

Look out for this scam: a caller from the “National Lottery Board” tells you the good news that you have won a big prize. But to collect is going to cost ya.

“He says I won some money but I need to send $2,000 to U.S. Customs, in order to receive the money, because it is coming from Costa Rica and any money coming in or out of the country requires a fee,” said Lashun, of Inglewood, Calif.

Hopefully Laushun didn't send the money. If so, it's money down the drain. Remember, you can't win a lottery you didn't enter.

Stop the payments

Dealing with the death of a parent is never easy, particularly when there are financial matters you don't expect. Danielle, of Montgomery, Ala., said she had a bad experience with Tronix Country when she learned her late father had an account with the company.

"Tronix has been taking money from my father's account and I notified them he passed and that I had a couple of questions for the manager,” Danielle told ConsumerAffairs.com. “To my dismay they wouldn't tell me who they were or what they did because i didn't know at the time. They refuse to let me speak to a manager or cancel his account.”

Tronix Country is a finance company for people with poor or little credit, specializing in financing computers and TV sets. They have a business model similar to Blue Hippo, which went out of business following a number of lawsuits. Chances are, Danielle's father had been making payments on equipment he had yet to receive. Danielle should close her father's bank account, or place a block on further withdrawals, as soon as possible.

Bad assumption

A cell phone is a lot like a credit card. If you lose it, someone else can use it to run up charges on your account. Fior, of the Bronx, N.Y., lost his cell phone shortly after cancelling his Sprint account. He didn't worry about it since he had just closed his account.

“When I received my bill I noticed that I have an $88.00 charge of data roaming in the Dominican Republic,” Fior said. “I called Sprint for an explanation and they said that someone may have used that device in the Dominican Republic. I told them that couldn't have happened because I cancelled my service on Jul. 27 and who ever used that device used it on August 2nd.”

That's when Fior learned his account remained active through the billing cycle, which ended August 24. When cancelling a mobile phone account, make sure you know when the account goes off line and protect your mobile devices until then.

The Food and Drug Administration’s (FDA) proposed partial remedy to protect women from the dangers of surgical mesh products that are used in pelvic repair procedures does not go far enough to protect public health, Public Citizen said in testimony delivered today before an FDA advisory committee.

The FDA should recall all surgical mesh products made of non-absorbable synthetic material that are used during transvaginal surgery to repair pelvic organ prolapse (POP) – a common condition in women – because the products offer no significant benefits but expose patients to serious risks and the potential for permanent life-altering harm, Public Citizen told the FDA’s Obstetrics and Gynecology Device Panel.

Public Citizen petitioned the FDA in late August to recall these surgical mesh products immediately and impose more stringent approval requirements in the future. The agency has since proposed reclassifying the products as class III medical devices, which would intensify the approval process for future products.

However, the FDA also appears ready to allow a grace period for manufacturers of current such mesh product to keep them on the market and require companies to conduct further studies.

Public Citizen maintains that further studies of the current mesh products would be highly unethical because there is sufficient data showing that these products are ineffective and harmful, and there should be no further delay in removing these products from the market.

“The FDA’s belated proposal to reclassify non-absorbable surgical mesh products specifically designed and labeled for transvaginal repair of POP to class III and require post-marketing approval evaluations is a step in the right direction, but this action alone is insufficient,” said Dr. Michael Carome, deputy director of Public Citizen’s Health Research Group.

“To properly protect public health, the FDA also must immediately ban all such mesh products currently available and require manufactures to recall these dangerous and ineffective devices," he said.

Recklessly endanger

“A grace period allowing continued marketing of these devices would recklessly endanger women,” said Dr. Daniel S. Elliott,  a urologic surgeon specializing in female urology and POP at the Mayo Clinic in Rochester, Minn., and a co-petitioner on Public Citizen’s petition.   “There is sufficient data available for the currently marketed mesh products for transvaginal repair of POP indicating that the risks of serious complications from these devices far outweigh their benefits.”

POP involves bulging or descent of one or more of the pelvic organs, such as the bladder, rectum or uterus, into the vagina, sometimes past the opening of the vagina. This common condition is due to weakness in the connective tissue and muscles that surround and support the pelvic organs. Most women with POP have no symptoms.

For symptomatic patients, treatment can involve surgical or non-surgical interventions; in surgical procedures, non-absorbable mesh often is implanted transvaginally (through incisions and punctures made through the wall of the vagina) with the intent of reinforcing the tissues around the pelvic organ that prolapsed and increasing the longevity of the repairs.

In 2010, approximately 300,000 women in the U.S. had surgery to repair POP, 75,000 of whom had surgical mesh transvaginally implanted, according to the FDA. Public Citizen estimates that approximately 67,500 of these procedures used non-absorbable mesh.

But the mesh offers no clinically significant benefits and has high rates of serious complications, which may or may not be able to be fixed with additional surgery, Public Citizen said in its August petition.

If you've had a surgical mesh procedure using either Johnson and Johnson or Cook products, tell ConsumerAffairs.com about it. 

If you want to buy a home or refinance one, it would seem there's no better time than now. Mortgage rates have fallen to an all-time low, according to Freddie Mac.

In the week ending today, the average rate for a 30-year fixed rate mortgage fell to 4.12 percent, down from 4.22 percent. The average 15-year loan is now down to 3.33 percent.

But as you begin to eagerly shop mortgage companies for one of those bargain rates, you might have a hard time finding one quite that low. The lowest rates are reserved for consumers with the most stellar credit ratings. Credit that is only “excellent” often results in a slightly higher rate.

Meanwhile, a report by SmartMoney suggests the recent spread in rates has less to do with credit scores and more to do with higher profit margins at some lenders. The report cites data from Informa Research Services as saying lenders in the last month have added as many as two percentage points to their profit margins.

Applications down

So, while the rates sound very enticing, some consumers decide not to borrow when they find the loan will cost more than they thought. The Mortgage Bankers Association (MBA) reports mortgage applications fell 4.9 percent from the previous week in the week ending September 2.

“Heading into the Labor Day weekend, the 30-year rate was at its second lowest level in the history of our survey, and the 15-year rate marked a new low in our survey,” said Mike Fratantoni, MBA’s Vice President of Research and Economics. “Despite these rates however, refinance application volume fell for the third straight week, and is more than 35 percent below levels at this time last year. Purchase application volume remains relatively flat at extremely low levels, close to lows last seen in 1996.”

The refinance share of mortgage activity decreased to 77.1 percent of total applications from 77.8 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 7.1 percent of total applications from the previous week.

Struggling with rising legal costs from mortgage-related litigation, Bank of America (BOA) is reportedly preparing to close 10 percent of its branches.

WCNC-TV in Charlotte, N.C., reports BOA will close 600 of its 5,900 branches in an effort to streamline operations and drastically cut costs. The TV news report cited unnamed sources.

Earlier this week, BOA's CEO Brian Moynihan laid out a plan to reorganize the company's management, aligning the company's operating units with its three core customer groups: individuals, companies, and institutional investors.

 "Today is a significant step in the continued transformation of our company," Moynihan said on Tuesday, when he announced the change.

De-layering

Moynihan called the changes “de-layering and simplifying."  He said the move removes a layer of operatins management and aligns company leaders with customer groups. He said it's part of Project New Bank of America.

BOA reported a loss of $8.8 billion in the last quarter, much of it tied to its acquisition of Countrywide Financial, one of the nation's largest marketers of subprime mortgages during the housing boom. As recently as last month, US Bancorp sued BOA to force the bank to repurchase mortgages sold by Countrywide in 2005.

That suit claims Countrywide ignored its own underwriting guidelines when it made those loans, which it packaged and sold to US Bancorp for $1.75 billion.

Since 2008 a number of states have also sued Countrywide, including Oregon, Michigan, Indiana and West Virginia. Fifty state attorneys general are also attempting to hammer out a settlement with major banks, including BOA, over accusations of fraud, related to using robo-signers to execute foreclosure documents.

Pets are almost like members of the family for most people, and when they get sick, the concern is deep and real. Thats why many pet owners get very upset when they don't feel their pet got the best medical care.

"My daughter took her cat to Banfield Pet Hospital because she was throwing up all the time and losing weight,” Cheryl, of Burien, Wash., told ConsumerAffairs.com. “They ran a lot of blood work and said there was nothing wrong with her. She gradually got worse over the next year and a half. I took her to another vet and she was diagnosed with a cancerous growth on her kidney, causing her to be so sick. They said it was inoperable and she had to be put down. If Banfield had diagnosed her properly in the first place, her life may have been able to be saved.”

Cheryl also doesn't understand why her vet bill was $1,100 for two visits, when the hospital was unable to help her pet.

Where there's smoke...

D., of Hazlet, N.J., is the latest consumer to contact us about what she sees as a potential fire hazard in her Cuisinart coffee maker.

“My Cuisinart DCC1100 started smoking and smelling like an electrical fire,” D. said.” I unplugged it and put it outside. I called Cuisinart to see if there was a recall they said no, but it was still under warranty, so they would send me a new one. Now I am reading all these other complaints. There is a problem with this coffee maker.”

D. did the right thing when she contacted the company about the problem. Now, she needs to take the additional step and inform the U.S. Consumer Product Safety Commission.

Taking nothing for granted

There's nothing simple about health care these days. Anthony, of San Diego, Calif., has an Aetna health insurance policy that he says is supposed to cover 100 percent all “routine” physical exams.

“Now I have received a bill from the lab facility stating that I owe money on two procedures performed, Anthony told ConsumerAffairs.com. ”After speaking with Aetna, they are stating that it is my responsibility to verify all procedures and lab work done to see whether they consider it 'routine' or not, and if they will cover it. It appears Aetna is now picking and choosing whatever procedures they want to cover in order to reduce their costs.”

Health insurance companies do, indeed, change their policies from time to time, and though it seems like a bother, the prudent thing is to check with your insurance company before each procedure to find out what is and is not covered. Beyond that, Anthony should check into the process for appealing a denial of claims. If his policy does, in fact, cover the procedure, perhaps he can have the denial reversed.

Won't take no for an answer

Lee, of Colorado Springs, Colo., got a telemarketer call from Mortgage Investors Corporation saying they could provide competitive terms on a mortgage refi. Thinking she had nothing to lose, she agreed to a meeting with a sales representative in her home. Big mistake, she now says.

“This was only supposed to take about 20 to 30 minutes of our time,” Lee said. “This pushy sales person stayed for over three hours trying to get us to sign a document. “We said no, not interested. We like what we have currently better. He called his supervisor to talk to my husband still we said no. Since this meeting from this company we continue to be called every day, three times a day. I;m sick of the calls and I told them how I felt about their tactics and to stop calling. It stopped for 2 weeks and now started again I feel very harassed and angry over this. I have blocked the numbers and they still find a way to call!

Here's a tip: if you allow a sales person into your home to make a sales presentation, they almost have to make a sale in order to keep their job. In-home pitches are almost always a bad idea. In Lee's case, she needs to report what she feels is harassment to Colorado Attorney General John Suther's office.

Well-run, conscientious businesses usually react with concern when they get a consumer complaint. Scammers, it seems, are using that quality trait against them.

The Federal Trade Commission (FTC) says it has become aware of a scam in which the fraudster uses the agency's name in a spam email. According to the FTC, the email gets its victims' attention with the following subject line:

URGENT: Pending Consumer Complaint

The body of the email says that a complaint has been filed against the company with the FTC. It provides a link to follow to find out the details of the complaint. If you were a business person who is concerned about how you are perceived by your customers, you might be tempted to click on the link.

Nasty surprise

But instead of getting information about an unhappy customer, you would download malware onto your computer.

The FTC says anyone getting such an email should delete it.

Malware, short for "malicious software," includes viruses and spyware to steal personal information, send spam, and commit fraud. Criminals create appealing websites, desirable downloads, and compelling stories to lure you to links that will download malware – especially on computers that don't use adequate security software.

But you can minimize the havoc that malware can wreak and reclaim your computer and electronic information.

If you suspect malware is on your computer, stop shopping, banking, and other online activities that involve user names, passwords, or other sensitive information.

Confirm that your security software is active and current. At a minimum, your computer should have anti-virus and anti-spyware software, and a firewall.Once your security software is up-to-date, run it to scan your computer for viruses and spyware, deleting anything the program identifies as a problem.

The state of Minnesota has filed separate lawsuits against five Internet-based payday lenders, accusing them of charging interest rates that violate state limits.

Minnesota Attorney General Lori Swanson said the loans were made to cash-strapped Minnesota borrowers and were were marketed as providing “cash between paydays.” Swanson said the loans carried unlawfully high annual interest rates of up to 782 percent percent and were often illegally extended from paycheck to paycheck, trapping the borrower in a cycle of expensive debt.

The Attorney General warned Minnesotans against taking out loans over the Internet from unlicensed lenders, citing a growing list of complaints to her office from consumers who have done business with such companies.

“Many people are living paycheck to paycheck right now, and unlicensed Internet lenders offer easy credit. This credit comes with a hefty price tag and often leaves a rash of problems in its wake,” Swanson said.

Other headaches

But Swanson said that the problems with these loans is not just the interest rate. In recent months, she says, consumers who have taken out or even just explored the option of short term loans from unlicensed Internet companies have experienced the following types of problems:

• Unauthorized withdrawals. When consumers take out an online loan, they must provide their banking and personal information. Some consumers report that unlicensed lenders made unauthorized withdrawals from their accounts, sometimes of hundreds of dollars.
• Unlawful debt collection tactics. Consumers report that some online lenders and their collectors use illegal debt collection tactics, such as threatening that the consumer will be taken to jail and prosecuted for a financial crime, or attempting to illegally garnish their paycheck.
• Phony collection scam. Some consumers who did not even take out a payday loan, but who only explored the option online, report being hounded by overseas scam artists who threaten to have them arrested if they do not pay, even though the consumer does not owe any money. These scam artists contact the consumers, often impersonating attorneys or law enforcement, demand large payments, and frequently attempt to scare or intimidate consumers into paying with threats of arrest or legal action against them or their families.

The five companies against which the lawsuits were filed are Flobridge Group, LLC of Utah; Integrity Advance of Delaware; Silver Leaf Management of Utah; Sure Advance, LLC of Delaware; Upfront Payday of Utah.

The Internet payday loan industry is estimated to have a total loan volume of $10.8 billion in 2010.

Scripps Health, a major hospital and health care provider in Southern California, has been recognized as the top company in the 2011 AARP Best Employers for Workers Over 50 program.

Scripps succeeds Cornell University, which placed second this year, as 2011’s number one finisher in the decade-long program.

Cornell joins other perennial top employers, National Institutes of Health (NIH) (#3) and First Horizon National Corporation of Memphis (#4), along with newcomer West Virginia University as fifth among the 50 honorees named today by AARP. The program completed its tenth awards designation since the 2001 launch.

“Scripps Health, Cornell and other employers on the list consistently recognize the value of, and have demonstrated exemplary policies for older workers,” said Jean Setzfand, AARP’s Vice President for Financial Security, in announcing the winners. “These companies and institutions deserve to be honored after their years of progressive practices that both meet the needs of mature workers and benefit their organizations as well.”

Scripps Health, with five hospital campuses and nearly two dozen clinics and coastal medical center sites, has been honored by AARP seven times over the last decade.

In addition to an array of alternative work arrangements such as flex-time, a phased retirement program, and a formal job rotation program, Scripps has a strong wellness program and generous health benefits for retirees under and over age 65.

In addition, the health system has designed a program that assists employees from age 50 to 70 as they move toward retirement. At the same time, Scripps maintains an on-going relationship with retirees to facilitate their return when temporary job opportunities develop.

Encore Cornell

Cornell University, a six-time honoree by AARP, has a multi-pronged “Encore Cornell” program, which provides retirees with workforce opportunities in addition to enrichment activities and resources.

“Encore Hire” and “Encore Volunteer” connect retirees with temporary employment and volunteer opportunities at the University and in the community. “Encore and More” provides retirees with information on resources, classes and events to support personal growth.

Finishing third, NIH offers broad health benefits and emphasizes financial education with pre-retirement classes and formal courses as part of a program that helps employees manage their finances at each stage in their careers. NIH participates in jobs fairs to seek out mature workers for openings.

“AARP is encouraged by these companies that have set a positive example and capitalized on the experience of working with older workers, especially given the difficult economy that has impacted employers and employees alike,” said Setzfand.

AT&T's battle to take over T-Mobile has moved across town, from the the U.S. District Court to Capitol Hill, where Sprint -- the carrier that has the most to lose -- is launching an advertising and lobbying campaign to preserve its unexpected late-game advantage over powerhouse AT&T.

Sprint threw the first pitch yesterday, with a lawsuit challenging the merger and echoing the Justice Department's arguments. It followed up today with full-page ads in The Washington Post and other inside-the-Beltway publications, reminding lawmakers that if the AT&T/T-Mobile merger is approved, AT&T and Verizon will control 77.6% of the wireless market in the United States. 

Easy-to-read icons compare that to the market share of the two leaders in other industries -- 18% in oil, 36.3% in airlines, 27.5% in banking, and so on.

AT&T is far from conceding, however.  Its general counsel, Wayne Watts, has been telling reporters the company will "vigorously contest" the Justice Department's suit.

A surprise

Last month's Justice Department lawsuit to block the $39 billion deal came as a surprise to nearly everyone.  AT&T, which has already absorbed most of the independent Bell companies created by the historic 1982 AT&T break-up, has accumulated more experience in the care, feeding and lobbying of regulators and legislators than the rest of the telecommunications industry combined.

AT&T boosted its spending on lobbyists by 30% to $11.7 million in the first six months of the year, Bloomberg News reported, but lobbyists aren't much help in the courtroom. Its PAC gave $805,000 to federal candidates, more than any other company, according to the Center for Responsive Politics.

Lobbyists are plenty helpful on the Hill though, and Congress is back in town so AT&T and Sprint may have to go into extra innings.

Lots at stake

There's a lot riding on the outcome.  If AT&T loses -- which seems almost impossible to those who've been around the track a few times -- it will not only lose the market share, bandwidth and customer accounts the T-Mobile deal would bring, it will also have to pay T-Mobile owner Deutsche Telekom a $3 billion fee and surrender some spectrum space to T-Mobile.

Consumers have a lot at stake as well, although none of the options are exactly overwhelmingly favorable:

• a combined AT&T/T-Mobile might improve service in rural areas, but then again it might not;
• Sprint would be severely weakened by an AT&T/T-Mobile lash-up which is most likely bad news for its customers;
• rejecting the merger preserves the status quo, which is hardly ideal.

Might it be better if Sprint bought T-Mobile? you ask.  Maybe, but it might also be better if the sun rose in the West tomorrow. The question is so hypothetical it's almost not worth discussing.  

For now, consumers are probably best advised to react with extreme skepticism to anything anyone says.  About anything. 

The competitor with perhaps the most at stake in a merger of AT&T and T-Mobile has gone to court to try and stop the deal in its tracks.

Sprint/Nextel has filed suit in U.S. District Court in the District of Columbia in a bid to stop the proposed $39 billion acquisition from taking place. It joins the U.S. Justice Department, which filed a similar suit, in arguing the proposed union of the nation's second and third largest mobile companies is anti-competitive.

Sprint/Nextel, which would become the third-largest mobile company behind AT&T and Verizon Wireless -- and with a much smaller piece of the pie proportionally -- said the deal would take the industry back to the 1980s, when just two firms dominated the industry, and consumers paid high prices.

"By acquiring T-Mobile, AT&T would be removing a low-price and innovative maverick competitor that provides particularly disruptive competition," Sprint argued in the suit. "The injuries to Sprint and the public at large would be irreparable if the merger were completed."

Echoing the government

Sprint made many of the same arguments against the deal as voiced by the government in last week's suit. In its suit, the government pointed out that mobile wireless telecommunications services play a critical role in the way Americans live and work, with more than 300 million feature phones, smart phones, data cards, tablets and other mobile wireless devices in service today.

Four nationwide providers of these services – AT&T, T-Mobile, Sprint and Verizon – account for more than 90 percent of mobile wireless connections. The proposed acquisition would combine two of those four, eliminating from the market T-Mobile, a firm that historically has been a value provider, offering particularly aggressive pricing, DOJ said.

“T-Mobile has been an important source of competition among the national carriers, including through innovation and quality enhancements such as the roll-out of the first nationwide high-speed data network,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.“Unless this merger is blocked, competition and innovation will be reduced, and consumers will suffer.”

The department said that it gave serious consideration to the efficiencies that the merging parties claim would result from the transaction but concluded AT&T had not demonstrated that the proposed transaction promised any efficiencies that would be sufficient to outweigh the transaction’s substantial adverse impact on competition and consumers.

AT&T has argued that the merger would actually benefit consumers, saying it would allow the combined companies to more quickly expand wireless broadband services across the U.S.

Netflix offers subscribers instant access to movies and TV shows through online streaming, which is quickly replacing DVDs-by-mail, the company's original service.  

But a lot of the streaming selections are old, third-rate ... or both.  Much of the newer, better content comes  from Starz Entertainment. Now Starz has announced it is ending its affiliation with Netflix at the end of February.

The two companies had been in contract renewal negotiations late last month, but Starz, LLC, President and Chief Executive Officer, Chris Albrecht says those talks are over.

“When the agreement expires on February 28, 2012, Starz will cease to distribute its content on the Netflix streaming platform,” Albrecht said.

It's not clear that the talks broke down over Netflix' offer. The video rental company had offered a reported $300 million to renew the agreement. Rather, Starz apparently broke off over the talks over the relatively small amount of money Netflix charges consumers for its service.

Too much value for consumers?

“This decision is a result of our strategy to protect the premium nature of our brand by preserving the appropriate pricing and packaging of our exclusive and highly valuable content,” Albrecht said. “With our current studio rights and growing original programming presence, the network is in an excellent position to evaluate new opportunities and expand its overall business."

Netflix charges consumers a flat $7.99 a month for unlimited streaming of its video content. That is well below the price charged by cable and satellite TV providers, who are also Starz customers.

The loss off the Starz contract leaves Netflix with a gaping hole in its streaming content, but the company doesn't appear to be worried.

“We’ll take the money that we were going to spend on Starz and spend it on other content,” Netflix spokesman Steve Swasey told AdWeek.

There have been suggestions that Netflix might begin producing original content, much like HBO and other prime-tier cable channels.

A Texas couple says say their 4-month-old son died from eating bacteria-tainted SimplyThick, a formula additive, just one day after the U.S. Food and Drug Administration (FDA) warned against using the additive in infants born before 37 weeks..

The parents sued SimplyThick, a thickening agent for management of swallowing disorders, Thermo Pac, and Respiratory Instruments dba Medco Medical Supply in Dallas County Court.

Heather Harris and Brandon Flowers say their child, Brayden, was born January 27, 2011, and was prescribed SimplyThick by his neonatologist to help with his digestion.

The suit says that after taking SimplyThick, Brayden developed diarrhea, constipation and apnea.

On May 24, without warning, the couple found Brayden comatose in his crib. He was rushed to a nearby hospital and died two days later at the age of 17 weeks.

FDA warning

On May 23, the FDA warned new parents, caregivers and health care providers not to use SimplyThick in foods given to infants born before 37 weeks, warning that it could cause a a life-threatening condition characterized by inflammation and death of intestinal tissue.

“Brayden was killed by SimplyThick. He ingested the tainted, bacteria-ridden, poisonous batch of product that was improperly manufactured and sold to the public,” the suit charges. It seeks damages of $5 million.

FDA said it first learned of adverse events possibly linked to the product on May 13, 2011. As of last weekend, the agency was aware of 15 cases of the condition, known as NEC, including two deaths.

The cases involved premature infants who were fed SimplyThick for varying amounts of time. The product was mixed with mothers’ breast milk or infant formula products.

Illnesses have been reported from at least four different medical centers around the country. The illnesses of which FDA is aware involve premature infants who became sick over the past six months.

SimplyThick was added to the feeding regimen of those infants who later developed NEC to help with swallowing difficulties stemming from complications of premature birth.

Could you face life without the U.S. Postal Service (USPS)? You might have to, warns Postmaster General Patrick Donahoe as he looks to Congress for a bail-out.

Donahoe is also asking Congress for  permission to implement a drastic plan to reduce costs. The immediate problem for USPS is a $5.5 billion payment due this month to the postal workers pension fund. There is no money to make the payment and it appears likely USPS will default.

Beyond that, Donahoe says the agency is in danger of running out of operating funds early in the new year. To rectify the situation, Donahoe, a former member of the postal workers union himself, wants permission to break the no-layoff clause in the workers' current contract.

To cut costs, Donahoe wants to eliminate 220,000 jobs. As many as 100,000 would be cut through attrition while layoffs would eliminate the rest. The president of the postal workers union, as you might expect, has strongly objected.

Earlier this year USPS announced plans to close 3,700 postal facilities and has asked permission to eliminate Saturday mail delivery.

Politically unpleasant

Even lawmakers who profess cutting government agency budgets might find this a bit sobering, coming at a time when unemployment is high and the economy struggles to produce new jobs. Historically, closing post offices and reducing services have been politically unpalatable for lawmakers in whose districts the cuts are taking place.

Without the ability to cut its costs, or obtain a huge infusion of revenue -- from, guess who, taxpayers -- Donahoe says USPS will not be able to go on delivering the three billion pieces of mail it handles each week.

USPS has been fighting a battle with red ink almost since Congress broke it off as a pure government agency and made it independent in 1971. Prior to that time it was a government department completely supported by taxpayers.

USPS says that unlike its competitors, Federal Express and United Parcel Service, USPS delivers first class mail for a uniform, low rate anywhere in the country. It currently employs more than 500,000 people, making it the second largest U.S. employer after Walmart.

In the event USPS did shut its doors, consumers might have to transmit documents electronically or pay the significantly higher rates charged by shipping companies.  

On the other hand, if the USPS officially went out of business -- which is highly unlikely -- there's little doubt that one or more entrepreneurial ventures would move in to take over at least some of its functions.