Following the story of FCC commissioner Meredith Atwell Baker joining Comcast as a lobbyist just a few months after approving that company's buyout of NBC Universal, the group Free Press is asking the remaining FCC commissioners to take a pledge that, if they vote to approve the AT&T/T-mobile merger, they won't then take a lobbying job with AT&T. Of course, if any of them took the pledge, it's not clear what's to stop them from then breaking the pledge...

While there's been plenty of concern in the past couple weeks about Apple's iPhone/iPad location data, followed by Google's Android location data, plenty of people pointed out from the beginning that what both companies have done completely pales in comparison to the sort of data that mobile phone operators regularly collect on you. Even as lawsuits have been filed against both Apple and Google, few of the people who are really upset about those two companies seem to recognize that what the operators have is much, much more complete. The mobile operators, apparently fearing that people may start to realize this, have become a bit proactive and are trying to convince everyone that the real problems are elsewhere -- specifically with apps on phones, not with the service providers. You see, don't worry about all the data we collect. Just look at what those apps are doing:

AT&T noted it “plays no role” in what kind of information smartphone apps collect, while T-Mobile pointed out the ways in which that data can be used.

Sprint lamented “consumers no longer can look to their trusted carrier with whom they have a trusted relationship to answer all of their questions,” particularly on privacy.

And Verizon Wireless called out smartphone app makers directly on the issue, stressing “location-based applications and services (whether provided by us or third parties such as Google) should give customers clear and transparent notice” and control.

This was in response to questions from Congressional Reps. Ed Markey and Joe Barton, leading all of the operators to also admit that they collect such data as well, but really, apps. Apps are a bigger issue. Just focus on the apps. Really. Apps.

Back when I was in college, one of my favorite classes was a class on arbitration. It was really fascinating to dive deep into how arbitration works, and it's a process I've remained fascinated with for years. Conceptually, it sounds like such a good idea. Have an arbitrator help work out a dispute, rather than going through a fully adversarial court process. And, when it's done right, it can be very effective. And, yet, many people are realizing that the system today is broken. According to various reports (pdf), businesses prevail 96.8% of the time in business-initiated contract arbitration cases handled by the National Arbitration Forum (and business-initiated cases are the vast, vast, vast majority of the cases). If that number seems unnaturally high, you've spotted the problem. The main issues is that, usually, the business gets to choose the arbitrator (or at least gets approval). Unlike the court system, the arbitrator is being paid for by the parties, and if that arbitrator wants to get more business, he or she is going to view the party likely to hire him or her in the future more favorably. This isn't to say there's outright corruption. I'm sure many arbitrators believe they're being fair. But the results are pretty damning.

At the same time, an equally broken process is the class action system. We've seen over and over again that class action lawsuits are used more as a way to enrich lawyers, rather than to help any particular class. The lawyers get the bulk of any settlement, and anyone in the class gets a couple dollars over an issue they didn't really care about in the first place. Or, in some cases, it's even more ridiculous where the "settlement" actually pushes people in the class to buy products from the company being sued.

So, I have to admit that I was somewhat conflicted about the Supreme Court case concerning the legality of arbitration clauses in California and their ability to block consumer class action lawsuits. In the end, the Supreme Court has ruled that the lower court rulings (in both the district and appeals courts), which upheld the right to a class action lawsuit against AT&T, were wrong. The lower courts found that the arbitration clause was an "unconscionable contract," but the Supreme Court felt otherwise, with a ruling that seemed to buy into all of the myths of arbitration, rather than what the data actually says.

The background story on the case is that a couple, Vincent and Liza Concepcion, sued AT&T in a class action lawsuit, saying that there were advertisements for free mobile phones, but sales tax was still applied on the full retail price meaning the phones weren't really free. Frankly, this seems like a somewhat silly class action claim to make and it fits with my feelings towards class action lawsuits. But, that shouldn't get in the way of the larger question, of whether or not such class actions (legitimate or not) can be blocked entirely by an arbitration clause. AT&T, of course, claimed that the arbitration clause in its contract blocked the class action lawsuit and meant it had to go through arbitration (and not as a class, but on an individual basis). And from there, we got the lower courts' decisions rejecting the clause and the Supreme Court now accepting it.

As much as I'm troubled by bogus class action lawsuits, this ruling bothers me much more. I do think that both the class action process and the arbitration process are regularly abused, but that the class action process is both more likely to be fixed and less likely to result in completely unfair results. If this involved a situation where two parties had a full and fair negotiation and then agreed to an arbitration clause, I wouldn't have much of a problem with it. But when it's a "click through" sort of agreement, where the consumer has no way to bargain or negotiate the contract -- and, in fact, isn't really expected to have read the contract -- I have serious problems with the idea that people can be forced to give up their basic rights to go to court over something that is designed for them not to read.

On top of that, this certainly opens the door to companies putting arbitration clauses everywhere to keep them out of court on all sorts of potential misdeeds. The unintended consequences of this sort of thing are certainly troubling. The proper response, at this point, would be for Congress to fix the law and to make it clear that you can't give up the right to go to court through such a non-negotiated contract... but the chances of that actually happening seem slim at best.

A few years back, we discussed an article by Declan McCullagh, which laid out some of the sneakier tactics of lobbyist groups to pressure the government to support some position using letterhead from various special interest groups:

"You go down the Latino people, the deaf people, the farmers, and choose them.... You say, 'I can't use this one--I already used them last time...' We had their letterhead. We'd just write the letter. We'd fax it to them and tell them, 'You're in favor of this.'"

It looks like AT&T's lobbyists went through the list and they're back around to the top with the "Latino people." Suddenly, and for no clear reason, The Hispanic Institute and the Latino Coaltion have decided that supporting the merger of AT&T with T-Mobile is of utmost importance to them. They've put out statements with such nonsensical claims like:

The proposed merger of AT&T and T-Mobile holds great promise for all Americans, and especially those of Hispanic heritage.

What's in it for these groups? Money, mainly:

One DC insider informs us that rumblings on K Street suggest AT&T had called every civil rights group in the United States for support within fifteen minutes of the deal being announced. Fearful of losing AT&T donations -- most of these groups quickly got to parroting prepared AT&T statements, unconcerned about the actual impact of a T-Mobile deal. Getting funding for a new events center apparently dulls any ethical pangs felt using your organization as a hired stage prop.

It's really difficult not to be cynical when you see this kind of thing playing out. What's really depressing is that no matter how many times this rather obvious practice is exposed, it just keeps on happening.

We just wrote about how Max Davis, who's trying to create a silly and totally pointless compulsory licensing system for MMS content was more or less laughed out of court in the lawsuit he filed against the mobile operators, claiming that they were running illegal P2P file sharing programs in the form of their MMS capabilities. It apparently took him all of a few days to come up with a new, perhaps even more ridiculous strategy: he's suing AT&T, Verizon, Sprint, T-Mobile and TracFone for supposed antitrust violations over the same basic issues. Once again, it seems clear that this is an incredibly weak (and almost certainly unproductive) attempt at getting these companies to agree to his pointless licensing scheme.

So how are these mobile operators guilty of antitrust violations? According to Davis:

Defendants purposely conspired via collusion to install themselves as the new primary gate keepers and sole beneficiaries of multimedia content sharing through their new MMS technologies.

Except, of course, that's ridiculous. These companies did agree to set up MMS systems, but that's because they're the mobile operators who run the mobile networks. That's not collusion. And it's not antitrust. The filing gets more ridiculous as it goes on. He claims that these operators do not qualify as DMCA service providers, contrary to the pretty clear language of the law and plenty of case law. The whole thing seems frivolous, and it seems likely that this lawsuit will reach a similar conclusion to the previous one.

The various mobile operators have been making tons of revenue off of premium "short code" SMS programs. These are ways to add charges for various things directly to your phone bill. For example, they've become popular with various charities, so you can support them simply by texting a message to a particular short code. Of course, in many cases, the mobile operators charge you or take a cut for allowing this. And, of course, as with anything like this, it's been left open to scammers... and those scammers have moved in. Just as we saw with phone service cramming, where charges would be added to your landline phone bill, there's been a growing set of operations cramming premium SMS offerings.

Broadband Reports highlights the saga of JAWA, a Scottsdale, Arizona-based company that's at the center of allegations of cramming. The company and a bunch of shells allegedly send text messages to people that say:

"Text back STOP if you don't want to subscribe."

Most people, of course, don't text back because they think it's a scam. What they don't realize is that even if it's a scam, it's the not replying that lets the telcos start adding fees to your bill. The big question here: why does any mobile operator allow charges to be put on your phone bill for inaction?

The blog AZDisruptors (normally about Arizona startups) has been calling attention to the company, including putting together this video explaining how the cramming works, how JAWA's CEO Jason Hope is apparently building the largest house in the US (complete with a 3-story night club), and how AT&T pretends (falsely) that it can't do anything about it: Oh yeah, Broadband Reports also notes that Hope's former blog, which was all about the Lamborghinis and other luxury cars he was acquiring, has suddenly changed to point to a page about his philanthropic work.

The thing is, JAWA has been doing its thing for quite some time. After Texas regulators began investigating, Verizon Wireless finally realized it needed to do something and sued. Amusingly, JAWA's defense to the lawsuit appears to be that it employs lots of people and is good for Scottsdale. However, it also points out that it's made Verizon Wireless tons of money, and even complains that Verizon Wireless seems to be withholding money owed.

While it's nice that Verizon Wireless has filed suit, it appears this only happened after Texas regulators began investigating, and after they made money from JAWA for a period of nearly four years. AT&T now claims that it's investigating too, but only after AZDisruptors demonstrated company representatives blatantly lying to him about whether or not they make any money from this and whether or not they can stop it.

The big question in all of this really should be why the mobile operators allowed this to happen at all. Why would they ever allow charges to be added to an account as a result of inaction, rather than through direct acceptance?

Last summer, we wrote about an incredibly poorly thought out lawsuit, by a company named Luvdarts, developers of MMS content, suing the mobile operators, because MMS can be forwarded from a recipient to another person. The company claimed that the big mobile operators were no different than file sharing networks, like Limewire or Gnutella, because each forwarding of content was infringement. As we pointed out at the time, this made no sense. It was a silly argument that was really being put forth by a guy named Max Davis, who has an equally silly plan to add compulsory licensing to MMS content, and this lawsuit was an incredibly weak attempt to push the mobile operators into negotiating. Instead, as we predicted, it's been dismissed by the courts for failure to state a claim. The dismissal was with prejudice, meaning that the court doesn't want to see them again on this. The press release linked above is kind of amusing, because it has the folks behind the lawsuit claiming that they're happy about this result and planning to appeal. Guys, you just got laughed out of court, because this lawsuit makes no sense. Appealing isn't going to fix that.

With AT&T introducing its new metered broadband plans, one of the key parts of the plan was an actual digital meter to tell you how much of your quote you used up. While we can argue about whether or not this acts as a massive disincentive for use, one thing that I don't think can be debated is that if AT&T is going to offer such a meter, it really ought to work.

Tragically, it doesn't.

Instead, early reports suggest that the meter is often wrong -- sometimes by tremendous amounts. Now, if AT&T is relying on the same metering technology to make its determination for whether or not people go too far, it seems likely that a lawsuit will be the eventual end result. How can a company like AT&T move to metered broadband with meters that just don't work?

A few years ago, we noted that BT's CTO had admitted that there weren't any congestion issues that required traffic shaping or other limitations on the network, just so long as they continued to do basic investments in network infrastructure. And, indeed, just as AT&T is introducing broadband caps, BT has announced that it's removing them, because there's no need thanks to infrastructure investments.

BT will remove the FUP controls currently applied to customers with ‘atypical’ usage. Today atypical users are restricted at 300GB usage and account for less than 0.5% of the BT customer base. BT will not target any individuals with restrictions based on usage levels. However, we still have traffic management policies that will restrict certain applications / protocols, such as P2P, when the network is busy. As BT continues to invest in the network and network bandwidth we can now remove these restrictions and ensure the experience of the wider customer base.

Of course, it's worth noting that following our original post, a commenter pointed out that there was plenty of competition in the UK market, but there still were caps. Perhaps that's going away. Competition drives investment and innovation... and that gets you away from unnecessary limits.

Over the weekend, Broadband Reports broke the story that after plenty of talk about it, AT&T is implementing broadband caps and overage fees. The caps are 150GB per month for DSL and 250GB per month for U-verse. AT&T claims that it's trying to be flexible, and the cap isn't quite a "hard cap." That is, subscribers will only be expected to pay overage fees if they go over the cap 3 times. But, if they do, the overage fees kick in, and it's $10 per 50 additional GB. AT&T had tested similar caps in the past, but the decision to implement these on a wider scale is pretty much the company publicly admitting that there isn't enough competition in the market, so it can put in place these kinds of limitations.

Now, I'm sure that plenty of people will say that 150GB is pretty high, and AT&T itself claims that only 2% of its current users tend to go over that amount. But... that's today. There are a large number of new apps and new uses for the internet that are increasing our use of broadband, and putting caps and meters on the end risks slowing down innovation in very serious ways. If people suddenly have to be worried about testing out some new high bandwidth streaming app, because they're afraid to make use of their connection, that risks harming a variety of potentially useful new apps and services. I know that, for example, once Sprint put caps on its EVDO/3G data service, I massively decreased my use of it (even though I don't think I ever came near the caps) just because I didn't even want to have to think about the risk or the fact that a single click might drive me much closer to the cap and overage fees. That mental transaction cost can be quite big, and I don't think the broadband providers recognize how powerful it can be.

Once again, the real issue here is the lack of competition. Despite claims to the contrary, plenty of places still really only have a single provider, and those that don't often are limited to just a single other provider (cable), with many of the providers there offering caps as well. AT&T is claiming that it's doing this to stop congestion on the network -- and even told the WSJ that bandwidth hogs were clogging the network -- but folks like Dave Burstein who follow this issue closely claim that congestion is minimal and that AT&T lied to the WSJ (who, it should be noted, didn't appear to question the claim).